CEO Pay Update

CEO PAY UPDATE….Charles Munger, Warren Buffett’s partner at Berkshire Hathaway, talks to the LA Times about the insane levels of CEO compensation these days:

What makes CEO pay so difficult is that only a few of the people who are earning these huge amounts are actually worth it….I like the idea of high pay for people who are really worth it. The problem is that most of them are not. Every mediocre employee who rises through the ranks to become CEO thinks he should retire rich. It’s crazy.

Do you think this might be what Munger is talking about?

Embattled Home Depot Chief Executive Robert L. Nardelli, under fire from stockholders for earning hundreds of millions at the same time the company’s stock fell and market share dropped, resigned suddenly today and will walk away with a severance package of $210 million, the company announced….During his tenure, Nardelli earned $240 million in salary, bonuses and stock options.

….During his leadership of the nation’s second largest retail chain after Wal-Mart, Home Depot lost market share to home-improvement rival Lowe’s Cos. and its stock price declined almost 8 percent.

Let’s get out our calculators. $450 million for six years of service comes to….about $75 million per year. And this is for reducing Home Depot’s value and losing market share to its main rival.

I wonder what Nardelli would have been paid if he had actually increased Home Depot’s value? Would there be enough money in the world?