Says the Economist:
“Executive compensation in America—already far ahead of the rest of the world, despite the best efforts of overseas managers to catch up—is now rising inexorably again. In fiscal year 2004 the total compensation of the median American company boss rose in every industry, by between 9.7% in commercial banking and 46.1% in energy, according to a new report by the Conference Board, a research organisation. In the big companies that comprise the S&P 500 index, median total chief-executive compensation increased by 30.2% last year, to $6m, compared with a 15% rise in 2003, according to a study published last month by the Corporate Library, a firm that tracks corporate-governance data.”
One of the interviewees – Bob Pozen, chairman of MFS Investment Management, is pissed off at executive pay packages that reward bosses generously even if they fail. He is extremely critical of the role of compensation consultants. They, he says, tend to be chosen by the chief executive, and to drive up pay by recommending that the top man should be paid more than his peers, having chosen a group of peers whose pay errs on the high side.
Hmmm. Can we outsource the CEO to a low-cost country? Is there no cure for Enron-ititis? Read the full article.
Maybe that’s why Peter Drucker wasn’t so popular at the end. He called this “looting.”
The last word – again from the Economist: “…hell is more likely to freeze than bosses’ pay.”