ROE v. Paid: Sweet Deals for Decent Performance in Health Care

While the stocks skidded, these companies' equity returns were not horrible.
By Stephen Schurr ,

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.
Source: TheStreet.com, Bloomberg, eComp Online, Yahoo!

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