3 Overpaid CEOs Raking In Far More Than They Are Worth

In a battle of the overpaid CEOs, Elon Musk recently made fun of Lucid Group (NASDAQ:LCID) CEO Peter Rawlinson for hauling in $379 million in 2022. Most of that was from options and stock awards vested during the year. 

As the Automotive News points out, you won’t be able to detect the superb pay from Lucid’s 2022 proxy. The Summary Compensation Table only shows $596,430 in total compensation. However, page 58 of the proxy reveals that the CEO earned $5.5 million from options exercised and $372.9 million from stock awards. Yet, Rawlinson only trailed one name in 2022.

Nvidia (NASDAQ:NVDA) CEO and co-founder Jen-Hsun Huang checked in at the number one spot. 

Who else was paid a lot more than they were worth in 2022? I’ll pick three names from the Automotive News/Equilar annual list of shame.    

General Motors (GM)

Since the promotion of Mary Barra to CEO of General Motors (NYSE:GM) in January 2014, she simply has not delivered for shareholders. GM stock is down 18% in the decade since her promotion. If you had invested your funds in the S&P 500, you’d be up 144% over the same period. 

For that considerable underperformance, Barra was paid $34.1 million in 2022, putting her in a distant third from Rawlinson. Barra likely earned more than $200 million over the past decade. 

Despite these nice sums, the overall long-term underperformance of GM stock has likely cost the engineer hundreds of millions more that she didn’t earn due to lagging the index. 

Now, it’s almost certain that the United Auto Workers (UAW) will strike. If so, the losses from paused production from a 45-day strike could be as high as $40 billion among Detroit’s three iconic automakers. Some analysts believe that its current share price, down 22% over the past year, has already baked in a strike. So once it’s resolved, shares should push back higher. 

And yet, a decade under Barra suggests that might not be the case. 

Hertz Global Holdings (HTZ)

Hertz Global Holdings (NASDAQ:HTZ) stock is up more than 8% year to date (YTD). However, it’s down nearly 19% over the past year, and 32% since the car rental company relisted in November 2021 after emerging from bankruptcy.   

Hertz’s CEO since February 2022 is Stephen Scherr, a three-decade veteran of Goldman Sachs (NYSE:GS). His compensation in 2022 with Hertz was just under $30 million, putting him in the fifth spot. 

Scherr’s CV includes impressive senior positions at the investment bank. He carried the titles Chief Financial Officer, Chief Operating Officer of the Investment Banking division, and Global Head of the Financing Group. He is certainly qualified to lead Hertz’s transformation. However, except for a stint between 2016 and 2018 as CEO of GS Bank USA, he’d never held that particular title anywhere else. 

As the Financial Times pointed out, Scherr stood to make upwards of $250 million by 2026 if the stock price surged. According to FT, he was issued 12.5 million shares that vest based on its future share price. 

As the Automotive News/Equilar list showed, Scherr was the fifth highest paid CEO of 2022. That’s a significant salary for a company that saw its Q2 2023 adjusted net income fall by 56% to $227 million on $2.44 billion in revenue.      

DuPont de Nemours (DD)

DuPont de Nemours (NYSE:DD) CEO Edward Breen was the eighth highest paid CEO in 2022. His total compensation tipped the scales at $27.1 million, up 14% from 2021. 

Breen’s situation differs slightly from the other two CEOs above. He helped lead the company through a massive $130 billion merger in September 2017 with Dow Chemical. Breen first became a board member of DuPont in February 2015. After the sudden departure of CEO Ellen Kullman in October 2015, he stepped in as interim CEO then was named permanent CEO a month later.

Once the two companies merged, Dow shareholders got one share of DowDuPont for each Dow share. DuPont shareholders got 1.282 shares of DowDuPont for each share of DuPont. then they split the larger business into three pieces. 

The separation into three companies, Dow (NYSE:DOW), Corteeva (NYSE:CTVA), and DuPont, was completed in June 2019. While DuPont was the biggest of three businesses, its market cap has moved sideways since the separation. 

The reality is that Breen has been CEO of DuPont since the separation. Yet, its shares have done nothing while the index gained 56% over the same period. In 2022, Breen was paid highly while delivering little. 

Therefore, activist investors ought to be asking the tough question of what has he done lately. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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CDC advisers recommend updated COVID shots for people 6 months of age and older

Advisers to the Centers for Disease Control and Prevention voted overwhelmingly Tuesday to recommend updated COVID-19 vaccines for people 6 months of age and older.

The 13-to-1 vote comes just one day after the U.S. Food and Drug Administration approved the updated shots from Moderna Inc.
MRNA,
-0.53%
and Pfizer Inc.
PFE,
+0.62%.
The FDA approved single-dose vaccines for people 12 and older and authorized emergency use of new shots for children as young as 6 months.

