The Most Overpaid And Underpaid CEOs In Tech

Microsoft ceo satya nadellaAPMicrosoft CEO Satya Nadella

A CEO earning millions of dollars a year isn’t necessarily overpaid depending on the size of the company, its industry, and how well the company has performed.

Which tech CEOs are actually the highest paid and lowest paid according to that standard? We turned to Robin Ferracone, a compensation expert who wrote the book on fair pay (author of “Fair Pay, Fair Play: Aligning Executive Performance and Pay”) and asked her. Ferracone is CEO of executive compensation consultancy Farient.

She and her team calculated three-year average pay (from 2011-2013) for us. They included the impact of previous stock grants. They compared that to what their peers earned. And from that they came up with a “Performance Adjusted Compensation” number for each exec.

We ranked the CEOs based on their “Performance Adjusted Compensation.”

No. 10 Highest Paid: Intralinks' Ronald Hovsepian At $8.45 million

IntraLinks Holdings CEO Ronald Hovsepian

CEO: Ronald Hovsepian

Company: IntraLinks Holdings

3-Year-Average 'Performance Adjusted Compensation': $US8.45 million.

2013 total compensation: $US3.4 million

Reason: His 'IPO option grant has appreciated in value' says Ferracone.

But the same can't be said for investors that bought stock on IPO day back in 2010. It opened at $US13 and now trades below $US12 at one point this year hitting as low as $US7.76.

No. 9 Highest Paid: Zebra's Anders Gustafsson At $15.23 million

Anders Gustafsson, Zebra Technologies CEO

CEO: Anders Gustafsson

Company: Zebra Technologies

3-Year-Average 'Performance Adjusted Compensation': $US15.23 million

2013 total compensation: $US4.02 million

Reason: 'Equity grants increased in 2013. Performance-based equity award for the 2011 - 2013 performance period vested in 2013 at 180% of target,' says Ferracone.

Gustafsson is clearly being rewarded for the gutsy move he made this year when Zebra bought its much bigger competitor Motorola Solutions for $US3.45 billion cash.

No. 8 Highest Paid: 3D Systems' Abraham Reichental At $15.84 million

Abraham 'Avi' Reichental CEO of 3D Systems

CEO: Abraham Reichental

Company: 3D Systems

3-Year-Average 'Performance Adjusted Compensation': $US15.84 million

2013 total compensation: $US10.9 million

Reason: 3D systems granted Reichental almost $US9.4 million in restricted stock units, double last years and almost six times more than the year before, landing him on this highest paid list.

'Equity grants increased in 2013 over historic norms with significant stock appreciation increasing value of historical grants,' says Ferracone.

However, Ferracone points out that 3D Systems has a history of fair pay, so she wouldn't call him 'overpaid' based on the one year's compensation.

No. 7 Highest Paid: WebMD's David Schlanger At $18.14 million

WebMD CEO David Schlanger

CEO: David Schlanger

Company: WebMD Health

3-Year-Average 'Performance Adjusted Compensation': $US18.14 million

2013 total compensation: $US7.98 million

Reason: Schlanger was named CEO in mid-2013, but he was a senior executive at the company and its predecessor since 1995.

He landed on the highest paid list because his '2012 option grant has tripled in value to $US24MM with increase in stock price,' says Ferracone.

No. 6 Highest Paid: NetSuite's Zach Nelson At $18.42 million

CEO: Zach Nelson

Company: NetSuite

3-Year-Average 'Performance Adjusted Compensation': $US18.42 million

2013 total compensation: $US12.5 million

Reason: In 2013, the board granted Nelson $US9.77 million in restricted stock (plus more than $US1.6 million in stock options), more than double the previous year's grants and five times more RSUs than two years earlier.

'Equity grants increased in 2013 over historic norms with significant stock appreciation increasing value of historical grants,' says Ferracone.

