ROE v. Paid: Sweet Deals for Decent Performance in Health Care
Measured by stock performance, the health care segment was in intensive care during 2002. But going by our preferred measure -- return on equity -- these companies look like another instance of boards that pay dearly for a fair result.
Of the 44 health care companies in the
S&P 500
, 20 handed out $10 million-plus in compensation to their chief executives. Fourteen of the 100 highest-paid CEOs in the S&P 500 come from this group, including
Pfizer's
(PFE) - Get Report
Henry McKinnell, who netted $33.9 million in pay, bonus and options, and
Tenet Healthcare's
(THC) - Get Report
under-the-gun chief Jeffrey Barbakow, who reaped $32 million in 2002 as his company's stock skidded 58%.
Pfizer devotees would be quick to point out that some CEOs earn their keep more than others. And today's ROE v. Paid: Health Care chart drives that point home.
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 guide to 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 Aon Consulting's eComp Database -- the numbers include salary, bonus and options. (For more on our series, please read
this column.)
ROE is also a good way to gauge a company's performance against its competitors.
Amgen
(AMGN) - Get Report
and
Biogen
(BGEN)
, as the chart shows, have posted five-year ROE well above their biotech peers.
Using 15% average ROE as an unofficial bar for solid performance, the chart shows 27 of the 44 health care companies in the S&P 500 made the cut. Based on stock performance, 2002 was a tough year: Only nine of the 44 companies posted positive returns -- the chart includes stock returns as well.
How did chiefs at
Johnson & Johnson
,
Medtronic
,
Abbott Labs
and elsewhere stack up? Check today's chart.
*Compensation figures were not available from eComp, so Yahoo! figures were used. |
Click here to see entire table
.