[stand856]

Big Paychecks - Forbes.com

The chief executives of America's 500 biggest companies got a collective 38% pay raise last year, to $7.5 billion. That's an average $15.2 million apiece. Exercised stock options again account for the main component of pay, 48%. The average stock gain was $7.3 million.

The highest-paid boss of the 500 companies we tracked: Apple (nasdaq: AAPL - news - people ) chief Steve Jobs. He drew a nominal $1 salary but realized $647 million from vested restricted stock last year.

The next four top-paid chief executives also earned most of their pay from exercised stock options: Ray Irani of Occidental Petroleum (nyse: OXY - news - people ) ($322 million total pay), Barry Diller of IAC/Interactive Corp (nasdaq: IACI - news - people ) ($295 million), William P. Foley of Fidelity National Financial (nyse: FNF - news - people ) ($180 million), and Terry Semel of Yahoo! (nasdaq: YHOO - news - people ) ($174 million).

We count compensation when it turns into cash or marketable stock; we do not value or count options until the executive exercises them. When calculating a chief executive's total pay, we measure the following for the company's latest fiscal year: salary and cash bonuses; other compensation, such as vested stock grants; and stock gains, the value realized by exercised stock options.

Amid a public outcry over executive compensation, the U.S. Securities and Exchange Commission cranked out tougher new rules on pay disclosures. The result is that proxies, the documents that, among other things, disclose executive compensation, are fatter this season, yet they don't necessarily paint a clearer picture for shareholders. To understand Sprint Nextel's (nyse: S - news - people ) compensation, you have to read more than 50 pages of complex tables and long-winded sentences.

In our sixth annual performance-versus-pay scorecard, we again set out to find the boss who delivered the best bang for the buck. This year, we found 189 bosses whose company has been publicly trading since April 2001, have been in office at least six years and have at least six years of pay history.

Our grading uses four factors. One is the company's stock performance (including dividends) relative to that of its industry peers over six years. Two others are annualized stock performance during the leader's tenure and performance relative to the S&P 500 during that time. The last factor is total compensation over the past six years.

For the second consecutive year, the chief who delivered the most value for the money is John Bucksbaum of General Growth Properties (nyse: GGP - news - people ), a real estate investment trust. Over the past six years, Bucksbaum has been paid a modest $723,000 a year in each year, while delivering a 39% annual return to shareholders. Since he took over as chief in May 1999, he has delivered an annual 29% return to shareholders, which is significantly better than the 2% annual return of the S&P 500 of that period.

Also for the second consecutive year, at the bottom of our performance/pay rankings is Richard A. Manoogian, chief executive of Masco (nyse: MAS - news - people ), a manufacturer of housing products such as faucets, gutters and cabinets. Masco's six-year annual return of 5% lagged in comparison with Masco's sector, which includes a number of building materials' companies. Manoogian has been collecting a paycheck averaging $11 million a year.

This year, we not only tracked chief executive compensation, but we also looked at the kingpins who run private equity and hedge funds. Reaping the rewards of percentage fees, the 20 top Wall Street fund managers earned an average of $658 million in 2006, versus $145 million for the 20 highest-paid chief executives.

A special thanks to Salary.com's CompAnalyst Executive, which provided us with compensation data on our 500 survey companies.
Components of Compensation

Salary: Annual base salary earned during the fiscal year.

Bonus: Annual incentives earned during the fiscal year and discretionary bonuses.

Other: Includes long-term incentive payouts and the value realized from vesting of restricted stock and performance shares. Also includes other executive personal benefits, such as premiums for supplemental life insurance, annual medical examinations, tax preparation and financial counseling fees, club memberships, security services and the use of corporate aircraft.

Stock gains: Value realized during fiscal year 2006 by exercising vested options granted in previous years. The gain is the difference between the stock price on the date of exercise and the exercise price of the option.

[HydroWerxTM]

Ahhh, the rich get richer, thanks to countless tax breaks, and the middle and lower class continue to struggle, the price of oil goes up and a dollars worth goes down. Good job government, keep letting big business run the country, soon the great depression won't look so great compared to what this country is headed for. I am proud to be an American, but am also an American who is not proud of what his country is doing to its own people.

[HarveyJ]

I can understand that running these companies can be stressful, and hard educated decisions must be made, but what the HELL are these people doing that could possibly be worth more than a few million a year?!?!?

If they started the companies, I'd be all for them reaping that kind of money. Like Bill Gates, he sorta deserves what he gets (but seeing as he stole the code for MS-DOS which started it all, not really), and at least he's become socially responsible with it too. But when you're just hired in by the current board of directors, you don't deserve to be making more than a small African countries GDP. Hell, a magic 8ball could probably do the job better.

