Thanks, but I don't want a golden parachute
So when you made your decision, did you get calls from other CEOs saying, "Hey, stop making it bad for the rest of us?"
(Laughing) No. But I think it is going to be an increasing trend . . . Trust me when I tell you that the CEOs I talk to do read the newspapers. We are sensitive to the criticism. Most CEOs are very sensitive to what their institutional shareholders think. I go out and try to see mine as frequently as I can. In general, they are pretty free about telling you what they like and don't like.
Next year, for the first time, companies will probably have to reveal the true value of supplemental executive retirement plans, or SERPs. Given what's happened to rank-and-file pensions, when you meet with other board members, what is the conversation about executive pensions?
I have a SERP here. When I came here from Wall Street, the firm wasn't in a position, no surprise, to approximate what I used to make. They gave me credit as if I had been here for a while as a "perk" of joining. So I have one. It is limited and is reduced by other benefits I get–401(k), the cash balance plan, and things like that. I have asked, and the compensation committee has concurred, that we ought to ask what the value of that is, in order to figure out whether it makes sense.
Some people say that compensation consultants have been driving up executive pay because they want to curry favor with executives who might hire them for other jobs.
I have never known a compensation consultant to depress compensation.
What about concerns that boards are too deferential to executives?
Boards generally don't want to annoy management, they don't want to antagonize management, but they take their responsibilities very seriously, in my experience . . . I am very leery of anybody who tries to establish upper limits on compensation . . . The fact is the market is aware of what executives are being paid, and as we go to better disclosure, the market will be even more aware of it. . . . Ultimately, that will be reflected in the stock price of the firm.
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