Are Top CEOs Overpaid for Their Performance?

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CEOs are paid so handsomely because they bring something important to the company, right? Like bankruptcy, or a bailout?

While we’re debating whether fast-food workers deserve $15 an hour, maybe we should take a look at executive pay, too.

The Institute for Policy Studies released a new study of nearly 250 corporate chief executives who have ranked among the 25 highest-paid CEOs sometime in the past 20 years. It evaluated the performance — the study puts that word in scare quotes — of those highly compensated individuals and found there wasn’t a clear relationship between pay and good stewardship.

In fact, “nearly 40 percent of the CEOs on these highest-paid lists were eventually ‘bailed out, booted, or busted,'” the report says. Here are some other findings:

  • Richard Fuld of Lehman Brothers was one of the 25 best-paid CEOs for eight years straight — right up until his firm collapsed in 2008, in what CBS News called “the largest bankruptcy in history, and it triggered a chain reaction that produced the worst financial crisis and economic downturn in 70 years.” 
  • CEOs whose firms disappeared or were bailed out by taxpayers after the financial crash made up nearly a quarter of the study’s sample.
  • An additional 8 percent of studied CEOs were pushed out of the job, but left “with golden parachutes valued at $48 million on average.”
  • Another 8 percent led corporations that faced significant fraud-related fines or settlements, usually costing more than $100 million per firm.
  • Only four women CEOs were included in the study, meaning they were the only women who made the top 25 best-paid CEO lists over the past 20 years.
  • Three of the CEOs studied made more than $1 billion in inflation-adjusted pay over the past two decades: Lawrence Ellison of Oracle got $1.8 billion, Sanford Weill of Travelers and Citigroup got $1.5 billion, and Michael Eisner of Disney got $1.4 billion.

So, what about these folks? Do they deserve their millions? Should taxpayers be helping pay some of them? Let us know what you think on our Facebook page.

Stacy Johnson

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