Tuesday, April 22, 2008

Life Should Be A Little More Fair

From Rewarding failure by Geoff Colvin:

You might suppose that the stars are in near-perfect alignment for major reform of CEO pay. The mammoth pay and disastrous performance of Countrywide Financial's Angelo Mozilo, Citigroup's Chuck Prince, and Merrill Lynch's Stan O'Neal should be enough to make the public furious.

Each CEO departed with $100-million-plus compensation after misadventures with subprime mortgages. Now add the economic slowdown to the mix; ordinary Americans are worried about making ends meet while failed pooh-bahs rake it in. Then throw in one more element - a presidential election. Put it all together, and how could change not be imminent?

The answer is that whatever remedies reformers enact, corporate boards can always find a way to pay the boss whatever they like. Over the past 25 years CEO pay has risen regardless of the economic or political climate. It rises faster than corporate profits, economic growth, or average workforce compensation.
The rich and politically powerful get to set a minimum wage for the poor and politically weak. It seems only fair that the poor and politically weak should be able to set a maximum wage for the rich and politically powerful.

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