No. 5 Highest Paid: Nuance Communications Paul Ricci At $31.68 Million

CEO: Paul Ricci

Company: Nuance Communications

3-Year-Average 'Performance Adjusted Compensation': $US31.68 million

2014 total compensation: $US17.94 million

Reason: This company is 'consistently awarding above-market performance and restricted equity grants,' says Ferracone.

The company's stock trades at over $US14 with a market cap of $US4.62 billion.

No. 4 Highest Paid: FleetCor's Ronald Clarke At $40.43 Million

Ronald Clarke FleetCor CEO

CEO: Ronald Clarke

Company: FleetCor Technologies

3-Year-Average 'Performance Adjusted Compensation': $US40.43 million

2013 total compensation: $US32.86 million

Reason: Clarke's '$US30 million (grant date value) of performance-based shares have appreciated significantly given stock price increase,' says Ferracone, which landed him on our highest paid list.

That is, of course, what performance stock grants are all about. In 2013, the company doubled down and awarded him another $US30 million worth of shares.

No. 3 Highest Paid: Yahoo's Marissa Mayer At $51.70 Million

CEO: Marissa Mayer

Company: Yahoo

3-Year-Average 'Performance Adjusted Compensation': $US51.70 million

2013 total compensation: $US24.94 million

Reason: Mayer's 'initial equity grant of $US40 million has increased in value,' says Ferracone.

And Yahoo intends to continue to pay her handsomely compared to her peers. 'Design of 'going forward plan' is significantly higher than market,' says Ferracone.

Mayer was granted $US35 million in stock when she joined Yahoo and another $US13.85 million in stock options in 2013, among other pay.

No. 2 Highest Paid: Salesforce.com's Marc Benioff At $55.17 million

Salesforce.com CEO Marc Benioff

CEO: Marc Benioff

Company: Salesforce.com

3-Year-Average 'Performance Adjusted Compensation': $US55.17 million

2014 total compensation: $US31.33 million

Reason: 'The annual options awards to founder CEO (Marc Benioff) are well above market,' says Ferracone.

For instance, Salesforce.com paid him $US14.5 million worth of options in 2012, $US18.9 million in 2013, $US27.7 million in 2014. Meanwhile, Benioff owns just over 7% of the company, more than any other individual person.

No. 1 Highest Paid: Oracle's Larry Ellison At $123.02 million

Oracle CTO Larry Ellison

CEO: Larry Ellison

Company: Oracle

3-Year-Average 'Performance Adjusted Compensation': $US123.02 million

2014 total compensation: $US67.26 million

Reason: Although Ellison gave up the CEO title in late 2014 to become CTO and executive chairman, Ellison still runs the show at Oracle.

He did take a slight cut in pay for the switch, but he is overpaid by just about any standard. 'As the founder CEO, he received annual option grants of $US70M (grant date value),' notes Ferracone.

And Now For The Shocking List Of Lowest Paid CEOs ...

Some of the wealthiest CEOs are actually underpaid -- by today's executive pay standards anyway.

They fall into 'Farient's ownership criteria' which means they have a big stake in their companies (typically because they are founders). Those stakes can be worth at least 20 times what they would be paid as a hired-gun CEO.

If they take a big salary and options on top of that (like Marc Benioff and Larry Ellison), they could be considered overpaid. If they don't, they might actually be 'underpaid' comparatively speaking.

With that explanation, click on to see the list of lowest paid CEOs ...

No. 9 Lowest Paid CEO: Microsoft's Satya Nadella At $1.42 Million

Microsoft CEO Satya Nadella

CEO: Satya Nadella

Company: Microsoft

3-Year-Average 'Performance Adjusted Compensation': $US1.42 million

2013 total compensation: $US7.67 million

Reason: Nadella is a long-time employee, so Ferracone was able to calculate how much he earned over three years. Based on that, he landed on the 'underpaid list.'

He likely won't stay there. As a CEO of one of the world's most important tech companies, he'll be paid well. But his huge starter kit of stock, valued at about $US65 million, won't begin to vest until 2019. Another one-time stock grant worth $US13.5 million vests over seven years.

