Thursday, June 29, 2006

Executive compensation

Our previous post noted some of the real facts behind some companies' efforts to end or reduce pensions for their rank-and-file workers. This week the Wall Street Journal reported on the issue of executive compensation, using the example of CEO Hank McKinnell of Pfizer:
Since Mr. McKinnell became CEO in 2001, Pfizer's shares have lost more than 40% of their value. Meanwhile, the CEO has received $79 million in pay during that period and has a guaranteed pension of $83 million when he retires.
. . .
Last year, total direct compensation for chiefs -- which includes salary, bonus and the value of restricted stock when it was granted -- jumped nearly 16% to a median of $6.05 million, according to an analysis of 350 major companies by Mercer for The Wall Street Journal. Most CEOs also received generous pensions, deferred compensation and other perks.
. . .
But institutional investors, who were surveyed separately, think a lot differently. Just 22% think the pay system has helped the nation's economic performance. And some 90% said top executives are "dramatically overpaid," compared with 61% of directors.

These contrasting views illuminate the problem: Most directors -- many of them CEOs and retired CEOs themselves -- still are more aligned with chief executives than with the shareholders they purportedly represent.

The rest of the article is here. Perhaps those who argue for fairness in the areas of pay for executives in relation to pay for the rank-and-file workers need to base their arguments on shareholder rights rather than justice in order to get more support for their proposals.