Executive Pay

For Richard M. Scrushy, CEO of health-care company Healthsouth Corp. in Birmingham, Ala., 1997 was an outstanding year. He took home $106.8 million in salary, bonus, and--primarily--exercised options to become the third-best-paid CEO in BUSINESS WEEK's annual executive pay survey. While his compensation may boggle the mind, so has his performance. In the 14 years since he founded Healthsouth with three partners and $50,000, Scrushy has built it into the largest outpatient care center in the U.S., with a market capitalization of $11.4 billion. In 1997, the stock rose 31%, bringing its gain over the past 10 years to more than 1,200%. Says Scrushy: "Finally, I rang the bell and got paid."

So did Ray R. Irani, longtime CEO of Occidental Petroleum Corp. In order to replace an incredibly lucrative 1990 employment contract that provided Irani a guaranteed paycheck worth close to $5 million a year for life, Occidental's board gave him a 1997 payoff valued at $101.5 million. That was enough to make Irani one of the best-paid executives in Corporate America. Did Irani, too, build a business from scratch, or bring shareholders great rewards? Hardly. Since 1990, Occidental's stock has risen just 10%, and the company lost $390 million in 1997--in part, due to Irani's sweet deal. Occidental is being sued by Teachers' Retirement System of Louisiana for breach of fiduciary duty. Irani wouldn't comment.