Oracle Corporation (ORCL): CEO Salaries Sport Princely Gains

Page 1 of 2

Oracle (ORCL)Can we really justify paying CEOs the money we do? The latest data shows top executives at the largest U.S. public corporations are pulling in annual compensation that puts them on par with elite sports athletes.

Last month Forbes showed Tiger Woods was back at the top of his game in 2012 and at the top of the compensation circuit, becoming the highest-paid athlete at more than $78 million. LeBron James, who just helped lead the Miami Heat to their second consecutive basketball title, was the fourth-highest-paid player at just under $60 million.

In comparison, a new analysis by the folks at Equilar found the median annual compensation in 2012 for some 200 chief executives at companies with more than $1 billion in revenues was $15.1 million, a 16% raise from the year before. At the top of the list was Oracle Corporation (NASDAQ:ORCL) CEO Larry Ellison, with more than $96 million in total compensation.

While many may say being responsible for the production of goods and services that run the economy and having control over thousands of jobs should receive pay at least as much as some guy playing a game, unlike these sports champions, the value of the CEO to the corporation isn’t so cut-and-dried. Think of them as being more like New York Yankees third baseman Alex Rodriguez, who was No. 18 on the Forbes list with $30.3 million in compensation, but of dubious worth to the overall success of the team.

There’s a disconnect happening in the board room by those awarding these outrageous salaries. According to the Economic Policy Institute, from 1965 to 2012, CEO compensation has gone from 20 times the average annual salary of the company’s workers to 273 times. In simpler terms, the CEO is making more in one day than his workers are making in an entire year. And as the poster boy for corporate excess, Ellison is making $45,790 every hour!

One could make the argument that Steve Jobs at Apple Inc. (NASDAQ:AAPL) had a LeBron James-type effect on the company when he returned to the helm of the company he founded, but did Nuance Communications Inc. (NASDAQ:NUAN)‘ Paul Ricci, who earned $37 million in 2012? The voice-recognition specialist had to cut its growth estimates earlier this year as transcription volumes sank and it admitted that “execution issues,” poor account management, and conflicted deal strategies caused operating margins to crumble 41% in the second quarter.

Was there no one as capable as Muhtar Kent to run The Coca-Cola Company (NYSE:KO) for less than $30.5 million? Can we pinpoint what he did to earn the pay? It has to be more than just having his hand on the tiller as the beverage maker moved into emerging markets such as Thailand, India, and Russia that helped beat analyst expectations last quarter. Coke’s earnings were still down across the board.

It’s not that these aren’t capable individuals; it’s just that there are lots of capable people who can do the job and do it for less. Executive performance is based on intangibles that can’t be quantified, yet boards of directors are willing to shell out tens of millions of dollars for something they can’t measure.

Warren Buffett famously doesn’t make a lot of money at Berkshire Hathaway Inc. (NYSE:BRK.A) with total compensation at $447,000 in 2012 (down 14% from the year before), but the conglomerate still has am enviable track record of outsized performance. Similarly, John Mackey at Whole Foods Market, Inc. (NASDAQ:WFM) is able to get by on less than $70,000 a year, and though his co-CEO, Walter Robb, does considerably better with under $1.3 million, it remains a pauper’s pay in comparison with  Lloyd Blankfein’s $21 million pay package Goldman Sachs Group, Inc. (NYSE:GS), up 75% from the $12 million he earned in 2011.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!