Many defenders of extravagant CEO pay say it is justified because their expertise results in shareholder value.  On CBNC today, they discussed the issue and gave us these comparison between CEO pay last year and what the shareholder return was last year

Company CEO compensation Stock Performance
AT&T $15 mil Down 34%
Verizon $20,2 mil Down 26%
Macy’s $14.8 mil Down 66%
JC Penney $14.9 mil Down 57%
Met Life $12 mil. Down 45%
Dow Chemical $19.3 mil Down 53%
Martha Stewart $6.9 mil. Down 70%
Sprint $14.2 mil. Down 87%

And before you say, “Well, the stock market was down overall,”  let me point out that the S&P last year fell 39.3%.  Which means that only two of the eight companies above beat the average.  What shareholder value?


UPDATE:  Listen to this discussion on CEO pay later today.  Note that the hyperactive Jim Cramer and faux journalist Erin Burnett touch on two points: 

1.  Compensation committees on boards of directors can’t really evaluate what the CEO should be paid and therefore relies on compensation consultants.

2.  Pay is forced upwards by the “comparison” approach; it just bids up the prices.