When Stocks Fall, CEOs Profit

By now, you know the story: The bursting of the real estate bubble last summer caused credit markets to seize up and destroyed hundreds of billions of dollars of shareholder value. [USA Today]

Americans, reeling at the plummeting values of their homes, felt substantially poorer as America toed the recession line.

So everyone�s feeling the heat, right? Wrong. As companies� stocks nosedive, industry CEOs are continuing to pull in massive salaries and bonuses.

Take, for example, the company KB Home. The firm had, by all accounts, a horrible year. It lost �$929 million on revenue of $6.4 billion. Shareholders also suffered from the home builder�s anemic performance, as the company�s share price dropped from $53 last February to the high teens by November.�

KB�s CEO, however, continues to roll in it. Jeffrey Mezger (the CEO) was awarded a $6 million cash bonus for 2007, on top of his $1 million base salary.

At Washington Mutual, a leading mortgage provider that went from a $3.6 billion profit two years ago to a $67 million loss last year, CEO Kerry Killinger took a 21 percent pay cut.

Sound harsh? It�s not. Killinger was paid $18.1 million in 2006, $14.4 million in 2007.

A USA TODAY review of CEO pay for 50 of the largest companies in the Standard & Poor�s 500 showed the median compensation last year was $15.7 million.

In other words: Despite the economic downturn, CEOs fared far better than their investors.

But wait, you ask, heads rolled in corporate offices this year, right? Yes. But that doesn�t mean much.

Take, for example, Chuck Prince, the Citigroup CEO who was told to pack his knives and leave in November. On his way out the door, Citi�s board gave Prince a bonus of $10 million. He was also allowed to keep $28 million worth of unvested restricted stock and options, and was granted $1.5 million in annual perks.

�It�s outrageous for CEOs to take risks that hurt shareholders and walk away with enough to never have to work again,� says Robert Mittelstaedt, dean of the W.P. Carey School of Business at Arizona State University.

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