Executive compensation and the concentration of wealth

Title:B&D CEO's big pay isn't unusual -- nor is critics' ire
Source: MSNBC
Date: March 21, 2004


From the article:

At Towson-based power tool giant Black & Decker, president and CEO Nolan D. Archibald's salary rose 8 percent in 2003 --to $1.375 million -- while his bonus stayed flat at $2.75 million. He also received an additional $7.28 million for the company's three-year performance, and options for 300,000 shares of stock.

Also:

At troubled Allegheny Energy (www. alleghenyenergy.com), CEO Paul J. Evanson made $467,308 in salary and $787,500 in bonus in his first six months on the job. He received a $6.3 million 'make-whole' payment for joining the company, which included moving expenses.

Former CEO Alan J. Noia, who retired May 1, made $255,385 in salary last year. Additionally, his severance package provided for a stipend of $133,000 a month for 30 months, or nearly $4 million.

Why does the article call Allegheny Energy "troubled"? You find this page on the Allegheny web site, which says:

"For the fourth quarter of 2003, Allegheny reported a consolidated net loss of $13.7 million, or $0.11 per share, compared to a consolidated net loss of $281.8 million, or $2.23 per share, for the fourth quarter of 2002. For the year ended 2003, Allegheny reported a consolidated net loss of $355.0 million, or $2.80 per share, compared to a consolidated net loss of $632.7 million, or $5.04 per share, for the same period in 2002.

So the company has lost approximately a billion dollars over the last two years. In 2002 it fired 600 people -- 10% of its employees [ref]. But the retiring CEO gets a $4 million severance package, and the incoming CEO gets over $7 million. That is the concentration of wealth at work.