Life among the 1%: CEO pay up 36.5% last year
And as we all remember about percentages, the bigger the base, the more money we’re talking about….
CEOs in the S&P 500 generally have a pretty good base.
According to a survey of CEO compensation by GMI (formerly known as the Corporate Library), chief executives in the Standard & Poors 500 companies saw a pay raise averaging 36.5% last year, after two years of “lower” pay packages. A broader survey of 3,000 major companies yielded an average 27% increase!
Paul Hodgson, senior research associate at GMI, said the sharp rise in pay was out of line with the relatively modest improvement that companies typically achieved in profits or share price during 2010.
Most of us who have worked in America’s companies know that executive pay has little to do with performance.
Three of the top nine CEOs were in health care, the most lucrative sector. The top two compensation packages were in health care:
- $145 million for John Hammergen of McKesson Corp. (MCK, Fortune 500), which distributes drugs and health and beauty care products to pharmacies; and
- $98 million for Joel Gemunder, who retired in July 2010 as CEO of Omnicare (OCR, Fortune 500), which provides drugs to nursing homes and other long-term care facilities.
Both companies, in public filings, actually reported lower pay packages for the two executives. McKesson listed Hammergen’s total compensation package as $46.1 million for the most recent fiscal year, while Omnicare listed Gemunder’s pay package at $32.8 million. Neither company returned calls seeking comment.
But GMI’s analysis adds up total “realized pay” — which includes not just salary, bonus and the estimated value of stock options granted, but also the value of profits from exercising those options and pension payments. Those items are not typically included in the reports companies file with the Securities and Exchange Commission.
Most of us who have worked in America’s companies know that executive compensation amounts are sometimes hard to pin down!
Hammergen exercised over 3.3 million stock options during the year, which netted $112 million, and the value of his retirement benefits grew by $13.5 million, according to GMI. If Hammergen were fired, his severance package is worth $469 million, according to GMI.
Almost half a billion dollars in severance… it might make a Board of Directors think twice about firing him!
Gemunder and two other executives on the “top 10” list benefited financially from large exit packages that were not included in the listings.
All of you folks who were laid off in the last year or have not received a raise in YEARS are probably scratching your heads right now….
And the 1% claim “class warfare…!”
-Bill at
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