There's lot of money to be earned, trickled out over years, but only if he performs well. And it could still be less what Tim Cook, Marissa Mayer, or Oracle's new co-CEOs earn.

No. 8 Lowest Paid CEO: Pegasystems' Alan Trefler At $758,740

Pegasystems CEO Alan Trefler

CEO: Alan Trefler

Company: Pegasystems

3-Year-Average 'Performance Adjusted Compensation': $US758,740

2013 total compensation: $US746,765

Reason: Trefler founder owns 52% of the company, so he takes a healthy salary and earns bonuses but doesn't gorge on stock options.

The stock trades at about $US21 with a market cap of about $US1.62 billion.

No. 7 Lowest Paid CEO: Super Micro's Charles Liang At $626,99

Charles Liang CEO of Super Micro Computer

CEO: Charles Liang

Company: Super Micro Computer

3-Year-Average 'Performance Adjusted Compensation': $US626,990

2013 total compensation: $US954,601

Reason: Founder CEO Liang owns 20% of the company. In 2013, he paid himself a reasonable salary ($US303,682) and a good dollop of stock options ($US633,652) and called it good.

The stock trades at about $US36 with a market cap of about $US1.65 billion.

No. 5 Lowest Paid CEO: Daktronics' Reece Kurtenbach At $480,960

CEO: Reece Kurtenbach

Company: Daktronics

3-Year-Average 'Performance Adjusted Compensation': $US480,960

2013 total compensation: $US570,354

Reason: The CEO is the son of the founder, Dr. Aelred Kurtenbach, who still holds a 5% stake. In 2013 Reece was paid $US282,227 in salary, some stock grants ($US35,000), a bonus ($US82,000), and $US165,900 worth of options.

The stock trades for about $US12.40 with a market cap of about $US544 million.

No. 4 Lowest Paid CEO: PDF Solutions' John Kibarian At $383,530

PDF Solutions CEO John Kibarian

CEO: John Kibarian

Company: PDF Solutions

3-Year-Average 'Performance Adjusted Compensation': $US383,530

2013 total compensation: $US483,790

Reason: Co-founder Kibarian owns just over 8% of the company. In 2013, he paid himself $US333,333 in salary, a $US65,000 bonus and another $US85,000 performance bonus, and no stock.

The stock trades at just under $US15 with a market cap of about $US462 million.

No. 3 Lowest Paid CEO: TeleTech's Kenneth Tuchman At $386,410

TeleTech Holdings CEO Kenneth Tuchman

CEO: Kenneth Tuchman

Company: TeleTech Holdings

3-Year-Average 'Performance Adjusted Compensation': $US386,410

2013 total compensation: $US360,604

Reason: Founder Tuchman owns just over 63% of the company. He pays himself $US1 salary and is tossing his bonuses ($US360,604 in 2013) into a retirement account.

The stock trades at about $US23 with a market cap of about $US1.15 billion.

No. 2 Lowest Paid CEO: National Instruments' James Truchard At $0

James Truchard, CEO National Instruments

CEO: Dr. James Truchard

Company: National Instruments

3-Year-Average 'Performance Adjusted Compensation': $US0

2013 total compensation: $US1

Reason: Co-founder Truchard owns 19% of the company and he doesn't take a salary, stock, or bonuses.

The stock trades for about $US31 and is worth about $US4 billion in market cap. By the way, NATI paid 60 cents in dividends on its common stock in 2014. For his stake, that was worth about $US14.5 million.

No. 1 Lowest Paid CEO: Google's Larry Page At $0

CEO: Larry Page

Company: Google

3-Year-Average 'Performance Adjusted Compensation': $US0

2013 total compensation: $US1

Reason: Page doesn't take a salary, stock grants or options, or bonuses. But he owns 42% of the company, a stake worth $US29.5 billion. (Co-founder Sergey Brin also takes $US1 salary and owns over 41%.) Google doesn't pay dividends either.

And that's why this billionaire is our No. 1 underpaid CEO.

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