Mr. Robert P. Cummins' days may finally be numbered as CEO of Cyberonics, Inc. (NDAQ:CYBX) as shareholders move in to control the Board. Some may wonder how he stayed in office this long; after all, he is the subject of an SEC investigation while his company's stock has lost more than 50% of its value this year alone. These same people would be shocked to learn that he is not only still in office, but he also received a new five year contract extension and a 50% pay raise!

So, just how much money is Mr. Cummins making? Well, he made the most money on June 15, 2004 when he and two other company officers netted a cool $2.5 million overnight – not bad for a day’s work! How is this possible, you ask? Well it turns out that the company just happened to receive a favorable FDA report with regards to their flagship product the day of their stock option grant. While trading was halted for the rest of us at $19.58 per share (the prior day’s closing price), they were issued 170,000 options at this price while the press release was circulated. The next day the stock opened at $34.81 per share – netting a whopping $2,589,100 overnight! Unfortunately for them, the SEC took issue and they are currently still under investigation.

However, in addition to that “bonus”, Mr. Cummins has also made an estimated $17 million in proceeds on the sale of shares received through stock option grants in addition to a substantial grant of restricted shares. This is not to mention his $800,000 per year regular salary. In fact, the executive compensation was in such excess that one board member actually resigned, saying that he “cannot support the direction of the governance practices of the Cyberonics board, in particular its practices regarding CEO compensation and succession.”

While this man is minting his own money, investors are losing millions. Even now, when the company is facing delisting from the NASDAQ and a possible default on its senior notes, this man remains in control of the company. Fortunately, an activist hedge fund is seeking control of the Board to turn things around. You can read their letter to shareholders here, which outlines many of the issues addressed in this article. Whether they are successful or not is contigent on several factors; however, this story goes to show just how corrupt Corporate America can be.