Congratulations, Larry Ellison, you're No. 1!
Forbes, as it does every year, has released its list of top executive salaries. In the overall list as well as the technology category, Ellison, the Oracle chief exec and billionaire yachtsman, was tops with total 2007 compensation at $192.9 million.
2007 was a very good year for Larry Ellison.
It's another big win for Ellison, who recently won a $3 million tax break on his $200 million estate in swanky Woodside, Calif. Ellison's lawyers successfully argued that the house suffered from "significant functional obsolescence" because it turns out there's a limited market for 23-acre estates built to look like 16th century Japanese summer palaces.
There were a few surprises as well as the usual cast of well-compensated characters. Second on the tech list was Nabeel Gareeb of MEMC Electronic Materials, a little-known silicon wafer manufacturing company in Missouri. Rounding out the top 10 were Cisco's John Chambers, Hewlett-Packard's Mark Hurd, Nividia's Jen-Hsun Huang, IBM's Sam Palmisano, Corning's Wendell Weeks, EMC's Joe Tucci, Agilent's William Sullivan, and Intel's Paul Otellini.
Just missing the top 10 were Apple's Steve Jobs at No. 11 and Sun's Jonathan Schwartz at No. 12. Being named on a tech exec compensation list is probably the last thing Schwartz needed Friday, given that Sun's share price dropped more than 22 percent in one day of trading, thanks to very disappointing earnings news.
As a rule, executives (particularly the ones at under-performing companies) hate making these lists, because of the inevitable "are shareholders really getting their money's worth?" questions they engender. I know this firsthand: I used to have the pleasure of calling people to let them know they made the grade for the top executive compensation list at BusinessWeek. Once, a well-known Silicon Valley mogul gave me an earful off the record. He said something along the lines of: "This is bull***t. And you know it's bull***t. And you can tell your boss it's bull***t."
Why was he so angry? The methodology for measuring executive compensation tends to vary from publication to publication. That makes some sense, of course, since the methodology (or rationale) for lavishing millions on executives tends to vary from company to company. Forbes' list relies on "calculating the overall compensation for the past year for executives, factoring in salary, cash bonuses, vested stock grants, stock gains and exercised stock options," according to the magazine.
This methodology can lead to wild fluctuations from year to year. Jobs topped the 2006 list with $646 million thanks to a stock package. But he slid to 11 in the 2007 with $14.6 million in annual compensation.
Take what you will from the Forbes list: You can argue some of the execs earned their money, you can say many of them didn't. But all of them probably make far more money than you and me.
Over the years, I've noticed something lots of techies have in common--they like things to be black-and-white. Sorry if that offends you, but in my experience, it's true.
Unfortunately, the real world is gray. Like it or not, living and thriving in a gray world, especially a gray workplace, involves negotiating. None of us are born with negotiating skills. We have to learn them. This will help.
Here are five things you need to know to negotiate effectively. They'll help you in all your work-related relationships - with peers, managers, subordinates, customers, vendors, everyone. They'll help you to negotiate better compensation packages, promotions, and even exit packages.
Who knows, they may even help to improve your personal and personal business relationships. After all, so much of family and business life involves negotiating. ... Read More
Editors' note: This blog initially misstated the price per share of former CEO Kevin Rollins' stock options had he been able to exercise them. The correct price is $28.67. The story should also have included that Rollins' stock options had vested prior to his leaving the company.
Kevin Rollins supposedly walked away from Dell with a measly $5 million payout. Turns out Dell's former CEO is pocketing nearly 10 times that amount.
Dell said in an 8K report filed on Wednesday that once the company finally files an annual report, it intends to pay Rollins $48.5 million. The money comes in the form of a payment in lieu of stock options, the company said in the report.
Rollins, who resigned on Jan. 31, had accumulated 7.3 million shares of Dell stock options since arriving in Round Rock, Texas, in 1995. According to the company, he could exercise his vested options 90 days after he left the company, which came on Aug. 2. Dell couldn't allow him to cash out because the company is under investigation by the Securities and Exchange Commission and is trying to sort out questions over its accounting.
