They came, they saw, they took it all. Welcome to the world where thieves have no honor and those most honored — with lavish rewards — hone their talents hammering the rest of us.
By Sam Pizzigati
Hard times can be good times — for the aggressively avaricious. Where others see pain, America’s greedy see opportunity. In desperation, they delight. The grimmer the economic outlook, the more ghastly their grabbing.
And who grabbed the most outrageously in 2010? We offer below our annual take on America’s ten greediest of the year.
10/ Nick Saban: A coach’s fabulous crimson ride
America’s college football coaches seem to have made an end run around the Great Recession. In 2006, only 10 of the about 120 big-time college football coaches took home at least $2 million a year. The 2010 total: 38.
The king of them all: the University of Alabama’s Nick Saban, with a 2010 takehome at $6,087,349, six times the college football coaching average. Only five coaches in all of professional sports will this year make more than Saban.
Forbes has labeled Saban the “most powerful coach in sports,” and his many perks — everything from two cars to a contract clause that lets him exit Alabama at any time without taking a financial penalty — amply confirm that assessment.
Financial penalties, meanwhile, are abounding throughout the rest of Alabama’s public sector. Budget cuts have forced some colleges in the state to up tuition as much as 23 percent. The state’s overall education budget dropped 9.5 percent in 2010, and local school boards now see no way to “avoid major layoffs.”
Saban, for his part, has been blasting the “greed” of sports agents who sneak college athletes cash in hopes of cashing out big themselves when the athletes turn pro. In August, Saban called these agents no better “than a pimp.”
A pimp, responded one national sports writer, displays a “willingness to physically exploit young people” the pimp claims “to protect” and, “above all, a love of money.” That definition, continued Fox Sports analyst Mark Kriegel, just might fit Nick Saban, Alabama’s most “highly paid state employee.”
9/ Howard Schultz: How to brew a bigger fortune
A decade ago, after running coffee giant Starbucks for 13 years, Howard Schultz stepped down as CEO to take life a bit easier as the company’s “chief global strategist.” Early in 2008, with Starbucks struggling mightily in the marketplace, Schultz took back his CEO slot.
The struggles continued. Massive layoffs would soon slash the chain’s workforce by 19 percent. Schultz would feel the pain. He started trumpeting “the shared sacrifice I want to make” — and pledged to take almost no personal salary.
But CEOs, wink, wink, only get a small fraction of their total pay from straight salary. The Starbucks corporate board, behind the sacrificing scenes, was actually turbocharging the Schultz pay package with a mammoth grant of stock options, delivered at just the moment Starbucks shares were hovering at a rock-bottom low.
Starbucks valued those options, at the time of their granting, at $12.4 million. By May 2010, after a Wall Street mini-boom, the value of the shares had soared to $46.8 million. More good news for Schultz: He scored another $26 million last year exercising options he had been granted way back in 1998 and 1999.
And what about Starbucks shareholders? Those who bought their shares in 2007, right before the Great Recession, still have no gain to show for their investment.
8/ Daniel Akerson: Competing at a mythic level
The chief executive of General Motors since this past September, Daniel Akerson, earlier this month gave his first “high-profile speech” as the automaker’s CEO. The prime takeaway from his address? The feds, said Akerson, need to ease up on the bailout pay limits still in effect for his fellow top GM executives.
”We have to be competitive,” Akerson told the Economic Club of Washington, D.C. “We have to be able to attract good people.”
Getting “good people” to fill jobs below GM’s executive level, on the other hand, apparently doesn’t matter all that much. GM salaried employees, Akerson has decided, will not see any increases this coming year in their base salaries. New assembly line workers at GM, for their part, are now making only $14 an hour, half the rate they would have been making before GM’s meltdown.
Akerson is currently making $1.7 million in cash annually, on top of $5.3 million in stock for the next three years. Before GM’s meltdown, the automaker’s CEO, Rick Wagoner, was raking in a much more “competitive” $10.2 million.
“Competitive” might not actually be the right word here. In the year Wagoner all by himself was collecting $10.2 million, Toyota’s top 32 execs — a group that included CEO Katsuaki Watanabe — were together pulling in only $19.9 million.
7/ Don Blankenship: Dirty business as usual
Outside the nation’s coal fields, few Americans knew Don Blankenship, the CEO at Massey Energy, before last April. But that all changed after an explosion that month left 29 Massey miners dead. Reporters would soon grill Blankenship about the mine’s long history of safety violations, over 500 in 2009 alone.
