Joystiq has your stash of criminally complete GTA IV news!

AOL Money & Finance

Why big-time CEOs deserve more, much more

With all the recent news and arguing over CEO pay here, here and here, I thought I'd step up to the plate and inject some reason into the discussion. After reviewing all the data, I can only conclude that since these CEOs are the world's best teachers, they deserve much higher pay and respect. I'll explain.

According to PayScale, the average schoolteacher makes approximately $40,000 per year. In any given year, how many students can they teach? A few hundred? Maybe a few thousand. Let's be generous and say 4,000 students. So, we're talking $10 per student per year.

Since, as investors, you should care only about stock performance, not business performance, we must apply the same pay scale to high profile CEOs who have taught hundreds of millions of shareholders the most important investing lesson of all -- to never trust anything they say, especially when they are so eternally optimistic. Let's also add up the shareholders from all these big struggling companies and do the math; we come to 100 million shareholders (in reality, if we add in all the pension plans and mutual fund investors, the number is many times greater) at $10 per student per year, or $1 billion.

Now, thanks to my handy WSJ CEO scorecard and my previous article dealing with CEO pay, we see the salaries of all CEOS of the biggest companies with the angriest shareholders. Here's the list:Citigroup (NYSE: C) Chuck Prince $140 million

Countrywide Financial (NYSE: CFC) Angelo Mozilo $110 million

Merrill Lynch (NYSE: MER) Stanley O'Neal $91 million

Morgan Stanley (NYSE: MS) John Mack $41 million

Yahoo! (Nasdaq: YHOO) Terry Semel $40 million

Capital One (NYSE: COF) Richard Fairbank $37 million

Sirius Satellite Radio (Nasdaq: SIRI) Mel Karmazin $31 million

Ford Motor (NYSE: F) Alan Mulally $28 million

Advanced Micro Devices (NYSE: AMD) Hector Ruiz $13 million

E*Trade (Nasdaq: ETFC) Mitchell Caplan $11 million

Less than $500 million in total compensation! Using the $10 per student figure, they are underpaid by at least half, but probably more. If we're a little more realistic in saying the average schoolteacher has 1,000 students per year, or $40 per student, that means all these CEOs should be making closer to $4 billion. That would mean they are getting just over 10% of what they're truly worth.

If we don't up their pay soon, we're going to lose our greatest teachers. Investor learning would be dealt a catastrophic blow. What then, CEOs who actually tell the truth, no matter how grim?!?!? I don't even want to contemplate such things. If you believe -- as I do -- that the investors are our future, we must act now to give these CEO teachers what they deserve!

Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund

Related Posts

Reader Comments (Page 1 of 1)

Add your comments

Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.

When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.

To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br> tags.

New Users

Current Users

Symbol Lookup
IndexesChangePrice
DJIA-5.8612,986.80
NASDAQ-4.882,528.85
S&P 500+1.781,425.35

Last updated: May 16, 2008: 04:21 PM

BloggingStocks Exclusives

Hot Stocks

BloggingStocks Featured Video

TheFlyOnTheWall.com Headlines

WalletPop Headlines

AOL Business News

Latest from BloggingBuyouts

Sponsored Links

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

Weblogs, Inc. Network