A trustee of the investment management firm Pacific Investment Management Co. (Pimco) is speaking out about the disconnect between the CEO’s pay and his company’s success, blasting chief executive Bill Gross for taking home a $200 million salary despite his “mediocre” work.
“You could hire 2,000 schoolteachers for that money,” former financial executive and one of five Pimco trustees William J. Popejoy told the Los Angeles Times. “I don’t know what Bill should be paid, but $200 million is not appropriate.”
Popejoy also disagreed with Gross’ management, calling it “bullying, if what I read is true.” He was referring to a Wall Street Journal article that skewered Gross for the strange company culture, which discouraged employees from making conversation and even eye contact with him.
In 2012, the billionaire bond manager’s salary brought his estimated net worth to $2.3 billion. The following year, the firm had its worst-performing year since 1994. In 2011, its core mutual fund did so poorly, lagging behind 70 percent of other investors and experiecing a loss of 1.92 percent, that Gross publicly apologized. It was overtaken as the world’s largest mutual fund in 2013.
The trend is common among big businesses, however: Often, the best-paid CEOs are the same ones to oversee bailouts, get fired, or get caught committing fraud. When Citigroup CEO Vikram Pandit resigned with a $6.7 million payout, he left the company in terrible shape; Hostess paid executives big bonuses at the same time it said it may need to declare bankruptcy; and BP is dragging out a major lawsuit over paying businesses for the 2010 Gulf disaster at the same time it tripled its CEO’s earnings.
CEO pay has skyrocketed over the past four decades, rising at 127 times the rate of average worker pay. Because of Wall Street reform, companies will soon have to disclose just how wide the gap has grown by disclosing what it pays the median worker.