Seeking Alpha
Long/short equity, growth, momentum, event-driven
Profile| Send Message|
( followers)  
Ever wonder what the chief executive officer of a large publicly traded company earns in total pay when including perks and stock options? Or, perhaps more importantly, if the executive truly deserves of that amount of compensation? To answer these questions, I looked closely at statistics from the 50 largest (by market cap) members of the S & P 500. (Note that I excluded foreign entity UBS and replaced it with the Altria Group (NYSE:MO). Also Berkshire Hathaway (NYSE:BRK.A) was excluded as it was not part of the S and P 500 when I began this study.)

I then compared the executive’s total pay to the executive performance both individually and in comparison to the executive’s peers. Executive pay was investigated with respect to the number of employees led, revenues and earnings generated, and share performance (excluding dividends). One could look at these tables I created and perhaps correctly conclude that the lowest ranked CEOs in the executive pay per employee column, and in the percentage of revenues and of earnings columns as the best bargains. However share performance should be looked at too. Also, there are many other ways to examine the performance of executives besides what I have included here, but I thought this was a good start.

To gather the data, I used a wide variety of sources including Yahoo Finance, Google Finance, corporate 10ks and 10Qs, Reuters, Forbes and the AFLCIO web site. For executive pay, the AFLCIO web site offered information on executive pay in 2 ways. The first included vested options and the second included option grants. The AFLCIO web site favors the second way as it feels that is a more accurate portrayal of executive total pay. Corporations though use vested options when totaling executive pay as this is GAAP reporting. Both methods have merits, so I decided to average them out and then called this statistic Average CEO Pay.

Also, a note about the fiscal year end dates used. Much of this information comes from year-end 10-K filings. However, not all companies use the same fiscal year, nor are many 10-Ks for 2009 yet filed, so I then focused on the latest fiscal year that was available. Mostly, this was fiscal year ending December 31st 2008. But some of the data also includes companies that had their fiscal year’s end on different dates in 2009 meaning that some share performance statistics may not compare fairly. The data from 2008 turned out to be important because executive pay scales were determined in an environment then that was less scrutinized than the current one. 2008 was a year of turmoil in the financial markets and the recession was gaining steam.

One last observation about executive pay: when the executive was paid on the low side when compared to peers, the executive was often a founder or joined the corporation in its early stages. This was especially true with Steve Jobs of Apple (NASDAQ:AAPL) and Eric Schmidt of Google (NASDAQ:GOOG), who tend to already be very wealthy from their existing share holdings, whereas other executives are not in that position. However Larry Ellison turns out to be the exception here as he is near the top of the executive compensation rankings and was at Oracle (NYSE:ORCL) when it first started up.

Here are some other interesting quick stats: The average CEO total pay was $19.6 million; the average number of employees was 170,000; the CEO was paid an average of $459 per employee; average annual revenues were $78 billion and earnings were $5.8 billion; CEO pay was an average of 0.06% of revenues, and 0.42% as a percentage of earnings. The lowest paid CEO was Steve Jobs of Apple at $1 per year. The highest was Larry Ellison of Oracle. The lowest paid CEO per employee (aside from Jobs) was H Lee Scott of Wal Mart (NYSE:WMT), the highest Ray Irani of Occidental Petroleum (NYSE:OXY). The lowest CEO pay as a percentage of company revenue was Microsoft’s (NASDAQ:MSFT) Ballmer, the highest (aside from Ellison) John Martin of Gilead (NASDAQ:GILD). The largest corporate earners were Exxon Mobile (NYSE:XOM) and Chevron Texaco (NYSE:CVX).

Two companies lost money for their respective periods and these were Citi (NYSE:C) and Conoco Philips (NYSE:COP). The lowest paid CEO as a percentage of corporate earnings (aside from Jobs and Ballmer 1st and 2nd respectively) was Eric Schmidt of Google. The highest paid CEO as a percentage of corporate earnings was American Express’s (NYSE:AXP) Kenneth Chenault. The best stock performance was a 65% return by Monsanto’s (NYSE:MON) stock but the fiscal year ended on August 31st. If looking at the Dec. 31st fiscal years, Gilead’s John Martin, and McDonalds’ (NYSE:MCD) James Skinner led their companies to positive stock returns. The worst returns were from Citi led by Vikram Pandit, Goldman (NYSE:GS) led by Blankfein and American Express led by Chenault.

Here are the tabulated stats:

