2. Ivan's Killer Comp
Verizon (VZ - Get Report) did well in 2011. The telecom giant's stock returned 12% for the year, or 18% when you factor in its hefty dividend. The S&P 500, on the other hand, finished the year dead even and only up 2% if you throw in the coupon.
Yep, 2011 was a very good year for Verizon shareholders. And what we learned this Monday is that it was an even better year for Verizon's former CEO Ivan Seidenberg. According to an Associated Press analysis of a Verizon regulatory filing, Seidenberg earned $26.4 million in 2011, up from $18.1 in 2010 and $17.5 million in 2009.Yes indeed it was a very good...Wait a second! We made a mistake. Let's back it up a second. Actually, let's back it up five months because Seidenberg only served as the company's CEO until the end of July, and after that he served as executive chairman until year end. So in truth, Seidenberg banked that $26.4 million for only seven months of work, not a full year. Hmmm. That's a pretty egregious paycheck even by Wall Street standards, especially considering the guy didn't even work the full year. Don't you think? But you know what? Let's give old Ivan the benefit of the doubt because his company beat the index. So he deserves every penny. Wait another second! Our bad. Let's back it up again. Actually, let's back it up to July 29, 2011. On that date, which was also Seidenberg's last day as CEO, the stock was at $35.29. And the stock started 2011 at $35.78. Hmmm. The stock goes down 49 cents for the seven months Seidenberg is on the job and the real capital appreciation occurs in the five months after he takes off. Nevertheless, he still gets a massive bump in pay. That's not terrible Ivan, not terrible at all. And on top of that, Seidenberg's successor, Lowell McAdam, earned $13 million in 2011, net of $10 million in restricted stock, which breaks down to about $1 million per month for each of his five months as CEO. So, by our very rough calculations, Verizon spent $31.7 million on its two CEOs last year, or $13 million more than its far larger rival AT&T paid its CEO Randall Stephenson. You know what? That's just plain egregious by any standard.