3 Deadbeat CEOs — and 3 Worth Every Penny

by Alyssa Oursler | June 12, 2012 1:51 pm

Dow Leaderboard[1]CEOs are the top of the food chain, the kings of the castle — something pretty evident by the overpriced paychecks they receive. But if they’re not only in charge and make boatloads more, shouldn’t that paycheck in some way reflect how the company’s stock performs? Shouldn’t those at the top be held accountable?

As you’ll see, that is oftentimes far from the case.

Bloomberg Markets recently came out with a report showing which CEOs create the most and least value[2] for their companies, and some of it wasn’t so pretty.

By dividing the company’s cumulative returns for 2009 to 2011 by the CEO’s total incentive compensation, Bloomberg ranked head honchos based on the percentage point return per $1 million of incentive pay received.

Take a look at who made the rankings:

3 Least Valuable CEOs:

  1. Vikram Pandit, Citigroup (NYSE:C[3])
  2. Walter Bettinger, Charles Schwab (NYSE:SCHW[4])
  3. Frederick H. Waddell, Northern Trust (NASDAQ:NTRS[5])

3 Most Valuable CEOs:

  1. Warren Buffet, Berkshire Hathaway (NYSE:BRK.A[6], NYSE:BRK.B[7])
  2. Robert G. Wilmers, M&T Bank (NYSE:MTB[8])
  3. Albert Lord, SLM (NASDAQ:SLM[9])

While Warren Buffet tops the list by taking no incentive pay, Robert G. Wilmers is also an impressive example — for every $650,000 in incentive pay he made, M&T Bank increased 78 percentage points.

That puts many other chiefs to shame. Vikram Pandit, for example, falls — and then crashes and burns — at the other extreme. Being number one in this case doesn’t look so good: for every $1 million Pandit made, the stock dropped around 4 percentage points. It can’t be all that bad to be Pandit, though, considering he nevertheless was handed $7.84 million in 2011 — a reward for Citigroup’s -60% stock returns over the two years prior, I would assume.

It often pays to be at the top, even when it shouldn’t.

Read more about CEO pay — the good, the bad and the downright awful — here[10].

  1. [Image]: https://investorplace.com/dow-leaderboard/
  2. showing which CEOs create the most and least value: http://www.ritholtz.com/blog/2012/06/what-bank-ceos-create-most-least-value/?utm_source=dlvr.it&utm_medium=twitter
  3. C: http://studio-5.financialcontent.com/investplace/quote?Symbol=C
  4. SCHW: http://studio-5.financialcontent.com/investplace/quote?Symbol=SCHW
  5. NTRS: http://studio-5.financialcontent.com/investplace/quote?Symbol=NTRS
  6. BRK.A: http://studio-5.financialcontent.com/investplace/quote?Symbol=BRK.A
  7. BRK.B: http://studio-5.financialcontent.com/investplace/quote?Symbol=BRK.B
  8. MTB: http://studio-5.financialcontent.com/investplace/quote?Symbol=MTB
  9. SLM: http://studio-5.financialcontent.com/investplace/quote?Symbol=SLM
  10. here: http://www.bloomberg.com/news/2012-06-05/wall-street-ceo-pay-rises-20-with-kkr-s-kravis-no-1.html

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