Executive compensation gone wild is a major pet peeve of mine. And if seven-figure pay packages plus restricted stock and options and country club memberships aren't bad enough, some executives are now sticking their companies with the losses on homes they bought.
Here's how it works: A company wants to hire a new CEO but she'll have to relocate to take the job. So the company agrees to make up any loss on the sale of the house. In this real estate market, that's becoming more of an issue. Qwest (NYSE: Q) lost $1.8 million on Edward Mueller's old house.
Part of me doesn't think this is such a big deal. If that's what it takes to recruit the executive, and the board is aware of the potential liability, it isn't really any different from a higher salary. Recent SEC rules that require companies to provide a summary compensation table showing the total value of the top officers' pay packages including all perks make this less of an issue.
Of course, some pay critics are using this as an opportunity to jump on the greed of executives and the supine nature of corporate directors. But the focus should remain on corporate governance and the fact that executive pay is too often completely unrelated to performance. Issues like relocation benefits make for good stories, but they're really not the issue.
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Reader Comments (Page 1 of 1)
5-18-2008 @ 4:18PM
B. Harrison said...
When will the insanity of MILLION DOLLAR Plus compensation for CEOs and upper managment stop. This is nothing more than corporate robbery of the stockholders and the employees.
Personally, I do not know of ONE single CEO or manager who truly warrants a multi-MILLION dollar compensation package. I have yet to see the results of any CEO/manager that could not have been accomplished by perhpaps DOZENS or MORE other business people; and too many of these CEOs/managers' corporations suffer significant losses under their "leadership".
Instead of being a competitive managment field, it has become a clique of selected CEOs and managers who, like Hollywood celebraties, are being paid for for illusional facade. Performance should be the basic determinant of thier compensation. And it is well past time to end the era of the "golden parachutes, especially for those losers who fail to significantly improve the coroporations long term net profits.
Part of our national economic problems are CEOs and managers who use "creative accounting" and short term questionable and suprficial manipulations to boost the charade of quarterly profits to "look good" . . . the we wind up with all of these major financial corporations who have extensive "assests" with highly questionable value, if any. At what point does this become financial fraud?
Stockholders, the true owners of the corporations, and the employees need to push for responsible, and reasonably paid effective management, instead of the parade of "movie star" image CEOs and corporate managers. They've bled our corporations and national ecomony more than we can afford.