“Violations,” the Massey chief coldheartedly retorted, “are unfortunately a normal part of the mining process.”
Almost as normal as windfall paychecks for Don Blankenship. The Massey CEO took home nearly $34 million in 2005, about quadruple the industry standard. Over the last three years, he has waltzed away from his office with another $38.2 million. But the real waltzing is only now beginning.
The 60-year-old Blankenship is retiring at the end of this year with a pension valued at $5.7 million, another $12 million in severance, still another $27.2 million in deferred pay, title to a company-owned house, and a two-year consulting agreement that pays $5,000 a month for no more than 32 hours work.
Blankenship may even exit, once all this year’s stats have come in, with a 2010 “performance” bonus that factors in safety.
How can a coal company CEO with 29 dead miners get a safety bonus? Massey’s flagship safety standard, “Non-Fatal Days Lost,” merely multiplies “the number of employee work-related accidents times 200,000 hours, divided by the total employee hours worked.” Death doesn’t factor in.
6/ David Cote: King of America’s corporate political cash
Coal can kill. Uranium, too. Workers who handle uranium, notes labor journalist Mike Elk, “suffer rates of cancer 10 times higher than the general public.”
That’s one big reason why the union local that represents workers at a Honeywell uranium facility in Illinois this past June rejected a management proposal to eliminate retiree medical care and boost — to $8,500 a year — the out-of-pocket health care costs active workers have to pay.
A disappointed Honeywell, one of the nation’s top defense contractors, promptly locked the Illinois uranium workers out. Those workers, ever since then, have been trying to meet face to face with Honeywell CEO David Cote.
The week after Thanksgiving, the locked-out workers even traveled to Washington, D.C., where Cote, a member of President Obama’s National Commission on Fiscal Responsibility, was discussing with his fellow commissioners a variety of proposals to slash federal spending.
Cote, who took home $13.2 million last year and $28.7 million the year before, has been spending big himself — on political contributions. Under his direction, Honeywell has emerged as the nation’s top corporate political giver.
Cote’s agenda? Making sure the budget-cutters in Washington keep hands off defense contracts. As one alternative, press reports indicate, he’s pushing a freeze on the pay that goes to America’s servicemen and women.
5/ David Tepper: This hedge needs clipping
Nobody made more money last year than America’s top hedge fund managers, and no hedge fund manager made more than David Tepper. This 53-year-old former junk bond trader at Goldman Sachs hit a $4 billion jackpot essentially betting, in the middle of the global financial meltdown, that Uncle Sam wouldn’t let Wall Street’s biggest banks go under.
Tepper is currently doing his best to single-handedly reboot America’s still depressed residential real estate market. In June, he spent $43.5 million to pick up a summer home in the Hamptons that used to belong to former New Jersey governor and Goldman Sachs CEO Jon Corzine. The 6.5-acre beachfront spread sports six bedrooms, a tennis court, and a heated pool — and rented last summer for $900,000.
The $43.5 million Tepper shelled out ended up the highest price paid this year for a Hamptons home. The total also amounted to about half the record $88 million the hedge fund industry raised for the homeless this past May at the 2010 Robin Hood Foundation dinner, Wall Street’s single biggest annual charity gala.
One official at the foundation dubbed that $88 million an act of “extraordinary generosity.” Others might define “extraordinary” a bit differently. David Tepper and the rest of the hedge fund industry’s top 25 last year together pocketed $25.3 billion. They averaged, each and every business day, over $100 million.
4/ Lloyd Blankfein: Getting the most from our tax dollars
Lloyd Blankfein, the chief exec at Wall Street’s biggest bank, has had a stunning century. Since 2000, Bloomberg News calculates, Blankfein has earned a whopping $125 million in cash bonuses and enough additional stock awards to leave him with a personal stash of Goldman shares worth over $300 million.
And the goodies keep coming. This January, Blankfein will pick up another $24.3 million in stock, as a delayed payout from previous years. He’ll also pick up millions more in soon-to-be-announced bonuses for 2010.
News of these bonuses, Wall Street analyst Jeanne Branthover predicts, will leave the public “outraged” and Wall Streeters “excited” — that “there’s still a reason to be working so hard.”
