CBS overpaid Moonves $28 million, says study of CEO pay
Pay expert Graef Crystal, a former adviser to Coca-Cola Co. and American Express Co., has concluded that pay for performance is a fiction.
In a study for Bloomberg News, Crystal examined the compensation of 271 chief executive officers and found the average slipped 4.7 percent last year to $9.95 million, with extremes ranging from $43.2 million for CBS Corp.’s Leslie Moonves to $245,322 for Google Inc.’s Eric Schmidt.
Using formulas he developed over 30 years in the business, Crystal crunched the numbers to see whether higher shareholder returns, the gold standard of performance for investors, led to higher pay, and vice versa. No matter how he sliced the data, the answer was no.
“The return explained none of the variations,” said Crystal, 76, in a telephone interview from his home in Las Vegas. “Simply put, companies don’t pay for performance.”
If CEOs were paid according to shareholder return, Moonves would take a $28 million pay cut under a model that Crystal developed. Schmidt would get more than a $17 million raise.