Highest Paid CEOs End Up Being Fired Or Fined, Study Finds

New study finds that many of the best paid CEOs are poor performers, too


Ken Lay's Bank Fraud Trial Continues
Getty Former Enron chair Kenneth Lay
About 40 percent of the highest-paid CEOs in the United States over the past 20 years eventually ended up being fired, paying fraud-related fines or settlements, or accepting government bailout money, according to a study released Wednesday.

The report by the Institute for Policy Studies, a left-leaning think tank, said that chief executives for large companies received about 354 times as much pay as the average American worker in 2012. That gap has soared since 1993, when CEOs for big companies received about 195 times as much.

But the best-paying companies do not necessarily receive the best performance from their CEOs, the report said.

For example, Enron's Kenneth Lay was one of the 25 highest-paid chief executives for four years, before his company collapsed in an accounting fraud in 2001. In May 2006, a Houston federal jury found Lay guilty of fraud and conspiracy. His death two months later led to his conviction being thrown out. The SEC is set to enforce a rule that would require companies to publicize the pay discrepancy between their CEOs and their median workers' salary; Staples' founder is calling on Congress to reduce job-killing regulations, and a new report suggests the average American household is earning less than when the recession ended four years ago, reports CNBC's Michelle Caruso-Cabrera.The think tank looked at the 25 best-paid CEOs for each of the past 20 years. There were 241 executives on the list in total, because many appeared for multiple years. That means that the 40 percent average includes many chief executives who have appeared on the lists several times.

To be sure, all of the biggest financial services companies during the 2008 financial crisis received bailouts, whether they wanted them or not. But many chief executives on the list, including Lehman Brothers' Dick Fuld, were at the helm when their company either went under or accepted a government rescue package.

Fuld received $466.3 million of compensation from 2001 through 2007, the report said. Fuld was not immediately available for comment.

The 2010 Dodd-Frank Act took steps to encourage more rational pay levels. The law, for example, requires all financial companies to disclose the ratio between the CEO's pay and median annual compensation for employees. But a number of the mandates have yet to be finalized by regulators, said Sarah Anderson, who co-authored the think tank's report.

"The Dodd-Frank Act was signed three years ago, and it is time for these very modest reforms in that legislation to be rigorously implemented," Anderson said.

"We see CEO-worker pay ratio disclosure as an important step forward toward corporate compensation common sense," the report said.

-By Reuters.

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Mr.Burns

Lay was a good man, I trained him very well.

August 30 2013 at 3:10 AM Report abuse rate up rate down Reply
Bill

Don't expect to see these rules implemented soon if at all. Our government has let big business get by with this for years and our legal system is broken. From now on this is a way of life in America with money making all of our laws or we do what is happening in Syria. I hope this raises a few red flags from our government so they can waste more of their time checking on me. Everyone of them are lazy good for nothing bastards in my humble opinion.

August 29 2013 at 4:18 PM Report abuse rate up rate down Reply
rtgarton

Who cares. What goes around comes around

August 29 2013 at 11:14 AM Report abuse rate up rate down Reply
Dan

I would bet that Ken Lay is enjoying his billions somewhere on a private beach in S. America, while his grave contains a purchased Mexican corpse.

August 29 2013 at 11:03 AM Report abuse rate up rate down Reply
Dan

Oh, and free staff (servants), health care, food, and pensions, to mention a few more.

August 29 2013 at 10:59 AM Report abuse rate up rate down Reply
Dan

Executive pay is a but a drop compared to benefits, bonuses, stock options, cars, airplanes, etc. ad nauseum. We should look at TOTAL COMPENSATION - usually at least twice their pay. I know I worked for GE, until my stomach could not take it.

August 29 2013 at 10:56 AM Report abuse rate up rate down Reply
jjfarino

The reason people earn less today then when the recession ended 4 years ago is because the recession didn't end 4 years ago. the trouble with America is that there are no more businessmen in the country any more, there is nobody left who is innovative and thinks about the good of the company and workers they only think about their own pay and the stock price. This article mentions Ken Lay but fails to mention the fact that he had no clue what he was doing when it came to running the company, he was not only corrupt but also incompetent and that's a dangerous combination.

August 29 2013 at 10:56 AM Report abuse rate up rate down Reply
yurday6

Why would they care if they get fired when they are worth one billion dollars or for that matter five million.

August 29 2013 at 10:51 AM Report abuse rate up rate down Reply
1 reply to yurday6's comment
Mr.Burns

Just try and fire me.

August 30 2013 at 3:11 AM Report abuse rate up rate down Reply
foxylynx

Maybe if they weren't crooks, they wouldn't be in such dire straits.

August 29 2013 at 10:48 AM Report abuse rate up rate down Reply

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