Facebook CEO paid record US$2.2 bil; “In the more than ten years that GMI has been publishing this report, I’ve never seen a top ten highest paid list that loomed this large”

October 25, 2013 Leave a comment

Facebook CEO paid record US$2.2 bil.: survey

AFP
October 25, 2013, 12:27 am TWN

WASHINGTON — Facebook chief Mark Zuckerberg set a new record for corporate compensation in 2012 with a package worth more than US$2.278 billion, according to a survey by a corporate governance firm. The report by GMI Ratings showed Zuckerberg’s salary of US$503,000 and bonus of US$266,000 were eclipsed by stock options worth some US$2.27 billion. This was the first year the survey found any chief executive collected more than US$1 billion, according to the GMI report released Tuesday.One other CEO’s compensation also topped US$1 billion in 2012, energy giant Kinder Morgan’s Richard Kinder, paid a salary of US$1 and given stock worth more than US$1.1 billion.

Those two overshadowed other CEOs, with the third-highest paid being Sirius XM Radio’s Mel Karmazin at US$255 million, followed by Liberty Media’s Gregory Maffei (US$254 million) and Apple’s Tim Cook (US$143 million).

Maffei also collected US$136 million for his role of CEO at Liberty Interactive Corp, the seventh highest on the list. Putting those two together would make him the third highest-paid with US$390 million.

In the survey of 2,259 North American publicly traded companies, GMI said pay increased a median of 8.47 percent. For the companies in the Standard and Poor’s 500 index, compensation rose 19.65 percent at the median.

“In the more than ten years that GMI has been publishing this report, I’ve never seen a top ten highest paid list that loomed this large,” said Greg Ruel, author of the report.

“While the companies in this year’s list have performed well over the past three and five year periods in terms of shareholder return, generally speaking, it’s the sheer size and volume of equity awards granted to these top executives that catapults their total compensation to astronomical levels.”

The massive compensation packages are generally due to stock awards, often in the form of options which allow a CEO to buy shares at a fixed price and cash in on gains.

GMI said Zuckerberg exercised 60 million stock options, granted in 2005 and fully vested by 2010, at a strike price of just six cents.

When Facebook went public in May 2012, Zuckerberg’s worth vaulted by more than US$2.7 billion dollars on the difference.

“Lest anyone think these are merely paper profits, readers may recall that Mr. Zuckerberg immediately liquidated more than US$1 billion worth of shares at the company’s IPO,” the GMI report said.

“The second largest form of compensation for Mr. Zuckerberg was perquisites totaling about US$1.2 million, including personal use of company aircraft during 2012 for him and guests as well as security costs.”

GMI noted that while stock options are intended to align the interests of top executives with shareholders, “the unintended consequence of these grants is often windfall profits that come from small share price increases.”

The others in the top 10 list were Dick’s Sporting Goods’s CEO Edward Stack, paid US$142 million, Starbucks’ Howard Schultz (US$117 million), Salesforce’s Marc Benioff (US$109 million) and Verisk Analytics’ Frank Coyne (US$100 million).

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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