Monday, April 29, 2002

Short Tenures, Big Returns

NEW YORK - As part of this year's survey of chief executive compensation at America's largest companies, Forbes analyzed pay and performance of individuals who have held the top job for three years or less. Of these 172 executives, 62, or 36%, have delivered to shareholders annualized total returns of 15% or greater during their brief tenures.

Some of these corporate chiefs owe their star status to simply being in the right company or industry at the right time. But for others, it's more than coincidence at work.

Take Waste Management, for example. In November 1999, A. Maurice Myers took the helm at the Houston-based waste disposal concern. Between then and April 5, 2002, Waste Management shares show an annualized total return of 24%, significantly outpacing the -8% return for the S&P 500 during that time.

Prior to Myers' tenure, the company had been dogged by numerous problems, including an accounting scandal, a heavy debt load and insider-trading charges related to its merger with USA Waste in 1998. Myers set about divesting non-core assets and refocusing on the company's North American solid waste business. The insider-trading charges were settled in November 2001 with a $457 million payment to plaintiffs.

Result: Waste Management's net income went from a loss of $398 million in 1999 to a profit of $503 million in the firm's latest fiscal year, ended in December. Perhaps more important than net results, Waste Management's excess cash flow margins have improved from 3% in 1999 to 9% in 2001.

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