Highest Paid CEOs In U.S. Are Either Fined Or Fired [STUDY]

Highest Paid CEOs In U.S. Are Either Fined Or Fired [STUDY]

A few months ago, an AFL-CIO survey showed that the highest paid CEOs in the United States received 354 higher pay in 2012, compared to an average American worker. Now a study by the Institute for Policy Studies has raised questions about whether the highest paid CEOs deserve those hefty paychecks, reports Nadia Damouni of Reuters.

Highest Paid CEOs In U.S. Are Either Fined Or Fired [STUDY]

Track record of highest paid CEOs

A report released Wednesday shows that more than 40% of the highest paid CEOs in the U.S. over the past two decades had to go through scenarios not expected from them. They received government bailouts, paid fraud-related charges or were fired due to poor performance. Findings of the study prove that a premium pay package for elite talent doesn’t always yield good returns. Eight percent of executives that were fired received an average of $48 million pay. Among those fined, 8% had to pay more than $100 million to regulators.

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The Institute for Policy Studies looked at the track record of 25 highest paid CEOs for every year of the past two decades. The list had 241 executives because many CEOs appeared on the list for many years. Almost all the leading financial institutions received government bailouts during the 2008 financial crisis.

Some highest paid CEOs gone bad

The report cited examples of Enron Corp. and Lehman Brothers. Kenneth Lay was the chief of Enron Corp. and appeared on the top 25 list for four consecutive years. But the world’s largest energy trader at the time collapsed after an accounting fraud in 2001. In 2006, Kenneth Lay was found guilty on 10 counts of fraud and conspiracy. He faced imprisonment for life, and soon died of a heart attack.

Lehman Brothers CEO Dick Fuld was at the helm when it collapsed in 2008. Dick Fuld received compensation of about $466.3 million between 2001 and 2007, according to the report. However, there are certain executives who deserve big compensation. For example, McKesson Corporation (NYSE:MCK) CEO John Hammergren. He has been among the highest paid CEOs in the United States, but he has taken McKesson Corporation to heights the drug distributor has never seen before. Well deserved!

With the Dodd-Frank Act, the government has taken some strict measures to make pay levels more rational. The Act requires financial firms to disclose the ratio of their CEO’s and average employee compensation. However, regulators are yet to finalize certain mandates.

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