Rich still too richly compensated according to richest of them all

Posted Nov 12th 2009 3:40PM by Tom Johansmeyer
Filed under: Competitive Strategy, Microsoft (MSFT), Financial Crisis

It's easy to save the world when you've already taken care of yourself. But, we rely on these mavericks -- the wealthy who realize they can make a difference -- to do what we cannot on our own. So, it comes as a relief that Bill Gates, founder of Microsoft (MSFT) believes executive compensation is still too high.

It's a murky topic, and some forms of regulation, Gates believes, won't help. In a discussion on philanthropy at the 92nd Street Y in Manhattan, where many of the people Gates criticized send their kids for early education, the former CEO and still rich guy cites the $1 million executive salary cap required by law in 1993 as a big mistake. While compensation has to be controlled, he believes this measure backfired and thinks that other, similar efforts are doomed to fail now.

Because of the $1 million cap, alternative forms of compensation were devised, with stock options causing executive pay to skyrocket and shaping the role of the CEO around quarter-to-quarter management rather than strategic planning and long-term sustainable value creation.

According to Reuters, Gates says, "The compensation problem is a very interesting problem. I do think compensation is often too high, but it's a very tough problem to solve." After all, there aren't many levers one can pull. He isn't crazy about too much government involvement but stopped short of saying that a regulatory solution would not be feasible.

Tags: 92nd st y, 92ndStY, bill gates, BillGates, compensation, compensation caps, CompensationCaps, executive compensation, executive pay, executive salary, ExecutiveCompensation, ExecutivePay, ExecutiveSalary, gates, inthenews, manhattan, microsoft, microsoft msft, MicrosoftMsft, msft, new york, new york city, new york new york, NewYork, NewYorkCity, NewYorkNewYork, philanthropy, regulation, regulations, salary cap, SalaryCap

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Reader Comments (Page 1 of 1)

11-12-2009 @ 5:01PM

thedude said...

I don't particularly feel that executive compensation is too high. I do think that executives are being compnesated for lousy performance though.

Paying some idiot 120 million per year to run a company into bankruptcy while screwing the shareholders is criminal.

I believe that executive compensation should start with a base salary of $52,000.00 per year (they can live not too poorly on that)

Then offer them bonuses based on the amount of taxes paid on the profits earned

If a company pays $250 million in taxes on $1 billion of profits then the select execs can be paid a percentage of $250 million the CEO maybe gets as high as 10% then progressively trickle down to lower execs who may only get 1% or even 1/2%

This would guarantee that Uncle Sam gets his share first, that the execs can still rake in a good salary and that there is some left over to create value and improve stock prices.

Execs should also be prohibited from trading company stock. Their pay would be based solely on actual performance rather than stock manipulation.

11-12-2009 @ 8:28PM

sue said...

He has more moeny than God of course and does not want others to get to his level. It is interesting how the elite wealthy do not want it for anyone else.