Fiserv Had ‘Most Overpaid’ CEO

Fiserv Inc. has so much money it could pay its CEO Jeffery Yabuki $27.6 million in annual compensation, or $13.8 million more than he deserves, a new study concluded. The company has so much money it could shell out millions for naming rights to the Milwaukee Bucks arena. But it pays its employees so little that Yabuki made 428 times the average worker. Yabuki stepped down after 15 years as a top-paid CEO in May 2020 and was succeeded by Frank Bisignano. 

Yabuki was included among the 100 most overpaid CEOs in the annual ranking done by As You Sow, which calls itself “the nation’s non-profit leader in shareholder advocacy.” The rankings are based on the most recent year of salaries. This is the seventh year the group has done its analysis, and Yabuki made the list in some of those other years as well. He was the local poster boy for how the nation’s wealth gap is elevating the 1% to ever richer heights at the expense of all other Americans.

The latest report comes amid a pandemic when “Unemployment is now above 20 percent for the lowest paid workers” and worker wages “represent a lower share of the U.S. economy than almost any time since the 1940s when the Federal Reserve began collecting the data,” the report noted.

“Yet, CEO pay continued to increase. The Wall Street Journal reported that ‘median pay reached $13.1 million for CEOs of the biggest U.S. companies, setting a new record for the fifth year in a row.’ A study by the Economic Policy Institute… found that CEO compensation surged 14 percent in 2019 to $21.3 million.”

As You Sow determines who are the most overpaid CEOs by a formula taking into account total shareholder return over the past five years, the percent of shareholders voting against the CEO pay package (30.88% voted against Yabuki’s compensation) and the ratio of CEO to average worker pay. The computation of the amount overpaid is calculated based on total shareholder return under that CEO’s leadership.

Ranking first, as the most overpaid CEO, was Sundar Pichai, the top dog at Alphabet Inc. (better known as Google) who earns $280.6 million, or $266.7 million more than he deserved. That was 1,085 times the average worker’s pay. The majority of shareholder votes — 69.15% — opposed the pay package. 

Ranking second worst was David M. Zaslov, CEO of Discovery, Inc., who earned $45.8 million or $33.8 million more than he deserved and which was 578 times the average worker’s pay. The vast majority of shareholder votes — 85.55% — opposed the pay package. 

Also on the list of corporate infamy was Johnson Controls International, located in Milwaukee for nearly its entire history, though the company moved its home office to Ireland in 2016, a move that was expected to save it $150 million a year in taxes. Its CEO George Oliver was ranked as the 85th most overpaid CEO, with compensation of $15.5 million or $2.8 million more than he deserved. His total was 369 times more than the average worker made.

In seven years of analyzing this data, As You Sow has made some interesting conclusions, including: 

-Top paid CEOs do a power job, earning less for shareholders. “Between 2015 and 2020 the companies in the S&P 500 who were never on our list had an annualized total shareholder return… of 5.6 percent, significantly outshining (by a factor of two) the annualized return of just 1.95 percent of the nine companies who have repeatedly been our list of ‘The 100 Most Overpaid CEOs’.”

-Shareholder opposition to big CEO pay is growing. In the most recent year analyzed, “the number of S&P 500 companies where the CEO pay package failed to get at least 50 percent of the votes more than doubled, going from six companies to 15 companies.” 

-Managers of mutual funds and pension funds are increasingly opposed to high CEO pay. “The number of financial fund managers who voted against the CEO pay package of at least half of the ‘100 Most Overpaid CEOs’ in their investment portfolios reached 47.” 

For those tracking the wealth gap in America, the fact that Fiserv is the company that bought the naming rights to the Bucks arena carries considerable symbolism. The Bucks biggest owners, Marc Lasry (estimated net worth $1.8 billion), Wes Edens ($1 billion) and Jamie Dinan ($2 billion) could have easily afforded to pay for the entire cost of a new arena and would have still gotten richer, as the value of the franchise has risen by $1.4 billion since they bought the team. Yet they got a taxpayer subsidy in excess of $800 million. And part of the increase in the franchise’s value and annual revenue is from the naming rights paid for by Fiserv. Yet none of that money will flow back to the taxpayers, though they paid for at least 75% of the arena’s cost. In fact, taxpayers aren’t even allowed to know how much the Bucks were paid for the naming rights. 

Even as Yabuki earned 428 times more than his average worker, the Bucks owners got all the return from the public-private investment in the new arena. It’s our local version of America’s wealth gap.