CEOs Are Paid Fortunes Just to Be Average

meyerVerizon’s purchase of Yahoo! for $4.83 billion, while an interesting exercise in combining content, networks and mobile services, highlights the broken norms for paying executives of U.S. corporations.

The short version is that issuing and repricing of stock options compensates executives for bull markets rather than their own performance is absurd.

When the deal is complete, Yahoo Chief Executive Officer Marissa Mayer will walk away with more than $200 million for doing little more than keeping the seat warm for the past four years. Or consider the billion dollars Jack Welch was paid for being brilliant enough to start as General Electric’s CEO when the bull market began in 1982, and then leaving in 2000 when the bull market ended. It didn’t hurt either that he cashed in his stock options just before a huge earnings scandal blew up, revealing how the numbers had been massaged for years. The accounting fraud led to a Securities and Exchange Commission settlement related to hedge accounting and revenue recognition and other disclosures.

Read more at: Bloomberg View.