The recommendations approved by the CDC advisers Tuesday include some key changes from the recommendations that previously applied to the bivalent COVID vaccines. People age 65 and older were recommended to get a second bivalent dose, for example, but the CDC is not currently recommending two doses of the new shot for older adults. The CDC said it will monitor epidemiology and vaccine effectiveness to determine if additional doses are needed. CDC director Dr. Mandy Cohen will make the final decision on recommendations.

The recommendations come as the vaccines are transitioning from federal procurement and distribution to the commercial market. The new shots are expected to have list prices of $110 to $130 per dose. But the Affordable Care Act requires insurers to cover most vaccines recommended by the CDC advisory committee at no cost to plan enrollees, and people with Medicare and Medicaid also have no-cost access to the vaccines. 

The CDC meeting Tuesday addressed some concerns about the accessibility and cost of the vaccines for people without health-insurance coverage. The CDC’s new Bridge Access program will provide free shots to uninsured people within days at retail pharmacies as well as local health centers, the CDC said. The agency had previously said that the free shots might not arrive in retail pharmacies until mid-October. The federal government’s vaccines.gov website will be updated later this week to list Bridge Access program sites, the CDC said.

Roughly 25 million to 30 million U.S. adults do not have health insurance. About 85% of people without coverage live within 5 miles of a Bridge Access program site, according to CDC data.

Under the Bridge Access program, CVS Health Corp.
CVS,
+2.57%
will administer doses in stores and Minute Clinics, the CDC said, and Walgreens Boots Alliance Inc.
WBA,
+1.35%
will offer doses in stores and at off-site events that target areas of low access and uptake. Healthcare-services company eTrueNorth is also working with the program to reach lower-access areas without other coverage under the program, the CDC said.

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T-Mobile to buy up to $3.3 billion in spectrum from Comcast

T-Mobile U.S. Inc.
TMUS,
-0.11%
on Tuesday said that it would buy spectrum from Comcast Corp.
CMCSA,
-0.15%
for between $1.2 billion and $3.3 billion in cash in a license purchase agreement. The telecom giant said it expected the transaction for the spectrum — or the swaths of frequencies that enable mobile communications — to close in the first half of 2028. Shares of T-Mobile were unchanged after hours. Comcast fell 0.2%.

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Nasdaq ends 1% down, leading stocks lower as tech shares slump

U.S. stocks closed lower on Tuesday, with the Nasdaq Composite leading the way down, as Apple’s unveiling of its new iPhone and watch failed to boost appetite for equities. The Dow Jones Industrial Average
DJIA,
-0.05%
shed about 16 points, or about 0.1%, to end near 34,647, while the S&P 500 index
SPX,
-0.57%
closed 0.6% lower and the Nasdaq Composite Index
COMP,
-1.04%
slumped 1%, according to preliminary FactSet data. That was the biggest daily percentage drop in about a week for the Nasdaq. Shares of Apple Inc.
AAPL,
-1.71%
were a focus Tuesday as it rolled out a lineup of new consumer products, including its iPhone Pro Max, which will now start at $1,199 instead of $1,099, while its Pro model’s price stays the same. Investors also remain focused on the inflation data, including the release on Wednesday of the consumer-price index for August, before the U.S. stock market’s open. Apple shares fell 1.9% on Tuesday. Climbing bond yields can pressure high-growth stocks as borrowing costs rise. The benchmark 10-year Treasury yield
TMUBMUSD10Y,
4.286%
edged down 2.4 basis points to 4.263% Tuesday, but was still near its highest level of the year.

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Ad spending for 2024 elections seen reaching record of $10.2 billion

The 2024 U.S. election cycle will spur an estimated $10.2 billion in advertising spending, according to a new report from AdImpact, an ad-tracking company that previously was known as Advertising Analytics. That total would set a new record and represent a 13% increase over the previous record of $9.02 billion set during the 2020 election cycle, AdImpact said.

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WeWork stock more than doubles in 2 days, after closing at a record low

Shares of WeWork Inc.
WE,
+82.76%
rocketed 80.8% on heavy volume in afternoon trading Tuesday, enough to make them the best performers trading on major U.S. exchanges, and have more than doubled in two days. Trading volume spiked to 47.5 million shares, compared with the full-day average over the past 30 days of about 2.4 million shares. The stock’s rally, which would be it’s biggest one-day gain since it started trading under the “WE” ticker on Oct. 21, 2021, comes even though the troubled flexible work space provider has not released any news Tuesday. The company has not immediately responded to a request for comment or information. The stock had rallied 15.9% on Monday — it’s up 109.1% in two days — after plunging 43.9% amid a five-day losing streak to close Sept. 8 at a split-adjusted record low of $2.65. The company’s 1-for-40 reverse stock split took effect at the market open on Sept. 5, which effectively multiplied the stock’s price by 40. Also last week, the company said it will look to renegotiate all of its leases, as its lease liabilities remain too high and “dramatically out of step with current market conditions.” The stock has still plunged 90.3% year to date, while the S&P 500
SPX,
-0.56%
has climbed 16.2%.

