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.

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Comments on “Can CEO Pay Be Controlled?”

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Anonymous Coward says:

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I have a problem with the corporation such as the airlines that cried poor and toldCongress to give them MY tax money for free because they did a bad job running their business. The CEOs whose salaries were know where/are making between $4 million and $12 million dollars a year… for what… mismanagement? Thousands of families lives are turned upside down and/or destroyed because Mr. Suit cannot run a business but continues to collect a pay check. If any one of those useless SOBs took a pay cut (perish the thought) they could potentionally save thousands of families and continuing to make bad choices. But no… they ruin the families and take their tax money.

Look at Enron. They screwed everyone and now the Dems want to see if the White House could have saved Enron. I don’t pay taxes to cover mammoth screw-ups. If you want to use my money to save huge businesses I want those responsible put to death. I bet the arrogant SOBs wouldn’t be so quick to play Russian Roulette with other peoples lives.

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