Motivating Multibillionaires

Why a multibillionaire needed the motivation of stock options or an "incentive" plan is a question for Ellison's psychiatrist. You would think his 1.1 billion shares--a 22% stake--was motivation enough. In each of the previous two years, he was paid $85 million.

I doubt that any performance would truly justify Ellison's take; Oracle's didn't come close. Over the 10 years through Dec. 31, Oracle stock is up less than 1% a year.

The current proxy season is young, but a worthy challenger to Ellison is Philippe Dauman of Viacom Inc. Dauman had a great mentor in company founder Sumner Redstone. No longer CEO, but still paid like one, Redstone pocketed $15 million in 2010.

But the real stash went to Dauman. The proxy justifies Dauman's pay, noting he "did not receive a salary or target bonus increase in 2009 due to a compensation freeze in light of economic conditions." This sounds like he was on hardship pay. Actually, in each of the preceding three years, Dauman was paid more than $25 million.

Big-Time

So in 2010, the board figured, he was ready for big-time. Dauman got a salary of $2.6 million and an annual stock award of $10 million. In addition, he got a one-time stock award of $31 million. Was there some vital distinction that created a pressing need for both awards? The proxy says the annual award is "designed to motivate employees to focus on long-term growth and stockholder value." And the rationale for the one-time award? As the proxy says, "See 'Annual Equity Awards' above."

Dauman also got $6 million in stock options and--you guessed it--$22 million in one-time options. Plus $11 million in a "non-equity incentive." Viacom says each pay category was based on performance metrics; apparently, Dauman didn't always qualify for the full award. Shareholders should thank their stars.

The compensation, of course, was blessed by a consultant, Pay Governance. But no metrics can justify such plunder. Since Viacom's stock began trading in its current form, in 2005, through year-end 2010, the shares are up just over 1% a year.

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