So the compensation committee tells the CEO what the goals are for him to achieve his performance bonus. The CEO agrees. Deal, right? Not for Las Vegas Sands Corporation. Due to an "improper interpretation" of the contract of Sheldon Adelson, the CEO, he received about $1,000,000 more than he earned under his bonus agreement. Did he give it back? You know the answer. Did the board ask him to give it back? Same answer. How well did the stockholders do? Their investment was down 18% in 2005. Furthermore, because the bonus was not earned according to the terms of the plan, it could not be treated as a deduction for income tax purposes. Who pays for that? The stockholder.
But Las Vegas Sands is not alone in paying a performance bonus to the CEO whether he earned it or not. Halliburton, Assurant, Big Lots and News Corp. also believe in being charitable towards the CEO.
Assurant, an insurance company, based its bonus on earnings that excluded hurricane losses, which is sort of the business they're in - insuring against hurricane losses. Assurant is really a very charitable company; they paid a bonus for complying with Sarbanes-Oxley. Gee, maybe he should have received a bonus for showing up at work every day. At Halliburton, they just about did, when they paid $5,500,000 in bonuses to everyone connected with settling an absestos case, which, to me, seems like a regular part of the job.
The compensation committee of Big Lots believes that their executives' compensation is below average. Ergo, they deserve a bonus. Who cares whether the company did poorly or the stock went nowhere last year?
The deal that Peter Chernin, COO of News Corp. has pays him a performance bonus even if earnings fall; in that case, he'd only get something over three million.
No comments:
Post a Comment