Many CEOs played the market like a Ponzi scheme. They bullishly boosted their company stock in public and cashed out quietly before the pyramid collapsed, leaving others to take the fall.

Take David Rickey, CEO of Applied Micro Circuits. Since 1999, reports the New York Times, he sold more than 99 percent of his stock, making $170 million. But on March 2, with the stock falling, he repeated on CNBC, "I dare you not to own my stock." As of April 6, Applied Micro stock was down 81 percent over the past year.

The average CEO of a major corporation earned $13.1 million in 2000, including salary, bonus and other compensation such as exercised stock options, according to Business Week's new survey of executive pay. That's nearly $36,000 every day of the year.

By contrast, the salaries of senior executives at Britain's top 100 companies averaged around $1 million.

Citigroup CEO Sanford Weill and former co-CEO John Reed hold the top two spots on the Business Week list. Together in 2000, they raked in $518 million--about a million bucks a day each, not including weekends.

They were followed by the CEOs of AOL Time Warner ($163.8 million), Cisco Systems ($157.3 million), Cendant ($136.7 million), Tyco International ($125.3 million), General Electric ($122.6 million), Inktomi ($107.6 million), JDS Uniphase ($106.9 million) and CMGI ($103.7 million).

If you bet the house on those companies, you're in trouble. As of April 6, 2001, the one-year shareholder return for Citigroup was a negative 2 percent, AOL Time Warner was down 43 percent, Cisco Systems 82 percent, Cendant 19 percent, Tyco International 13 percent, General Electric 21 percent, Inktomi 98 percent, JDS Uniphase 88 percent and CMGI down 98 percent.

CEOs didn't always earn as much as small countries. In 1980, CEOs made 45 times the pay of production and nonsupervisory workers. By 1990, the CEO-worker pay gap had doubled, with CEOs making 96 times as much. Last year, CEOs made 458 times as much as production and nonsupervisory workers.

While workers' 2000 pay was lower than it was in 1980, adjusting for inflation, CEO pay was ten times higher. In 1980, full-time production and nonsupervisory workers made $28,950 on average and CEOs made $1.3 million (in 2000 dollars). Last year, workers made $28,579 while CEOs made $13.1 million.

Forget pay for performance. For example, Walt Disney Co. CEO Michael Eisner received, says Business Week, "a salary increase, 2 million stock options in Disney Internet Group valued at $37.7 million and an $11.5 million bonus--after three years in which net income fell by more than half from $1.9 billion in 1997 to $920 million." Eisner's total 2000 compensation was $72.8 million, a big bite out of Disney's net income.

Most CEO pay leaders underperformed the market going up, and have underperformed it going down. According to a new report by the Boston-based United for a Fair Economy, "If you had invested $10,000 in Walt Disney stock on December 31, 1993, the year CEO Michael Eisner topped Business Week's highest-paid list, held the stock for one year, then sold it to buy the stock in next year's pay leader and so on, by the end of 1999, your $10,000 investment would have eroded to just $3,585. A similar $10,000 investment made in the S&P 500 over the same period would have grown to $32,301."

If you had invested $1,000 at the end of 1999 in each of the ten companies with the highest-paid CEOs, by the end of 2000 your investment would have lost nearly $1,000 more than if you had invested in the S&P 500.

"While shareholders got hammered, many compensation committees scrambled to cushion their chief executives from feeling any pain," says Business Week. They granted massive new stock options and outright stock grants, wrote off corporate loans and piled on cash and perks.

CEOs took an outrageous share of rising company fortunes and are padding themselves in the downturn at the expense of workers and shareholders--many of them with modest stock holdings they count on for retirement.

Congress shouldn't reward CEO greed with a big tax cut.

Holly Sklar is coauthor of "Shifting Fortunes: The Perils of the Growing American Wealth Gap" and a consultant to United for a Fair Economy. She can be reached at hsklar@aol.com.

(c) By Holly Sklar
Knight-Ridder/Tribune News Service

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