Companies under fire paid CEOs well

Study says top executives got 75% above the average

August 29, 2002|By BLOOMBERG NEWS

NEW YORK - Enron Corp., Qwest Communications International Inc. and 21 other companies whose accounting is under investigation paid their chief executives 70 percent more than the U.S. CEO average, according to a study released yesterday.

The CEOs of companies under review earned an average of $62.2 million from 1999 through 2001, more than the $36.5 million average of CEOs at about 360 companies profiled in Business Week magazine's annual surveys, according to a report by United for a Fair Economy and the Institute for Policy Studies.

Former Qwest CEO Joseph Nacchio, Enron's Kenneth Lay and other former and current heads of companies that are charged with misstating results together were paid $1.4 billion in the three years, the groups said. About $530 billion, or 73 percent of shareholder value, was wiped out at their companies from Jan. 1, 2001, to July 31, 2002, the report said.

"For a number of CEOs, you wonder how many pearls they're generating per hour to be getting that much money," said University of Texas law professor Henry Hu, adding that executive pay has "gotten out of control."

Nacchio was paid $266.3 million in the three-year period, the report said. At the same time, Qwest's stock fell 43 percent. The local-telephone company, under investigation by the Securities and Exchange Commission and Justice Department, said it improperly booked some sales and expenses.

Lay, former CEO of Enron, was paid $250.8 million in the period, while the company's stock fell 98 percent. The energy trader is charged with using off-the-books partnerships to hide debt and boost profits.

The companies under investigation fired 162,000 workers from January 2001 to Aug. 15, 2002, said Chris Hartmann, co-author of the report and a researcher at Boston-based United for a Fair Economy.

Other companies studied include Adelphia Communications Corp., AOL Time Warner Inc., Bristol Myers Squibb Co., El Paso Corp., Kmart Corp., PNC Financial Services Group, Tyco International Ltd. and WorldCom Inc.

United for a Fair Economy, founded in 1994, researches and lobbies on issues related to wealth distribution.

The Washington-based Institute for Policy Studies was formed in 1963 and researches social and environment issues.

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