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Gold futures end at lowest in 3 weeks

Gold futures declined Tuesday to settle at their lowest in three weeks as investors await Wednesday’s release of the U.S. consumer price index data. The reading holds significant importance ahead of the Federal Reserve’s policy meeting in September and may provide additional insights into the inflation scenario in the United States, “which could significantly impact investor expectations regarding the U.S. dollar and, consequently, gold trading,” said Rania Gule, market analyst at XS.com. December gold
GCZ23,
-0.55%
declined by $12.10, or 0.6%, to settle at $1,935.10 an ounce on Comex. Prices based on the most-active contract settled at their lowest since Aug. 22, according to Dow Jones Market Data.

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: BP CEO to resign: report

BP Plc’s BP chief executive Bernard Looney is about to resign less than four years into the job, according to a Financial Times news story on Tuesday that cited two people familiar with the decision. Looney, who has spent his entire career at BP, was appointed chief executive in July 2020. He was tasked with leading BP’s transformation to an integrated energy company, “one that creates long-term shareholder value by delivering solutions to the trilemma of secure, affordable and lower carbon energy,” the company says on its website. BP did not immediately comment and Looney did not respond to requests for comments, the Financial Times said. BP’s American depositary shares held on to 1% gains in midday trading Tuesday.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

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ORCL, WRK, AAPL, AAP and more

Traders work on the floor of the New York Stock Exchange, July 12, 2023.

Brendan Mcdermid | Reuters

Check out the companies making headlines in midday trading.

Oracle — Shares dipped more than 12% a day after the software company posted disappointing earnings and revenue guidance for its fiscal second quarter. Oracle’s revenue, which came in at $12.45 billion, was weaker than the $12.47 billion forecast by analysts. Its forward guidance of 5% to 7% revenue growth in the second quarter also fell short of the 8% implied growth expected by analysts polled by LSEG, formerly known as Refinitiv.

WestRock — The stock rose 4.8% following news that the paper and packaging company will go through with a merger with Smurfit Kappa. Shares of Smurfit Kappa traded on the FTSE 100 tumbled 9.8%.

Apple — Shares lost more than 1.3% during midday trading as the technology giant is expected to unveil a new iPhone at its launch event kicking off at 1 p.m. ET.

Casey’s General Stores — The retailer added more than 11% on the heels of an earnings beat. The company reported an adjusted $4.52 per share on revenue of $3.87 billion. Analysts polled by FactSet forecast an adjusted $3.36 and $3.9 billion, respectively. Executives also reiterated forward guidance and forecast an increase to 2024 same-store sales by 3% to 5%.

Beauty Health — The HydraFacial parent company’s shares surged 23.2% after it announced a cost-cutting program. The first phase of the program is forecast to generate $20 million in annualized cost savings during the first quarter of 2024. Beauty Health’s board of directors also authorized a $100 million share repurchase program.

Advance Auto Parts — Shares fell 6.2% to a 12-year low after S&P Global downgraded the auto parts provider’s credit rating to BB+, the highest level of “junk,” or speculative, status, from BBB-.

CVS — The drug store chain climbed 2% following an upgrade to outperform from peer perform by Wolfe. The firm said the business could inflect over the next six to 12 months.

Block — Shares of the payments company jumped 1.5% after Baird reiterated an outperform rating on the stock and designated shares as a bullish fresh pick. The Wall Street firm said shares may be oversold after the company experienced a temporary outage on its payment processor Square.

Cintas — The stock gained 2.4% after Bank of America upgraded Cintas to buy from neutral, calling the corporate apparel maker a “best-in-breed company” that can benefit as recession risks wane. The firm attributed the new rating to its growing confidence in a potential soft landing for the U.S. economy.

Geron — Stock in the biotechnology firm added roughly 1% following an upgrade to buy from Goldman Sachs earlier Tuesday. Analyst Corinne Jenkins noted optimism over recent U.S. Food and Drug Administration approval for myelodysplastic syndromes treatment imetelstat.

Exxon Mobil — Shares of the energy giant rose more than 2% as the price of oil continued to climb. Futures for U.S. benchmark West Texas Intermediate crude hit their highest level since November. Elsewhere, Morgan Stanley reiterated its overweight call on Exxon, saying the company was a top pick in its category.

— CNBC’s Yun Li, Samantha Subin, Hakyung Kim, Lisa Kailai Han, Jesse Pound, Pia Singh and Brian Evans contributed reporting.

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