An investor advisory firm has deemed Sprint Nextel Corp executives the most overpaid in corporate America, with top managers awarded pay valued at nearly $74 million last year when the company struggled.
The mobile communications service provider had the worst 2007 pay-for-performance rating among the Standard & Poor's 500 index of large companies, Glass Lewis & Co said in a study released this week.
Glass Lewis specializes in making recommendations to investors on how to vote proxy ballots.
Sprint hired a new CEO late last year as it grappled with customer defections. The company lost $29 billion in the year from continuing operations, largely from a huge goodwill write-off and shares fell 30 percent. The 2007 compensation figures Glass Lewis tallied include pay for both Sprint's former and current CEOs, which boosted the overall amount.
"It's very important to consider that 2007 was a highly unusual year because of compensation that was paid to an exiting CEO, as well as sign-on compensation paid to a new CEO," Sprint spokesman James Fisher said. "We had significant other severance charges for executive changes during the year."
He said the company's executive compensation structure "is highly focused on pay for performance."
Other large companies on the "Overpaid 25" list include home builder KB Home, automakers Ford Motor Co and General Motors Corp and media company CBS Corp. Stocks on the list fell, on average, almost 33 percent during the companies' 2007 fiscal years, Glass Lewis said.
Representatives from KB Home, Ford and GM were not immediately available. A CBS spokesman declined to comment.
Compensation packages for the most highly paid U.S. executives "have been so over-the-top that they have skewed the standards for what's reasonable," Glass Lewis said in the report.
Pay is high at many companies even when performance is mediocre or dismal, it said.
The pay-for-performance rankings are based on a formula that compares a company's pay practices for its top executives with business performance against its peers, Glass Lewis said. The formula looks at compensation including cash pay, restricted stock and stock options, which in some cases could currently have no value based on current stock prices.
At Sprint, the company picked new CEO Dan Hesse in December 2007 to replace Gary Forsee, who resigned two months earlier. Forsee received about $22.4 million in total compensation last year, while Hesse got total compensation valued at about $28.3 million, according to Glass Lewis' calculations.
The rest of the nearly $74 million in total compensation cited by Glass Lewis went to a group of other top members of the company's management team, Glass Lewis said.
Executive pay has become a major election-year issue as politicians rail against big payouts at companies hit hard by the Wall Street meltdown. After a public outcry, the $700 billion bank bailout was altered to include some restrictions on pay packages at companies participating in the rescue.
Financial firms Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc, Washington Mutual Inc and Citigroup Inc were not among the worst offenders in terms of pay for performance, but all earned "deficient" grades, Glass Lewis said in its report.
It said Bear Stearns, which has been acquired by JPMorgan Chase & Co, had a deficient grade in both 2005 and 2006, but collapsed before it could be reviewed this year.
Glass Lewis also rated companies with the best 2007 pay-for-performance scores, which it said included Apple Inc and Amazon.com Inc.