ROE v. Paid: Industry Chiefs Rake It In
Among the 62 industrial companies in the
S&P 500
, there were some industrial-strength payouts handed to chief executives last year.
The three biggest: David Cote's $56.6 million windfall from
Honeywell
(HON) - Get Report
, Frederic Poses' $50.4 million bonanza from
American Standard
(ASD)
and, of course, the mother of all dubious paydays, Dennis Kozlowski's $81.1 million parting gift from
Tyco International
(TYC)
.
As today's "ROE v. Paid: Industrials" chart illustrates, not every executive deserved such largess: Tyco and Honeywell have notched an average return on equity over the past five years below 15% -- below those of many of their peers. American Standard's Poses gets credit for whipping his company into shape. With his $50 million compensation plus the $50 million more he has in unexercised stock options, according to Aon Consulting's eComp database, one wouldn't argue that he is underpaid.
As part of
TheStreet.com's
coverage of executive pay, the "ROE v. Paid" charts compare a company's average return on equity -- or ROE, a handy measure of how effectively a CEO puts shareholder money to use -- over the past five years with the chief executive's compensation. For compensation, we used the most recent figures provided by eComp Database; the numbers include salary, bonus and options.
Lots of media outlets have been measuring executive pay against the company's stock market returns over the past year. Since the
S&P 500
cratered 23.4% in 2002, and took down lots of individual companies with it, we felt ROE would be a fairer -- if still imperfect -- measure of executive performance. (For more on our series, please read
this column.)
Some high-profile CEOs are on the industrial list, including
GE's
(GE) - Get Report
Jeffrey Immelt and
General Dynamics'
(GD) - Get Report
Nicholas Chabraja. Both men are highly paid, but they have ROE figures that easily outpace those of their peers.
All told, half of the 62 companies posted ROE above 15% on average over five years -- the unofficial yardstick for solid performance.
Click here to see entire table.
*Compensation figures were not available from eComp, so Yahoo! figures were used. |