Shareholders: Look What CEOs Are Doing with Your Money

Skechers (SKX), maker of men's and women's shoes, recently purchased a used car for $120,000. Natural gas producer Chesapeake Energy (CHK), just bought a historical map collection for $12.1 million. These purchases appear completely unrelated to the respective operations of these companies, but they do have one thing in common: these items were purchased from each company's executives!

Since these transactions are taking place at fair market value, these don't form part of executive pay (which can be found easily by following these instructions). Instead, they are just executive perks that most shareholders won't ever know about. But these items are disclosed in proxy statements, and Michelle Leder of footnoted.org is determined to expose them. Her site is dedicated to reporting the items that companies try to bury in their routine SEC filings.

Reading Michelle's site can make a shareholder (executive) depressed (excited)! Post after post reveals many an instance of shareholders getting ripped off without their knowledge. For example, Raytheon (RTN) paid moving expenses of $229,000 for its CEO. As if that weren't enough, it paid this same CEO $500,000 because that's how much his house price dropped since he bought it...Why on earth should shareholders be paying for a home buyer's mistake?

While one could argue that the best executives earn far more for shareholders than they cost, that's beside the point. What it costs to retain an executive should be part of his salary; it should not be buried in fine print. Until this is the case, we unfortunately have to spend hours on end digging through SEC disclosures, and we can take advantage of the fact that Michelle is doing some of the work for us!

Comments

[algo41:]

Actually, it was $140,000 that SKX paid. Greed and entitlement knows no limits.

May 09 10:31 PM

[notsosmart:]

this article is about 20 yrs.too late.shareholders are & have been ripped off for years & its the selfserving boards that ok this as they provide perks for themselves.nothing you can do except sell the stock.not a good answer but the only one.

May 10 11:16 AM

[ain't no fo...:]

Read the Form 4's if you want to really get sick to your stomach - nothing more than outright theft of shareholder equity via options awards.

And its not just the "C" level guys - check out some of the BOD's who OK those awards - and then get nearly as much on their own... there are Board members getting MILLIONS of dollars worth of stock options that they flip the same day they exercise - for a dozen meetings a year? Yah, right, give me a break.

Its gotten so that one of my first due diligence steps when researching a company is to read the Form 4's. And I don't care how much the company is SUPPOSEDLY making - if these cretins are robbing the shareholders blind with their options plans then their interests are misaligned with the shareholders and sooner or later the shareholders are gonna take it on the chin.

May 10 08:57 PM

[pitboss33704:]

Once again : " Let the shareholders eat cake ... "

May 11 11:32 AM

[wtp:]

We "boiling frogs" have gotten too familiar with this particular aspect of corporate fraud over the years and tend to move on too easily, with a shrug. Thanks for reminding us of its importance, and for the Leder link.

May 11 11:47 AM