CEO Compensation: HAS THE FUN RUN OUT FOR THE BOSSES?
by and Keith Kefgen
November 1, 2009
You thought it was tough being the CEO of a bank these days; the casino industry has been just as brutal. Bankruptcies and near failures abound. The difference is that the U.S. government bailed out the banks. No such luck for casinos. Just a year ago, MGM, LVS, WYNN and others were trading at all-time highs. What a difference a year makes.
CEO pay has also been one of the most hotly debated topics during this economic crisis. Congress has even gotten involved by passing new legislation regarding executive pay. With that as a backdrop, our annual survey of CEO performance demonstrates that a chief executive can perform well even in the worst of circumstances.
10 Best Performing CEOs
Richard Haddrill at Bally Technologies topped the list this year, with an HVS Value Index of 156 (see chart “10 Best Performing CEOs”). His rating means that despite the economic downturn and his $3.7 million in total compensation, he still was underpaid by nearly $2 million. In fact, Bally Technologies was one of only three companies to see a rise in their stock price over the survey period. WMS and Churchill Downs were the others. Additional top performers included Lyle Berman, Andre Hilliou and Steve Wynn, all past winners of our survey.
It was interesting to see an even split between operators and suppliers in this year’s Top 10. Usually there has been a decided advantage for one side or the other.
SALARY and BONUS
Top Gaming Salaries
Gaming Industry CEO Survey
Each of the top 10 incentive packages was greater than $1 million. We found it startling to see the average market capitalization for a gaming company go from $5 billion to $2 billion, demonstrating the destructive force of the economic meltdown. Likewise, overall compensation for gaming CEOs went down by almost $1.3 million in 2008.
The list of gaming’s richest CEOs didn’t change much year over year, but the value of their stock holdings has been greatly diminished. For example, Sheldon Adelson was worth $19 billion at the end of 2007, and at the end of 2008 was worth only $1.5 billion. Steve Wynn and Micky Arison remained billionaires as well but saw the value of their stock decrease by 50 percent.
As the gaming industry is in survival mode, we predict that executive compensation will continue to fall. Not until the economy rebounds and consumers start spending discretionary dollars will things improve for the industry and its CEOs.
and Keith Kefgen
is president of HVS Executive Search, a leading career placement and compensation consulting firm specializing in the lodging, gaming, retail and restaurant industries. He is a frequent lecturer on these and related issues and has written more than 90 articles on the topics of executive selection, pay-for-performance, corporate governance and executive leadership. He is the founder of the recruiting Web site hospitalitycareernet.com and 2020skills.com, an online assessment profiling service.
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