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.
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.
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