Friday, September 18, 2009
Financial Execs Underpaid? Richard X. Bove
A Limited Survey
Vice President Equity Research Financial Sector
[email protected] 813.909.1111
Methodology and Results
Using data derived from USA Today and Sports Illustrated an attempt was made to compare total compensation in three broad sectors. The 2007 total compensation of CEOs in the financial and non‐financial industries were compared to the 2008 total compensation in sports. The 2007 numbers were used for the executives since it is believed that this represented their top incomes. The top 15 in total compensation were selected in each category. They were then placed in a matrix (see table on next page). The results showed:
The average total compensation of the top 15 sports figures was $40 million per year (median $31 million). The top non‐ financial executives received $39 million on average (median $30 million) and the top 15 financial executives received an average of $30 million (median $21 million).
The following were noted concerning the 45 individuals listed: o
In the top 15, there were 6 sports figures, 5 non‐financial execs, and 4 financial executives.
o
In the middle 15, there were 5 sports figures, 9 non‐financial executives, and 1 financial executive.
o
In the bottom 15, there were 4 sports figures, 1 non‐financial executive, and 10 financial executives.
The two highest paid investment bankers will no longer be employed as CEOs on January 1, 2010.
The traditional banker with the highest pay received $29 million. He was the only traditional banker to earn as much as any of the top 15 sports players.
There was not one woman listed in any category.
Not shown is that the average basketball player in the NBA makes $5 million per year and the average baseball player in MLB makes $3 million. The average employee at Goldman Sachs (GS/$180.91/Buy) is estimated to make $800,000 this year. One might argue that sports leagues are government sponsored oligopolies. As a result of restraining trade in this fashion, government allows sports figures to earn incomes at the peak of American industry. One might also argue that by establishing trade restraints in this sector, government believes that entertainment should be valued more highly than the financial and productive sectors of the economy where restraint of trade is illegal. This information is being provided because government is apparently now seeking to place income restraints on the financial sector, presumably, because it believes that allocating funds to this sector is not as productive for the economy as say being a shooting guard for the Los Angeles Lakers, or a third baseman for the New York Yankees. Nations like China that compete with the United States globally do not seem to have the same incentives built into their systems. That country appears to be placing the greatest incentives on producing low priced products that can be sold globally.
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Friday, September 18, 2009
Financial Execs Underpaid? Total Compenation for the Top 15 Individuals in Three Sectors Comp Millions
Financial
2007
Comp All Other
2007
Comp Sports
$130 - $120
Tiger Woods
2008 $128
$120 - $110 $110 - $100 $100 - $90 $90 - $80
John Thain
$83
$80 - $70 $70 - $60
Les Moonves
$68
Richard Adkerson
$65
Lawrence Ellison
$61
Bob Simpson
$57
Phil Mickelson $60 -$50 Lloyd Blankfein $50 - $40
$54
Kenneth Chenault
$50
John Mack
$41
$40 - $30
Glenn Murphy
LeBron James
$40
Floyd Mayweather
$40
Kobe Bryant
$35
$39 Shaquille O'Neal
$35
Alex Rodriquez
$35
Edward Breen
$34
Ray Irani
$34
Ronald Sargent
$30 Peyton Manning
$30
Derek Jeter
$30
Kevin Garnett
$30 - $20
Jamie Dimon
$29 Lee Scott Miles White
James Cracchiolo
$20 - $10
$62
$31
$29 $29
Richard Meelia
$28
Daniel Hesse
$28
Robert Iger
$28
Alan Lafley
$27 Dale Earnhardt
James Hackett
$27 Allen Iverson
$27
Kevin Durant
$26
Jeff Gordan
$26
Ben Roethlisberger
$25
$27
$23
Richard Fuld
$22
Robert Kelly
$21
Kenneth Lewis
$20
Jay Fishman
$19
Arthur Ryan
$18
Dowd Ritter
$17
Ronald Logue
$17
Richard Fairbank
$17
Dennis Glass
$16
$10 - $0 Average
$30
$39
$40
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Friday, September 18, 2009
Financial Execs Underpaid?
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Friday, September 18, 2009
Financial Execs Underpaid?
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