Executive Pay: A Special Report
The Drought Is Over (at Least for C.E.O.’s)
By DANIEL COSTELLO
Published: April 9, 2011
HAPPY days are back — in the corner office, at least.
After shrinking during the 2008-9 recession, paychecks for top American executives are growing again — in many cases, significantly so.
Rarely has the view from the corner office seemed so at odds with the view from the street corner. At a time when millions of Americans are trying to hang on to homes and millions more are trying to hang on to jobs, the chief executives of major corporations like 3M, General Electric and Cisco Systems are making as much today as they were before the recession hit. Indeed, some are making even more.
The disparity is especially stark as companies are swimming in cash. In the fourth quarter, profits at American businesses were up an astounding 29.2 percent, the fastest growth in more than 60 years. Collectively, American corporations logged profits at an annual rate of $1.678 trillion.
[Where's the tax? TAX THE RICH!]
What many of these executives aren’t doing, however, is hiring. Unemployment, although down from its peak, stood at 8.8 percent in March. And few economists predict the jobless rate will drop substantially anytime soon.
So far, this recovery has not trickled down.
On this year’s list, the highest-paid C.E.O. was Philippe P. Dauman of Viacom, who made $84.5 million in just nine months. (Viacom changed its fiscal year-end to September from December.)
[$312,963.00 per day]
Also at the top was Ray R. Irani, the C.E.O. of Occidental Petroleum, who took home $76.1 million last year, up 142 percent from the previous one.
[$208,493.00 per day]
Lawrence J. Ellison of Oracle, the software giant, followed close behind, with a $70.1 million payout, though that is down 17 percent from 2009. Still, Mr. Ellison’s fortunes are just fine: he had more than $26.3 billion in stock and other holdings in Oracle in 2010.
[Well, you get the idea.]
There are some early signs that shareholders are pushing back and demanding to be heard on what they deem as excessive pay packages.
Shareholder frustration was probably most evident in recent weeks in the unusually bitter public spat at Hewlett-Packard. Two of the most powerful shareholder advisory groups issued highly critical public reports recommending that investors this year vote against H.P.’s executive pay plans and current board members, saying that the company highly overpaid its executives.
H.P. rejected the criticism in a letter to shareholders in March, saying the recommendations were flawed. But at a packed annual meeting in an Arlington, Va., hotel late last month, a majority of shareholders voted against approving the robust executive pay packages.
True power for shareholders may come when executives who perform badly or whose companies are accused of fraud are required to forfeit their multimillion-dollar payouts.
[In the case of fraud(!), they aren’t fired; they aren’t arrested an put in jail. They forfeit their bonuses!]
You can read all about the whole sorry mess here.
http://www.nytimes.com/2011/04...agewanted=1&src=recg
LETTERS
How General Electric Dealt With the Tax Man
Published: April 9, 2011
To the Editor:
In “Who Could Blame G.E.?” (column, April 5), Joe Nocera says America’s corporations have a fiduciary duty to maximize profit for their shareholders. Who says so? This has become the modern mantra of business-school professors and chief executives. But the corporation is not chartered by the shareholders. It is chartered by the state. The state charters corporations because it believes they may provide benefits to the society and not just to the shareholders.
It is interesting to note that as recently as the 1980s, the Business Roundtable’s chief executive mission statement asserted that the chief executive had a duty to care for customers, employees, communities and the nation (the stakeholders, in other words) as well as the shareholders.
This mission statement was changed in the mid-1990s [Remember the movie Wall Street "Greed Is Good?"] to conform to the present shareholder value fetish. General Electric and other corporations that practice this fetish do so at their own and the country’s long-term peril.
CLYDE PRESTOWITZ
Potomac, Md., April 5, 2011
The writer, president of the Economic Strategy Institute, a nonpartisan public policy think tank, was counselor to the secretary of commerce in the Reagan administration.
http://www.nytimes.com/2011/04...era.html?ref=opinion
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