rssCEO Raises Under Scrutiny
Friday, February 01, 2008 at 1:58 pm
- 7 Comments
Most CEO’s don’t wake up in the morning, look at themselves in the mirror and say, “Regardless of my company’s overall performance, I deserve a raise!” In reality their companies usually hire consultants that determine CEO pay. And now those consultants are under scrutiny.
Yesterday Rep. Henry A. Waxman, D-Calif and chair of the House Oversight and Government Reform Committee, sent a letter to the top 250 Fortune 500 companies asking who these consultants were and how they determine executive pay. Do the consultants do other work for the company? Are multiple consultants hired or just one? Is their boss the CEO? Do shareholders know about any of this? Company employees?
Despite public hand-wringing over the fact that CEO’s of the largest companies make about 600 times more about the average employee, the people recommending these salaries, however, are largely a mystery. A December Oversight Committee hearing reported that CEO’s at 113 of the top 250 companies, had consultants who performed other roles with the corporation. In other words, the consultant may be telling their boss whether they deserve a raise.
With the looming recession, their might be growing public momentum to probe the otherwordly pay of CEO’s. Indeed, the oversight committee’s general investigation will hold a hearing on the well-compensated CEO’s of companies responsible for the subprime mortgage crisis.
So these could be high-anxiety times even for the super-rich.
7 Comments
Comment posted February 4, 2008 @ 1:00 am
I think any company that has lost billions of $$ and is looking for a bailout must give taxpayers and shareholders an explanation for $100 million plus CEO pay. I mean they are all crying about going broke, and expecting us to cover those outrageous salaries and/or buyouts. Those companies deserve to go under. They are top heavy and muct fall over sometime. They are ruining this country. Those boards that agree to pay a bunch of losers high salaries because they are worried about losing talent need to get a clue. The best thing that could happen would be if the Managers who consistently lose money went to work for the competition. Either their product is a loser or their management is.
Comment posted February 2, 2008 @ 8:10 pm
I think this is a complicated issue; boards have compensation committees who are frequently CEOs at other corporations. These committees hire consultants, but it seems it’s always in everyone’s interest to overpay the CEO. Why pay less? No one seems to care and no one is punished for over-payment. Conflicts of interest, hidden agendas, lack of transparency abound.
But the thing the galls the most is that these CEOs, always stout advocates of competition, can fail miserably and still make millions. They talk about risk-taking and the virtues of the market, but they game the system to ensure they will be completely insulated from poor performance. The only ones who suffer are the employees and the shareholders.
Comment posted February 2, 2008 @ 2:25 am
I thought it was the Boards of these corporations that set the compensation. And the Board members are CEOs of other corporations, on whose Boards may sit the CEO in question.
Thus, they decide on a large pay package in hopes that their own pay package is reciprocally large. Reciprocally… is that a word?
Comment posted February 1, 2008 @ 8:25 pm
I thought it was the Boards of these corporations that set the compensation. And the Board members are CEOs of other corporations, on whose Boards may sit the CEO in question.
Thus, they decide on a large pay package in hopes that their own pay package is reciprocally large. Reciprocally… is that a word?
Comment posted February 2, 2008 @ 2:10 pm
I think this is a complicated issue; boards have compensation committees who are frequently CEOs at other corporations. These committees hire consultants, but it seems it's always in everyone's interest to overpay the CEO. Why pay less? No one seems to care and no one is punished for over-payment. Conflicts of interest, hidden agendas, lack of transparency abound.
But the thing the galls the most is that these CEOs, always stout advocates of competition, can fail miserably and still make millions. They talk about risk-taking and the virtues of the market, but they game the system to ensure they will be completely insulated from poor performance. The only ones who suffer are the employees and the shareholders.
Comment posted February 3, 2008 @ 7:00 pm
I think any company that has lost billions of $$ and is looking for a bailout must give taxpayers and shareholders an explanation for $100 million plus CEO pay. I mean they are all crying about going broke, and expecting us to cover those outrageous salaries and/or buyouts. Those companies deserve to go under. They are top heavy and muct fall over sometime. They are ruining this country. Those boards that agree to pay a bunch of losers high salaries because they are worried about losing talent need to get a clue. The best thing that could happen would be if the Managers who consistently lose money went to work for the competition. Either their product is a loser or their management is.
Comment posted February 3, 2008 @ 7:00 pm
I think any company that has lost billions of $$ and is looking for a bailout must give taxpayers and shareholders an explanation for $100 million plus CEO pay. I mean they are all crying about going broke, and expecting us to cover those outrageous salaries and/or buyouts. Those companies deserve to go under. They are top heavy and muct fall over sometime. They are ruining this country. Those boards that agree to pay a bunch of losers high salaries because they are worried about losing talent need to get a clue. The best thing that could happen would be if the Managers who consistently lose money went to work for the competition. Either their product is a loser or their management is.
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