There are companies where the share prices go down and the CEOs STILL get a bonus!
Looney Tunes, man!

Am I ranting out of jealousy? Not really.
What the hell are these people going to do with all that money? Buy a house and a yacht, and then what? Spend millions wasting resources and living large while other people struggle to survive...

As much as I like capitalism, it needs some restraints on it. Unfettered capitalism like that is killing everything, from the environment to general creativity.

[paul2145r]

Oh come on people -- if you were in their shoes, would you turn down the money if you were at the head of a multi-billion dollar company?

[HydroWerxTM]

Originally Posted by paul2145r

Oh come on people -- if you were in their shoes, would you turn down the money if you were at the head of a multi-billion dollar company?

Most of the time these are the same people contributing sometimes millions to goverment elected senators representatives and even the presidents campaigns, don't think they just fell into that job. Hell most of them were elected officials themselves getting a payback from big business as a CEO.

If I were in their shoes I wouldn't be taking benefits and retirement away from the small guy who bust his ass for 30+ years just so I can have a bigger bonus.

[HarveyJ]

Paul, I'd be happy to take a million or two a year... but after that, I cannot honestly think of anything to do with that much money other than things that are literally creative ways of wasting it.
Sure, I could donate to the poor... .OR I could just as easily get the company to reinvest it in social outreach programs that would be more fiscally responsible, and generate good Page Ranking for the company (which means I'd be doing my job right).

Honestly, how big a house do you need?
Why bother getting a sports car when you can't legally drive it for its designed purpose?
How much do you really need to be comfortable?

The life I lead now is quite a comfortable one. I'm renting a nice place (in Australian major cities, you'd have to be an idiot to buy right now. We're at the peak of a nearly decade long bubble) that's got enough room for my partner and pets. I've got a nice car (V8 station wagon... sensible car) with a good stereo, a home media center, and I can go out and do what I want on weekends without worrying about my hip pocket. I don't work too hard either, and I have time for my hobbies... And this is all from about $70k p.a. before tax.

I literally cannot imagine what I would do with millions of dollars a year, other than just waste it on pointless trappings and stupidity.

[MoneyMagnet]

I say congratulations to all the people earning that money!

I think it is silly for people to be jealous, or even think that people getting paid that much money is not fair.

If you think in ratios, a homeless person can be complaining about how much middle income people earn and how big their houses are. Then in ratio, you have middle income people complaining about how much executives earn and how big their houses are. If you don't like it, earn more yourself!

I will be happy to earn the income as these executives are enjoying =]

Also on a side note: Last I recall, Bill Gates purchased the rights/code to MS-DOS. I remember purchasing something isn't the same thing as theft.

[brownbob06]

Originally Posted by HarveyJ

Honestly, how big a house do you need?
Why bother getting a sports car when you can't legally drive it for its designed purpose?
How much do you really need to be comfortable?

I would need the extra money to build a racetrack to drive my sports car for it's intended purpose...

but seriously, quit complaining about how much they make, that's capitolism, you know, capitolism: the reason we're all on an entrepreneurship website.

And Harvey, what do you mean Capitolism needs some restraints? That's the dumbest thing I've ever heard. So you're saying there should be a cap on how much people get paid for their jobs? Maybe you should move to a socialist country so everyone gets their "fair share."

[Fadzuli]

Why do you care how much they earn anyway? If you read Robert Kiyosaki's books he will tell you to MYOB - mind your own business.

Focus on improving your income rather than others.

[malumu200]

All this CEO deserve this money with every single penny. This is what's great about captilism & America, we can be going through a recession with many families barely surviving & cost of living going up but their are people still making that money. I not only admire them, but look forward to the day when I can partner with them. And with some of you who "can't imagine getting that much" well guess what? You will never make this kind of money because that's just your mindset. So get use to the "comfortable income" your making because all this CEO have the mindset of making millions & that's why they get paid the big bucks.

What's that saying ? "your thoughts manifest your actions", so for everyone who can never "imagine making that much money" your absolutely right you will never make that much money. We should be inspired by what this CEO are making, knowing we all have the same potential.

And lastly it is no one's fault but the person whose worked 30 years and gets laid off but themselves, maybe they should have gotten into a different field.

I see and hear to many people bitching of how it's "unfair" or "ridiculous" how much some people are making and I find most of the time it's people who make no money that do all the bitching of how someone else is making all that money. Well guess what? You have the mentality of a loser.