Corporate boards were under the gun last year to change the way chief executives were paid--rightly so, given the scandals. The trend was to hand out fewer stock options and more cash and outright stock grants.
But no matter how the compensation is configured, the question remains: Which bosses delivered the best return to stockholders while taking home a reasonable paycheck? That's the focus of our annual scorecard on compensation.
In his second consecutive year as number one boss: Amazon.com's Jeff Bezos, who has delivered a 58 percent annual return to shareholders since taking his company public in 1997.
For our pay-versus-performance rankings we combed our database for executives with six years of tenure as chief executive and a six-year pay history. We came up with 194 bosses who fit the bill. We rank them four ways. The first is by six-year stock performance (including dividends) relative to a company's industry peers. Second and third are the stock performance during the chief's tenure and performance relative to the S&P 500 over the same period. The final measure is total pay over the six years -- pay being defined to include cash realized from the exercise of stock options. We combined these four rankings to create a bang-for-the-buck score.
The ten best bosses on this scorecard are listed, as are five of the worst. To see how the rest of the chief executives fared, click here.
The median six-year pay for this group came to $4.1 million a year, while the median six-year return to shareholders was an annualized 8 percent. In a quick comparison you can easily see how Bezos was number one, with an annual average pay of $82,000 and a 34 percent return.
Our worst chief executive, Richard Manoogian of Masco Corp., checked in with an average annual paycheck of $13 million and a 2 percent annual return to shareholders. Click here for a profile Thomas P. MacMahon of Laboratory Corp. of America, who has given shareholders a solid 42 percent annualized return since 1998. And we look at one of the worst, Sidney Taurel of Eli Lilly. This year we also study pay for board members and conjure the ideal pay package.
For a list of the 2003 paychecks of 500 chief executives of America's biggest companies click here.