Instead, Dell entered into an agreement to pay Rollins the $48.5 million, which represents the value of his stock options if he had been able to exercise at the price of $28.67, according to David Frink, a Dell spokesman. The price Dell agreed to pay was the average price that Dell shares closed at the week before Rollins' stock options expired.
Dell compensated 400 other current and former employees whose stock was vested and had expired in the same way, Frink said.
When Rollins stepped down, some publications expressed sympathy over his payout. The Register called it a "slap in the face" considering that Hewlett-Packard sent former CEO Carly Fiorina off with $21 million.
Dell's stock price grew after Rollins initially took over in 2004. After topping out at about $42 in Jan. 2005, the stock started a descent and the price has remained below $30 since April 2006.
On Rollins' watch, Dell also came under SEC scrutiny and lost market share to HP.
It might be hard for anyone to feel sorry for Rollins now.
The Seattle-based company operates a Web site where anyone can supply details about their compensation and the service will tell them how it stacks up against peers.
Employees have typically dug up info on pay scales by asking friends employed in the same field--an inexact and frustratingly limited amount of information. Who knows if Joe or Sue is telling the truth?
"This throws light on information that has always been hard to find," Michel Floyd, chief technical officer at Knowledge Networks, said during the AlwaysOn Stanford Summit here on Wednesday. Floyd was in the audience during a presentation by PayScale CEO Mike Metzger. "This is information that businesses are going to want as much as individuals," Floyd said.
The Seattle-based service, which last month announced it had received a $10 million round of funding, is free to individuals. The company makes money by charging for premium services. For instance, after completing a report about myself (that lasted about 5 minutes) and being shown where my pay and benefits rank among journalists in similar positions, I was given the option of obtaining more detailed data for $20.
Based on the quality of information I received from the free search, I'm tempted to buy the premium package. In addition to informing me about my field, the service provided fun facts, such as average compensation of software engineers who graduated from the University of Southern California, my alma mater.
I could also create a set of scenarios or "what ifs" that could help me learn how much I might be making with an MBA or if I lived in New York.
Most of PayScale's revenue comes from employers. Companies pay $100 for a single report or $350 for five. The 5-year-old service also offers annual subscriptions.
But is PayScale's information any better than querying friends?
People hate sharing information about how much they earn but are more likely to share if their identities are kept anonymous and if they get something in return, according to Metzger.
"There isn't any motivation not to tell the truth," Metzger said. "People are motivated to give accurate information so they can get accurate information back. We also do a lot of validation tests and flag answers that look iffy."
PayScale has accumulated 8 million profiles, and the number doubles annually. As the company accumulates data, the less a phony response is going to matter, Metzger said. And PayScale isn't just for executives. About 40 percent of visitors are hourly workers.
"We see a broad range of positions," he said. " We get nurses, attorneys, coal miners, truck drivers, rabbis and phlebotomists."
A few proxy advisory firms are urging shareholders to protest Yahoo Chief Executive Terry Semel's $71 million salary package by voting against re-election of three members of the board at Tuesday's annual meeting, according to the San Jose Mercury News.
Yahoo is struggling to get its ship back on course. After a company reorganization late last year and disappointing first-quarter results, some analysts have speculated that this year may be Semel's last. Last year, the company's revenue growth slowed, its net income slid 60 percent in the fourth quarter compared with the same period in 2005, and its stock fell 35 percent in the face of formidable competition from Google and Microsoft jumping into the search advertising fray.
Meanwhile, Semel is one of the highest paid CEOs in the country, complains Institutional Shareholder Services. Semel's pay is more than 900 percent above the median his counterparts make at companies like eBay, says Proxy Governance.
"He's tremendously overpaid," compensation expert Graef Crystal says bluntly. "He's off the map."
Yahoo spokeswoman Helena Maus told the newspaper: "Under Terry's leadership, the company has a clear strategy to create stockholder value, and the company is well-positioned to capitalize on the substantial growth opportunities ahead for the Internet."
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