This past year, 2007, was a tough one for many companies and their CEOs. Certain industries—in particular, financial services, real estate and retail—have been hit hard by economic wounds—some self-inflicted, others the result of debilitating macroeconomic trends.
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But one group of companies that didn’t have too bad a year was high-tech vendors. For starters, results of the AeA’s report on the industry showed that high-tech added nearly 100,000 jobs in 2007, unemployment rates for many high-tech jobs were below 2 percent last year and that the average tech industry wage was 87 percent higher than the average private-sector wage.
Recent financial data, filed by publicly traded high-tech companies, reveals that those situated in the executive suites at some of the leading vendors also had a very good year.
At the top of the list is Oracle‘s bold and brash leader, Larry Ellison. He took home $61 million in total compensation in 2007, which was a 100 percent increase from his 2006 total compensation.
The compensation data on the CEOs comes from a recent article in The New York Times that offered accounting breakdowns and comparative analysis of chief executive pay at 200 companies with revenues of at least $6.5 billion. (The data was gathered by compensation researcher Equilar.)
The theme of the article was that in this tough economic climate and new era of more accountability and transparency for CEO compensation, companies were still paying their CEOs more (using “discretionary bonuses”) even as the relative performance of the CEOs’ companies was tanking.
In other words, summed up the Times report, “true links between pay and performance remained scarce.”
High-Tech’s High Flyers
Generally speaking, however, that was not the case with the high-tech companies highlighted in the article. While Ellison’s pay did rise 100 percent from the year previous, Oracle’s stock price rose 36 percent, and its net income rose 26 percent (revenues were nearly $18 billion). (Ellison’s total value of equity holdings in Oracle is now a mind-boggling $24 billion.)
Other high-tech execs did well personally as their companies prospered. IBM chief Samuel Palmisano earned nearly $21 million in total compensation last year (an increase of 11 percent from 2006), while IBM’s stock price rose 13 percent in value, and Big Blue gained 11 percent in net income on revenues of $99 billion. (Palmisano’s total value of equity holdings in IBM is now worth $74 million.)
Cisco Chairman and CEO John Chambers’ total compensation rose 29 percent to $13 million in 2007, as Cisco’s net income increased 31 percent from the year previous. Cisco shareholders did well too: its stock price increased by 62 percent, which also brought Chambers’ total value of equity holdings to $272 million. EMC‘s Joseph Tucci experienced similar success: His total compensation rose 87 percent (to $4.7 million) as EMC’s net income rose 36 percent. EMC shareholders saw a 40 percent increase in the stock’s value. (Tucci’s total value of equity holdings is almost $80 million now.)
Other high-tech CEOs, however, saw a decrease in their overall total compensation even as their companies and stock prices fared well in 2007. For example, HP‘s chief executive, Mark Hurd, saw his total compensation drop 8 percent to $26 million, while HP’s net income gained 17 percent from 2006 (on revenues of $104 billion). In addition, HP’s stock price rose 34 percent.
Executives experiencing a similar year-over-year pay cut in total compensation while their companies realized an increase in shareholder value included Texas Instruments’ Richard Templeton (17 percent cut in overall pay) and Sun Microsystems’ Jonathan Schwartz (64 percent cut in overall pay).
Near the very bottom of the list were the names of three industry titans and their “meager” 2007 compensation. No. 194 on the list of 200 was Microsoft CEO Steven Ballmer, who took home a paltry $1.3 million (which was actually an increase of 31 percent from the year before), even as Microsoft’s net income increased 12 percent (on revenues of $51 billion) and its shareholders saw a 28 percent increase of its stock price.
At No. 197 was Google Chairman and CEO Eric Schmidt, who earned just $480,561 in total compensation last year. Net income at the search giant rose 37 percent on revenues of more than $16 billion and Google’s stock rose 50 percent.
And last (but certainly not least) on the list was Apple CEO Steven Jobs, who took home a whopping $1 last year. Apple, of course, had a good year: Net income rose 76 percent (on revenues of $24 billion), and shareholder value increased 99 percent.
Don’t worry too much about the three executives, however. Just because they didn’t take home much last year, doesn’t mean they aren’t obscenely rich: Ballmer’s total value of his equity holdings is worth $12 billion, Schmidt’s at $6.6 billion, and Jobs’ at more than $851 million.