Greed, greed and more greed
C.E.O. Pay Goes Up, Up and Away!
Joe Nocera, NYT
APRIL 14, 2014
At 79, Graef “Bud” Crystal is the grand old man of executive compensation critics. Once a top compensation consultant, he switched sides in the 1980s, becoming a fierce critic of many of the practices he helped institutionalize, and analyzing executive pay for other media like Fortune and, most recently, Bloomberg News. He’s been known to call his second career “atoning for my sins.”
The other day, Crystal was recalling what it used to be like trying to cobble together pay information about a chief executive based on reading the disclosure documents required by the Securities and Exchange Commission. There was no rhyme or reason to the way the numbers were put together, and shareholders were often left scratching their heads.
“I remember writing an article for Fortune in the late 1980s, using Goizueta’s pay at Coca-Cola,” Crystal told me. (Roberto Goizueta was the chief executive of Coke from 1981 until his death in 1997.) The proxy statement showed that he made $800,000 that year in salary. But about 15 pages later, it showed that he had received an additional $56 million in stock options. Except that, instead of being written numerically, the option grant was spelled out, thus easy to overlook. “It was deliberate obfuscation,” said Crystal.
For the most part, it isn’t like that anymore. In the mid-2000s, the S.E.C. passed rules forcing companies to place all the compensation information for top executives in one place. There were people who thought that this effort at pay “transparency” would help get C.E.O. compensation under control — in effect shaming compensation committees and chief executives from letting executive pay get any more out of hand than it already was.
(More here.)
Joe Nocera, NYT
APRIL 14, 2014
At 79, Graef “Bud” Crystal is the grand old man of executive compensation critics. Once a top compensation consultant, he switched sides in the 1980s, becoming a fierce critic of many of the practices he helped institutionalize, and analyzing executive pay for other media like Fortune and, most recently, Bloomberg News. He’s been known to call his second career “atoning for my sins.”
The other day, Crystal was recalling what it used to be like trying to cobble together pay information about a chief executive based on reading the disclosure documents required by the Securities and Exchange Commission. There was no rhyme or reason to the way the numbers were put together, and shareholders were often left scratching their heads.
“I remember writing an article for Fortune in the late 1980s, using Goizueta’s pay at Coca-Cola,” Crystal told me. (Roberto Goizueta was the chief executive of Coke from 1981 until his death in 1997.) The proxy statement showed that he made $800,000 that year in salary. But about 15 pages later, it showed that he had received an additional $56 million in stock options. Except that, instead of being written numerically, the option grant was spelled out, thus easy to overlook. “It was deliberate obfuscation,” said Crystal.
For the most part, it isn’t like that anymore. In the mid-2000s, the S.E.C. passed rules forcing companies to place all the compensation information for top executives in one place. There were people who thought that this effort at pay “transparency” would help get C.E.O. compensation under control — in effect shaming compensation committees and chief executives from letting executive pay get any more out of hand than it already was.
(More here.)
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1 Comments:
here is a classic case of government trying to solve a non-existent problem that makes the problem worse, so we need yet another government solution to deal with the shitstorm they created in the first place.
Since this idiot journalist doesn't remember the Clinton years, leave it to the experts (that's me!) to remind you follks of the 1993 budget that saw the creating of an IRS tax provision called 162(m). This provision was written in to law for the stated purpose of discouraging companies from paying in excess of $1 million in corporate pay, as any additional compensation would be taxed. But, as is the case, this is a prime example of 'government knows best' f*** ups. TaDa - 'performance pay' was exempted. So, unsurprisingly, businesses started paying executives more in the form of stock options, such that fully 55 percent of deductible executive pay was "performance pay" between 2007 and 2010.
If these government busy bodies would just leave things alone, we wouldn't see the enormity of the chasm between rich and poor as we have seen.
Thank you President Clinton. While trying to soak the rich, you made them wealthier. And that jackass president we have today rails on the widening gap between rich and poor as if HIS policies have been parked on the sidelines for 5 years. DOes anyone really think that those closest to the printing presses aren't going to further enrich themselves? Obama does. If these jackasses had ever taken a 101 econ course rather than poli sci classes, they might have an understanding that their failed liberal policies only make things WORSE!
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