Regular readers of this blog will know that one issue on which I am still a flaming left-winger is CEO pay. I'm astounded by the huge amounts of money even unsuccessful CEOs take home. In today's Wall Street Journal the always perspicacious Alan Murray takes a look at the issue (subscription required). According to Murray, I'm not alone. Here's his lead:
What do superinvestor Warren Buffett, Florida Gov. Jeb Bush, and labor boss Gerald McEntee have in common?
Not much, except this: They all believe executive compensation in the U.S. has gotten out of hand.
Murray cites the egregious cases of ousted CEOs' golden handshakes: $44 million for Morgan Stanley CEO Philip Purcell, $21 million for Hewlett-Packard CEO Carly Fiorina. He also takes a thoughtful look at Home Depot CEO Robert Nardelli's $27 million 2005 take—more, it seems than the man who beat him for the General Electric CEO post, Jeff Immelt, and more than the CEO of Home Depot's competitor Lowe's, even though Lowe's stock price has risen and Home Depot's hasn't.
Murray summarizes the situation in his final paragraphs:
Change is underway. Boards are getting tougher. They now require compensation consultants to report directly to them, not to company management. Proposed Securities and Exchange Commission rules requiring clearer disclosure of executive compensation may help, too. And the lavish separation packages given to Mr. Purcell and Ms. Fiorina were the exceptions last year, not the rule.
But change may not be happening fast enough to stop the gathering opposition. If the pace doesn't quicken, companies may find it forced down their throats.
Let's hope so. Warren Buffett, Jeb Bush, and Gerald McEntee are fighting a good fight.
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