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This is an edited version of comments delivered by LBO editor Doug Henwood on his July 25, 2002, radio show. The show is "Behind the News," Thursdays, 5-6 PM eastern U.S. time, on WBAI, 99.5 FM in New York, or on the web.
Bill O'Reilly, host of the O'Reilly Factor on the Fox News Channel, one of the funniest shows on TV (and not always intentionally so), has a feature on every show called "The Most Ridiculous Item of the Day." O'Reilly's politics are largely appalling, but he's entertaining, and I'm going to steal this idea and begin presenting a Most Ridiculous Item of the Week on this show. Here's the premiere.
According to official capitalist ideology, CEOs and other top execs deserve their enormous salaries because they're big risk takers and because they contribute so much to society. It's pretty well established that executive pay actually bears little resemblance to performance - and here's an extreme case. Neal Travis reports in today's New York Post (uh-oh, that's my second citation in less than a minute of a Murdoch media property - I assure you this is entirely accidental) Bob Pittman, who's been squeezed out of a top job at the troubled media giant AOL Time Warner, is going to leave with a $60 million-plus severance deal. Now this is a company whose stock is off more than 80% over the last two years - twice as much as the overall market, and which is now under investigation by the SEC for accounting chicanery. If you get $60 million for being part of a collossal failure, what would the price tag be for success?
But Pittman's parting check is nothing compared to that enjoyed by ex-CEO Gerald Levin, architect of the merger of AOL and Time Warner that is now universally regarded as a disaster. Levin left the company earlier this year with more than $200 million. Nice work if you can get it.
I was thinking about potential guests to discuss the stock market meltdown and the corporate scandals tonight, but I was overcome by an irresistible attack of vanity, and concluded that I could do it better than anyone. So here we go.
First, a measure of the damage. As of Tuesday's closing prices, the most widely used benchmark for stock prices, the Standard and Poor's 500 index, was off 48% from the high it made on March 24, 2000. (The S&P 500 is a broader measure than its more famous cousin, the Dow Jones Industrial Average;