Can CEO Pay Be Controlled?
from the maybe,-maybe-not dept
We’ve had a number of discussions lately about out-of-control CEO pay at technology companies, so this article about how to tame CEO compensation seemed relevant. To some extent, I’m not sure I’m a fan of what they talk about. I remember the debates a decade ago about “excessive” CEO compensation, and I don’t really have a problem with it when a company is doing well. However, when a company is doing poorly, it seems very questionable to be laying off workers without severance, while giving the CEO responsible for the collapse many millions of dollars and free planes and such. This article has two basic suggestions. First, it says that union pension fund managers should force boards to limit CEO compensation. Of course, this would appear to be focused on big companies that employ unionized employees, but the effect of limited CEO pay in one industry or company, could certainly influence others. The other suggestion, since so much compensation these days is in the form of stock options, is to simply cap the upside for CEOs. After they’ve made $x million in option wealth, the rest goes back to the company. Again, I’m not sure how strong an idea this is, as it does (at least to a certain extent) remove some of the incentive from the CEO to improve the companies stock price. Still, it is interesting to think about. I would think that a simpler solution might be to hold boards more liable for companies that fail while their CEOs were handed huge raises and bonuses.