Something is wrong with this picture: The exorbitant salaries of CEOs—who make 354 times the average worker—are often justified by their so-called value and skill, yet 40 percent of America’s top 25 CEOs have either been fined, bailed-out, or fired, DailyMail reports.
Companies that pay top dollar for their chief executive officers often don’t get the expected return, according to a recent study conducted by the Institute of Policy Studies. The report analyzed the highest-paid CEOs over a span of 20 years. Researchers discovered that almost half exhibited poor performance—and paid a price for it, too.
Among the 25 CEOs, eight percent were fired but all received “golden parachutes”—financial compensation guaranteed to an executive in the event of dismissal—averaging a whopping $48 million! And of those who were fined, only one CEO paid the penalty out-of-pocket; others cost their firms over $100 million, Daily Mail adds.
One of the most scandalous head honchos on the list is Richard Fuld, notoriously known for causing Lehman Brothers to crumble in 2008. He pocketed an astronomical $468 million during his tenure. However, even more nefarious than Fuld is Kenneth Lay, former CEO of Enron:
While handsomely reaping the benefits of a top 25 CEO, Lay oversaw the greatest corporate bankruptcy in American history, prior to Lehman. Enron’s collapse put thousands out of work, wiped out the pensions of many life-long employees and resulted in a Houston federal jury finding the chief executive guilty in 10 counts of securities fraud and conspiracy. Facing the rest of his life in prison, according to the New York Times, Lay died of a heart attack before his sentencing.
The report presents one way to curve these problems; firstly, researchers suggest companies should reel in exorbitant executive compensation. As MN has reported before, the SEC plans to force companies to reveal their CEO-to-worker pay ratio, in accordance of the 2010 Dodd-Frank Laws. Secondly, the investigators advises the IRS to close the “loophole that allows companies to deduct executive compensation from payroll taxes, which the report calls a ‘outrageous,’” DailyMail concludes.