Well, it's the usual report from the pig fest AKA the annual analysis of CEO pay. Each year brings a ceiling-shattering example of greed. This year, it's Charif Souki. Oh, and there is another gem to share as well.
The analysis, one of many but probably the most thorough, comes courtesy of Equilar's annual analysis for The New York Times.
Mr. Souki rates special mention:
Two executives who did conspicuously well last year are Charif Souki at Cheniere Energy, a natural gas distributor, and Richard C. Adkerson at Freeport-McMoRan Copper & Gold. Mr. Souki topped the Equilar list and was the only executive to make nine figures last year. He received $141.9 million, which amounts to more than half of Cheniere’s revenue. Mr. Adkerson made $55.3 million, nearly four times his 2012 pay.
Cheniere did not respond to a request for information about Mr. Souki’s compensation. It appears from the company’s proxy statement that his huge share award was for meeting targets connected with the construction of “trains,” or facilities for cooling natural gas sufficiently for it to be exported economically, something of a holy grail for the American gas industry.
While the company has never made a profit, Cheniere is understood to be further along in building its trains than rival companies. Whether this justifies Mr. Souki’s immense bonus is a matter of opinion. Evidently the board thinks it is, but a shareholder lawsuit filed last week, which questions the way stock was allocated to Cheniere executives and led the company to postpone its annual meeting from June until September, shows that others disagree.[emphasis added]
Leslie Moonves of CBS raked in a tidy $65.6 million and the reasoning for his pay indirectly underscores a point I and others have made for some time:
Mr. Gabelli stands out from his asset-management rivals, but Mr. Moonves has plenty of company in his industry. Eight of the 30 most highly paid C.E.O.s run businesses that produce or distribute filmed entertainment or do both, including the four main broadcast television networks.
That’s probably no coincidence. Dana McClintock, a CBS spokesman, pointed to a passage in the company’s proxy statement indicating that senior executives’ pay is based partly on compensation paid at rival entertainment companies and in related industries.[emphasis added]
That little snippet says a lot. It's all about cronyism. As part of the research a few years ago for my book
"The Audacity of Greed", I interviewed Graef "Bud" Crystal. Now semi-retired and living north of San Francisco, Crystal was once one of the country’s premier compensation consultants—the outside fixers that CEOs and their boards bring in to give their robbery of shareholders a veneer of respectability.
Here is what he told me in 2009:
According to Crystal, the original notion of CEO compensation was simple: you pitched your pay level to that of other CEOs. But that notion didn’t last long. "In 1970, one CEO hired me and said, ‘we don’t have a bonus plan and do we need one?’" recalls Crystal. "I did the study and I went back to the CEO and said ‘yes you do need a bonus plan. But we have a problem area. You are making $150,000-a year and the problem is that the $150,000 is equal to the salary and the bonus to what your competitors are paying so we have to cut your pay to $100,000-a-year and then we can put in a bonus.’" Crystal laughs. "It was like a scene from The Exorcist where ice formed on the windows…he started arguing about the findings and he finally said ‘let me say this to you this way: who do you think is paying your bills anyway?’ I replied, ‘If I recall correctly the checks were drawn on the corporate account, not your personal account so the shareholders are paying me, not you.’ The meeting ended quite quickly."
If we have learned anything from the last couple of years, and the last 30 years actually, it is that most CEOs are not particularly smart. They are not particularly gifted. They are not particularly endowed with special skills to manage companies.
What they have learned–-and I suppose this is a skill–-is how to manipulate the system, and that is particularly true when it comes to pay and benefits. The boards of directors are stacked with cronies, friends and business colleagues who ratify whatever pay package is put on the table. So, when Moonves' flack says CBS bases the CEO's pay on what rival companies pay their guy, it's all an inside game that has nothing to do with performance and everything to do with legal corporate corruption.