With Securities and Exchange Commission chairman Christopher Cox last month outlining plans to make companies come clean on executive compensation, pay for bosses is shaping up as the next big fight.
In an interview on NPR, Nell Minnow, co-founder of the Corporate Library, talks about possible directions for the "Jack Welch GE Commemorative Disclosure Rules" and about the loopholes in the system that allow the rampant abuse to continue. While the audit committees and nomination committees are doing a better job, the compensation committees are failing.
The Conference Board seems to have picked up on that point. In its report here, it calls on compensation committees to do a better job controlling consultants.
According to the report, it's best to make sure they are independent of management so that they can give objective, neutral advice.
Hi Leon,
To me the bigger issue is the AMOUNT of executive compensation. We’ve passed the bounds of reason to the point that some of these pay packages now shock the conscience.
I used to be in the corporate world and I can tell you that no corporate executive is worth $60 million — I don’t care how good they are. One person can make a big difference in business performance — but not that big.
Just think of the bigger impact to the company’s bottom line if they’d give up those outrageous pay packages. then, they’d be contributing something worthwhile.
The gap between the average employee and those making these big pay packages has gotten skewed completely out of whack.
It reminds me of that scene in the Mel Brooks movie Spaceballs, where they are going from hyper speed, past ridiculous speed, to ludicrous speed. That’s what corporate pay packages have done — they’ve passed ridiculous and are now at ludicrous.
Best,
Anita