SymbolCEO NameAvg CEO Pay ($)# of EmployeesCEO Pay per Empl.Date
XOMRex Tillerson27,312,84180,00034112/31/2008
MSFTSteven Ballmer1,276,62793,000146/30/2008
WMTH Lee Scott19,263,7742,100,00091/31/2009
AAPLSteve Jobs134,300012/31/2008
PGAlan Lafley23,539,539135,0001746/30/2009
JNJWilliam Weldon29,260,010115,00025412/28/2008
GOOGEric Schmidt508,76419,8352612/31/2008
GEJeffrey Immelt11,688,769300,0003912/31/2008
IBMSamuel Palmisano26,753,970398,4556712/31/2008
JPMJamie Dimon27,708,057222,31612512/31/2008
TRandall Stephenson13,675,043282,7204812/31/2008
PFEJeffrey Kindler14,659,011120,70012112/31/2008
CVXDavid O'Reilly17,054,38967,00025512/31/2008
WFCJohn Stumpf11,275,684267,3004212/31/2008
CSCOJohn Chambers12,255,36666,5501846/25/2009
BACKenneth Lewis9,908,400283,7173512/31/2008
KOE. Neville Isdell27,490,18992,40029812/31/2008
ORCLLawrence Ellison70,656,30586,0008225/31/2009
HPQMark Hurd38,272,773304,00012610/31/2008
INTCPaul Otellini12,565,20079,80015712/27/2008
PEPIndra Nooyi14,854,384198,0007512/27/2008
PMLouis Camilleri37,629,25575,60049812/31/2008
CVikram Pandit24,544,350265,0009312/31/2008
ABTMiles White28,294,44172,00039312/31/2008
VZIvan Seidenberg19,453,383222,9278712/31/2008
GSLloyd Blankfein22,030,28636,20060911/28/2008
MRKRichard T Clark15,521,63455,20028112/31/2008
SLBAndrew Gould14,508,19177,00018812/31/2008
COPJames Mulva26,897,25430,00089712/31/2008
MCDJames Skinner13,596,919400,0003412/31/2008
VJoseph Saunders14,042,4905,7002,46412/31/2008
QCOMPaul Jacobs16,403,41216,1001,0199/28/2008
OXYRay Irani45,434,73610,4004,36912/31/2008
UTXLouis Chenevert20,792,801233,1008912/31/2008
DISRobert Iger40,923,347144,0002849/27/2008
MMMGeorge Buckley12,586,93875,00016812/31/2008
AMGNKevin Sharer14,146,65716,70084712/31/2008
UPSD Scott Davis5,741,972426,0001312/31/2008
AMZNJeff Bezos1,281,84024,3005312/31/2008
HDFrancis Blake8,914,350209,300432/3/2008
BMYJames Cornelius24,094,00235,00068812/31/2008
MDTWilliam A Hawkins III8,282,60041,1582014/24/2009
CVSThomas Ryan23,109,454215,00010712/31/2008
AXPKenneth Chenault35,360,24558,30060712/31/2008
CMCSABrian Roberts24,984,455100,00025012/31/2008
BAW James McNerney Jr.17,802,930157,10011312/31/2008
KFTIrene B. Rosenfeld17,848,33998,00018212/31/2008
GILDJohn C Martin11,775,9753,4413,42212/31/2008
MONHugh Grant14,365,75522,9006278/31/2008
MOMichael E Szymanczyk11,600,00010,4001,11512/31/2008



SymbolRevenuesCEO Pay as % RevsCorp. EarnCEO Pay as % Earn% Share Returns
XOM4770.005745.000.0607-13.10
MSFT580.002214.600.0087-5.30
WMT4060.004713.400.1438-5.51
AAPL370.00008.000.0000-56.91
PG790.029813.400.1757-13.57
JNJ640.045712.900.2268-16.54
GOOG220.00234.200.0121-55.51
GE1830.006417.300.0676-53.93
IBM1040.025712.300.2175-20.78
JPM1120.02474.900.5655-25.16
T1240.011012.900.1060-28.06
PFE1480.00998.100.1810-17.00
CVX2730.006223.900.0714-18.33
WFC520.02172.400.46981.70
CSCO360.03406.100.2009-22.96
BAC1240.00802.600.3811-63.10
KO320.08595.800.4740-24.10
ORCL230.30725.601.2617-13.97
HPQ1180.03248.300.4611-25.44
INTC380.03315.300.2371-45.73
PEP430.03455.100.2913-27.01
PM640.05886.900.5454-9.06
C1300.0189-28.00-0.0877-75.96
ABT300.09434.900.5774-2.49
VZ970.02016.400.3040-18.07
GS540.04082.001.1015-64.98
MRK240.06477.800.1990-45.33
SLB280.05185.400.2687-56.49
COP2460.0109-17.00-0.1582-39.80
MCD240.05674.300.31628.59
V70.20062.400.5851-6.86
QCOM110.14913.200.51269.91
OXY240.18936.900.6585-20.67
UTX590.03524.700.4424-28.03
DIS360.11373.301.2401-3.22
MMM250.05033.500.3596-29.84
AMGN150.09434.200.336824.35
UPS510.01133.000.1914-19.75
AMZN190.00670.650.1987-44.65
HD770.01164.400.2026-23.46
BMY210.11475.400.4462-6.03
MDT140.05922.200.3765-38.98
CVS870.02663.200.7222-27.15
AXP320.11052.701.3096-63.73
CMCSA340.07352.500.9994-6.63
BA680.02621.301.3695-50.07
KFT420.04252.900.6155-14.62
GILD50.23552.000.588811.15
MON110.13062.000.718365.00
MO190.06114.900.2367-31.32


Authored by Tom Henderson, Strategist JBH Capital.

Disclosure: Long-term tiny shareholder in Exxon Mobil.
Source: Executive Pay Comparisons for 50 Largest S&P 500 Companies