You think you lost a bundle in the market? The CEOs who lead the companies in the upper decks of the Fortune 500 have fared even worse: Their stock holdings in their own companies declined in value by $54 billion last year.
A just-released study by executive compensation consultancy Steven Hall & Partners sums up the damage. For CEOs who head 175 of the top 200 corporations in the Fortune 500, the median value of the equity held in their own businesses dropped 50% last year. This decline is far worse than the 37% median drop for the stocks of those companies.
What accounts for the relatively dreadful performance of the CEOs' own holdings? Options. They tend to be tremendous wealth accumulators in good times. But when a stock price falls below an option's exercise price, the intrinsic value of the option goes to zero. And in this sinking stock market, that has happened a lot. Those underwater options create a more dramatic drop-off in CEO equity values than you'd expect from just looking at a company's stock price.
So that whopping $54 billion, actually, is the total amount that the CEOs' equity value--including shares owned outright, exercisable and unexercisable option gains, and unvested restricted and performance shares--dropped in 2008. As for the decline in the median value of those CEOs' holdings, it went from $60.9 million to $29.5 million.
Steve Hall, managing director of Steven Hall & Partners, notes that equity compensation has long been viewed as the most direct approach to link executives' interests with their shareholders'--and, he says, "The study confirms this total alignment." Indeed, among the chief executives with huge declines in their own stock holdings: General Motors' (GM) Rick Wagoner ($24.3 million), Citigroup's (C) Vikram Pandit ($29.2 million), and General Electric's (GE) Jeff Immelt ($114.7 million.) Even the CEOs of Exxon Mobil (XOM) and IBM (IBM), which outperformed the S&P last year, suffered declines of more than $25 million in the value of their holdings.
The CEO at the very top of the Fortune 500--Lee Scott of Wal-Mart (WMT)--actually scored a gain: The value of his Wal-Mart holdings went up $30.9 million to $202.6 million. Wal-Mart stock rose 10% last year. 
"We can't copy. If you want to copy somebody, you're going to be second at best, and always a step behind."
-- Doug McMillon, newly named president and CEO of Wal-Mart (WMT) International. He's succeeding Mike Duke, who is due to take Wal-Mart's helm as CEO Lee Scott retires.
When McMillon talked with Fortune's Geoff Colvin in "The Colvin Interview" last October about innovation and Wal-Mart's global growth prospects (click here MORE
Jessica Shambora, Writer-Reporter - Jan 8, 2009 5:02 PM ET
Is the role of the Fortune 500 CEO changing? I think it is. Of course, we've never seen so many corporate chiefs gain fame by testifying in the halls of Congress -- and then get skewered on Saturday Night Live. Any leader's nightmare, indeed. But as the world spins out of control, even the admired CEOs (a rare breed!) are feeling a need to step up and broaden their traditional MORE
Patricia Sellers - Dec 12, 2008 4:42 PM ET
"In my mind, there is no doubt that this is Wal-Mart time. This is the kind of environment that Sam Walton built this company for."
-- Lee Scott, president and CEO of Wal-Mart (WMT), in The New York Times today. Consumers are going for value and there's no better evidence than Wal-Mart's October sales. Same-store sales at Wal-Mart increased 2.4%, beating expectations. The stock dropped only 1% on a 443-point down MORE
Jessica Shambora, Writer-Reporter - Nov 6, 2008 6:22 PM ET
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Pattie Sellers has written some of Fortune's most talked-about cover stories, including "Oprah's Next Act," "Can Meg Whitman Save California?" "The $100 Billion Woman" (Melinda Gates), "MySpace Cowboys," Martha Stewart ("I cannot be destroyed"), Ted Turner ("Gone with the Wind") and Oprah Winfrey ("Oprah Inc."). Since its launch in 1998, Pattie has helped oversee Fortune's "Most Powerful Women" cover package.
A specialist at dissecting larger-than-life personalities, she has also profiled former U.S. Treasury Secretary Hank Paulson, Morgan Stanley chairman John Mack, and countless CEOs.
Pattie co-chairs the annual Fortune Most Powerful Women Summit, the preeminent gathering of women leaders in business, philanthropy, government, academia, and the arts. She started at Fortune in 1984, covering the big brand companies.
In Pattie's blog, Postcards, she provides insight into the lives of super-achievers through commentary, career advice, and Guest Posts by CEOs and other leaders.
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