CEOs, famous investors hit hard by market plunge

By RACHEL BECK – 15 hours ago

NEW YORK (AP) — Here's something that might provide a bit of solace
amid the plunging values in your retirement accounts: Warren Buffett is
losing lots of money, too. So are Kirk Kerkorian, Carl Icahn and Sumner
Redstone.

They are still plenty rich, but their losses — some on
paper and others actually realized — illustrate how few have been
spared in today's punishing market when even big-name investors,
corporate executives and hedge-fund titans are all watching their
wealth evaporate.

The portfolio damage for some of these
high-flyers has soared to billions of dollars in recent months. And
they can't just blame the market's downdraft — some did themselves in
with badly timed stock purchases or margin calls on shares bought with
loans.

"It's always hard to beat the market no matter who you
are," said Robert Hansen, senior associate dean at Dartmouth's Tuck
School of Business. "But when the ocean waters get that rough, it is
hard for any boat to avoid getting swamped."

It has been a
painful year for anyone exposed to the stock market. The Standard &
Poor's 500 stock index, considered a barometer for the broad market,
has lost about 36 percent since January, with every single sector —
including once thriving energy and utilities — seeing declines of about
20 percent or more.

Such losses in the last year have wiped out
an estimated $2 trillion in equity value from 401(k) and individual
retirement accounts, nearly half the holdings in those plans, according
to new findings by the Center for Retirement Research at Boston
College. Similar losses are seen in the portfolios of private and
public pension plans, which have lost $1.9 trillion, the researchers
found.

As stocks have plunged, so have the value of chief
executives' equity stakes in their own companies. The average
year-to-date decline is 49 percent for the corporate stock holdings of
CEOs at 175 large U.S. companies, according to new research by
compensation consulting firm Steven Hall & Partners.

Topping
that list is Buffett, who has seen the value of equity in his company,
Berkshire Hathaway, fall by about $13.6 billion, or 22 percent, so far
this year, to leave his holdings valued at $48.1 billion. Oracle
founder and CEO Larry Ellison has seen his equity stake fall by $6.2
billion, or about 24 percent, to $20.1 billion, according to the
research that ran from the start of the year through the close of
trading Oct. 29.

Rounding out the top five in that study were
Microsoft's Steve Ballmer, whose company equity fell by $5.1 billion to
$9.4 billion; Amazon.com's Jeff Bezos, whose equity fell by $3.6
billion to $5.7 billion; and News Corp.'s Rupert Murdoch, with a $4
billion contraction to $3 billion.

News Corp. and Microsoft
declined comment, while representatives from Berkshire Hathaway, Oracle
and Amazon.com didn't respond to requests for comment.

Those
results included the value of the CEOs' stock, exercisable and
non-exercisable stock options and shares that haven't yet vested. They
are drawn from each company's most recent proxy statement, which means
they might not include subsequent stock purchases or sales.

"Everyone
wants to see executives have skin in the game, and this shows they
certainly do," said Steven Hall, a founder and managing director of the
compensation consulting firm. "But in the end, we have to remember they
still have billions to fall back on."

But there have been recent
instances where executives' large equity positions have blown up — not
only damaging a particular CEO's portfolio but the company's
shareholders, too.

A growing number of executives at companies
including Boston Scientific, XTO Energy Corp. and Williams Sonoma Inc.
have been forced to sell stakes in their companies to cover stock loans
to banks and brokers. The company stock was used as collateral for
those loans. The falling prices triggered what is known as a "margin
call."

"A decrease in insider ownership is bad for corporate
governance," said Ben Silverman, director of research at the research
firm InsiderScore.com. "Then executives' interests are less aligned
with their shareholders."

Investors in Chesapeake Energy Corp.
were recently faced with the surprising news that company CEO Aubrey
McClendon was forced to sell almost 95 percent of his holdings —
representing more than a 5 percent stake in the natural gas giant — to
meet a margin call. His firesale of more than 31 million shares, valued
at nearly $570 million, put downward pressure on Chesapeake's stock in
the days surrounding the mid-October transaction.

McClendon has
called this a personal matter and said he would rebuild the ownership
position, according to Chesapeake spokesman Tom Price.

Redstone,
the famed 85-year-old chairman and controlling shareholder of CBS Corp.
and Viacom Inc., was forced to sell $233 million worth of nonvoting
shares in those companies. That was done to satisfy National
Amusements' loan covenants, which had been violated when the value of
its CBS and Viacom shares fell below required levels in the loan
agreements.

National Amusements is Redstone's family holding
company, and the stock sales represented 20 percent of the holding
company's CBS shares and 10 percent of its Viacom shares. A spokesman
for National Amusements declined to comment.

Certainly some of the biggest investors aren't happy with recent market events.

Earlier
this year, billionaire Kerkorian's investment firm Tracinda Corp. paid
about $1 billion, at an average share price of near $7.10, for about
141 million shares in Ford Motor Corp. That represented a 6.49 percent
stake in Ford.

Those shares have tumbled as the automaker's
financial condition weakened considerably amid slumping sales and
tighter credit conditions. That drove Tracinda to disclose twice in
recent weeks that it was selling some of its Ford stock — one batch of
7.3 million shares sold at an average price of $2.43 each, and the
other for 26.4 million shares at an average sale price of $2.01 each.
That means for about a quarter of his total Ford holdings, he got $71
million.

Tracinda spokeswoman Winnie Lerner declined to comment.

Activist
investor Icahn faces an equally ugly situation with his investment in
Yahoo Inc. earlier this year, when he bought about 69 million shares
for a nearly 5 percent ownership stake. As of June 30, those shares
were valued at about $20.60 each, according to a regulatory filing.

Over
the summer, he fought hard to get Yahoo's board to agree to a takeover
by Microsoft Corp., a deal that never went through. As a concession,
Icahn got a seat on the Yahoo board for himself and two allies.

But
his Yahoo holdings are off sharply, with the company's shares trading
around $13 each. That means he's down more than $500 million since late
June. Icahn didn't respond to a request for comment.

As Tuck's
Hansen notes, the current market conditions are serving up a reality
check — not just for individual investors but for the biggest names
around.

"Fishing isn't called catching, and investing isn't just
called making money," Hansen said. "We have to remember that things can
go down by a lot."