Nonperformance Pay AMD's Jerry Sanders shows how, protestations aside, CEOs do well even if their stockholders do not.

By Graef Crystal
(posted Friday, Nov. 21)

      In recent years, company after company has taken the pay-for-performance pledge. This time, they promise shareholders, the future will be different, no longer will the CEO make tons of money in good times and bad. Oh really? How come, then, when I recently analyzed the compensation of 856 CEOs of mostly middle- and large-sized companies, I found that roughly 98 percent of the variation seemed to have little or nothing to do with how they performed?       The pay for these CEOs ranged from a minuscule $51,000 for Robert Levine of Cabletron Systems to a mammoth $189 million for Michael Eisner of Walt Disney. About 25 percent of the variation in their pay could be explained by differences in company size. But only 2 percent could be explained on the basis of differences in shareholder-return performance (stock-price appreciation plus reinvested dividends).

Links For more on CEO pay in general, check out the Crystal Report Online. Chief Executive magazine named Andy Grove its CEO of the Year for 1997, while the Intel page offers an interview with Grove. James Surowiecki reviewed Inside Intel: Andy Grove and the Rise of the World's Most Powerful Chip Company in Slate. The AMD page includes brief bios for its board of directors, including Jerry Sanders. And the Electronic Frontier Foundation posts an off-color joke featuring Grove, Sanders, and Bill Gates. Graef Crystal, an expert on executive compensation, writes a monthly column on the subject for Slate.

Illustrations by Michael Sloan.