The 25 Most Overpaid and Underpaid

Posted by: Jena McGregor on October 16, 2008

With all the understandable anger over the outsized pay packages at failed financial firms—including the funds New York AG Andrew Cuomo is going after at AIG—it’s easy to forget that excessive pay is a huge problem in all industries. To wit, proxy adviser Glass, Lewis & Co. released its “Pay Dirt” report on the companies with the best and worst paid executives last week. And only five of the “overpaid 25” companies are financial firms.

To determine its list, Glass Lewis defines performance as a relative metric, tying performance to how well a company performs relative to its peers. Its proprietary pay-for-performance model evaluates the top five executives’ compensation by benchmarking it against the top five executives at its peers. Then, it compares the company’s performance with those same peers. After further calculations, the firm assigns companies a grade, which leads to its list of the 25 most overpaid and underpaid companies in both the S&P 500 and Russell 3000.

The top three overpaid on the S&P 500 list are Sprint Nextel, KB Home and Jones Apparel Group. While two firms related to finance follow—E*Trade and Merrill Lynch round out the top five—the rest of the top 10 include apparel maker Liz Claiborne, homebuilder Pulte Homes, and media giant CBS Corp., but no other financial firms.

After the jump, the complete lists of Glass Lewis’ 25 most overpaid and underpaid companies in the S&P 500:

MOST OVERPAID
1. Sprint Nextel Corp.
2. KB Home
3. Jones Apparel Group Inc.
4. E*TRADE Financial Corp.
5. Merrill Lynch & Co. Inc.
6. Masco Corp.
7. Liz Claiborne Inc.
8. Pulte Homes Inc.
9. CBS Corp
10. McKesson Corp.
11. Electronic Arts Inc.
12. General Motors Corp.
13. Dynegy Inc.
14. Computer Sciences Corp.
15. Advanced Micro Devices Inc.
16. Regions Financial Corp.
17. Nabors Industries Ltd.
18. Ashland Inc.
19. Office Depot Inc.
20. Ford Motor Co.
21. Tenet Healthcare Corp.
22. XL Capital Ltd.
23. King Pharmaceuticals Inc.
24. MGIC Investment Corp.
25. Tyson Foods Inc.

MOST UNDERPAID
1. Apple Inc.
2. MEMC Electronic Materials Inc.
3. Leucadia National Corp.
4. Titanium Metals Corp.
5. Amazon.com Inc.
6. Stryker Corp.
7. Allegheny Energy Inc.
8. Schlumberger Ltd.
9. Waters Corp.
10. Microsoft Corp.
11. Questar Corp.
12. Host Hotels & Resorts Inc.
13. Windstream Corp.
14. C.H. Robinson Worldwide Inc.
15. NYSE EURONEXT
16. Thermo Fisher Scientific Inc.
17. CME Group Inc.
18. Cognizant Technology Solutions Corp.
19. National Oilwell Varco Inc.
20. Apache Corp.
21. Google Inc.
22. TECO Energy Inc.
23. Sigma-Aldrich Corp.
24. AutoZone Inc.
25. PPL Corp.

Reader Comments

blymer

October 17, 2008 3:45 PM

Relativity within industries that are all eating at the pig trough doesn't provide much insight into ovrpayment versus underpayment. It's like saying one turd is better than another turd simply because it has corn in it.

Bryan

January 18, 2010 10:17 PM

I'm an employee who's working in a big company but sadly fell into the underpaid category, what should I do? Move into a smaller company and hoping to get a higher pay? Hmm, I guess I'd better start to think very hard and not relying on my current day job and start doing my own business.

Cheers,
Bryan
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