Pay for (Lack of) Performance

Obermatt AG is a Swiss firm that specializes in evaluating the performance of companies, company operations, boards of directors and managers. Its products are proprietary, but The Economist reported on Obermatt’s latest evaluation of big-company CEOs. Obermatt bases its valuation of a CEO on how well a company’s earnings grow and its returns to investors improve. Comparing that performance against the company’s peers gives Obermatt a measure of how over-paid or under-paid a CEO is.

The most overpaid executive, to the tune of $175 million in 2008, was Ray Irani, CEO of Occidental Petroleum, The Economist reported. The most underpaid, by $84 million, was Steve Jobs of Apple (who paid himself $1 a year in salary but who owned a lot of Apple stock).

The most over-paid CEOs, after Irani, were:

Stephen Hemsley, UnitedHealth Group

John Martin, Gilead Sciences

Mark Hurd, Hewlett Packard

Richard Adkerson, Freeport McMoRan Copper & Gold

Thomas Ryan, CVS Caremark

Andrew Gould, Schlumberger

Ivan Seidenberg, Verizon Communications

Hugh Grant, Monsanto

Bog Iger, Walt Disney

The most under-paid, after Jobs:

Eric Schmidt, Google

Scott Davis, UPS

Warren Buffett, Berkshire Hathaway

Daniel Fulton, Weyerhauser

Joseph Saunders, Visa

Steve Ballmer, Microsoft

Vikram Pandit, Citigroup

Frank Blake, Home Depot

Charles Moorman, Norfolk Southern