How hard is Lloyd Blankfein working? He simply never misses an opportunity, however small, to make a buck off taxpayers. This year’s prime example: the fees that Goldman Sachs has fixed on Build America Bonds, the federal program that’s helping states and localities raise money for construction job projects.
Local governments, in tough times, often have to cut back on such projects because they can’t afford to pay the interest on new bond offerings. With Build America Bonds, the federal government is paying 35 percent of this interest.
Investment banks charge municipalities fees to bring their bonds to investors. Goldman’s fees typically range up to 0.625 percent of each bond issue. But Goldman has been charging, on Build America Bonds, up to 0.875 percent. Why so much? Goldman, Blankfein told Congress, had to “educate the market.”
3/ Mark Hurd: Unfurling a platinum parachute
The truly greedy don’t just grab — at the expense of those they overpower. And the truly greedy don’t just feel entitled to grab all they can get. The truly greedy feel invincible while they’re grabbing away, just like former Hewlett-Packard CEO Mark Hurd.
HP’s board cheered Hurd on, every step of the way, until this past August when news surfaced that the married CEO had wined and dined a former erotic actress, handed her a huge and undeserved marketing contract, and then fudged HP’s books to cover up his indiscretions.
That arrogance would cost Hurd his job, but not much else. Hurd left HP with a severance package that may total $40 million and almost immediately landed a comfy new gig as president of business software giant Oracle. His new contract will bring Hurd, in his first Oracle year, as much as $11 million — and a boss, Oracle CEO Larry Ellison, who just happens to be his buddy.
2/ Larry Ellison: How dare we call him ruthless
Mark Hurd has shown himself to be a whiz at the merge-and-purge corporate CEO two-step. But the master of that merger two-step — snatch a rival’s customers, then fire its workers — has always been Oracle chief executive Larry Ellison, the third-richest man in America.
Oracle has bought out 66 companies over the years, and Ellison, the Wall Street Journal estimates, has collected $1.84 billion in compensation just the last ten years alone. But Oracle’s chief started this past year out vowing to change his ways.
In January, after consummating a $7.4 billion takeover of Sun Microsystems, Ellison had “We’re Hiring” buttons handed out at the news conference to announce the deal — and then royally denounced a news report that Oracle would be axing half of Sun’s 27,600 workers.
“Those who wrote this should be ashamed of themselves,” Ellison ranted. “The truth is, we are going to hire about 2,000 new people to beef up the Sun businesses — about twice as many as we will let go.”
The truth turned out to be anything but. Five months later, with no fanfare, an Oracle filing with the federal Securities and Exchange Commission revealed that the company was taking a huge severance write-off for personnel reductions. As many as 8,600 jobs, one analyst calculated, would be history.
1/ Andrew Clark: Education really does pay
Just a few years ago, at the height of America’s subprime frenzy, bankers and mortgage lenders were making mega millions hoodwinking vulnerable old people into refinancing their homes at unconscionably high interest rates.
Today, in an economy still reeling from that fraud, a new high-growth industry — the for-profit higher ed sector — is hoodwinking vulnerable young people into taking on taxpayer-financed student loans they can’t possibly repay.
And now this industry, facing federal regulations that aim to rein in its deceit, is waging a massive media campaign based on the phony premise that Washington wants to make it “harder to get the education” students “need to succeed.”
No one is personally profiting more from this for-profit higher ed industry chutzpah than the CEO of the San Diego-based Bridgepoint Education, an enterprise that specializes, of late, in going after returning military veterans. That CEO, Andrew Clark, last year took home $20.5 million.
For-profit colleges didn’t pay any particular attention to military vets until 2008. But Congress that year gave veteran tuition benefits a significant hike, and the for-profits rushed to gobble up the newly available tuition dollars. Bridgepoint’s military enrollment soared to 9,200 in 2009, up from just 329 three years earlier.
Overall, the New York Times recently reported, Andrew Clark’s Bridgepoint last year spent more on marketing and promotion than on educating its students.
For-profit colleges have hit upon an enormously lucrative business model: Promise vets — and other potential students — anything to get them to enroll, even if that means signing them up for courses of little real value or classes, the Times notes, they would be “all but certain” to fail. If students do fail or drop out, no prob. The for-profits get to keep the tuition, courtesy of America’s taxpayers.
Plenty of America’s power suits, to be sure, are making more money than Andrew Clark. But none are grabbing with any more gusto.
Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.