Author would like CEOs to have less pay, more ethics

[Jon8503]

Nov. 17, 2005 (KRT News delivered by Newstex)
When Leo Hindery suggests cutting the pay of many top corporate executives and redistributing the excess among employees, a lot of people suggest that he's off his rocker. Others, says Hindery in his new book, "It Takes a CEO," respond that such a move would amount to only a symbolic gesture, punishing the big guys without substantially helping the little guys. "Not so," he writes. "If the `CEO tax' (that is, the excessive compensation) paid by Occidental Petroleum (NYSE:OXY) in 1997 had been distributed across that huge company's workforce, everybody would have gotten an extra $8,199."

He adds that if the excessive compensation paid other top Occidental executives had been similarly redistributed, everybody would have gotten an additional $16,398. "How many average Joes at Occidental would have turned up their noses at an extra sixteen grand?" he asks. "Not too many. And lest we forget, those are the people who actually earned most of the money for the company."

The author, managing partner of the private equity firm InterMedia Partners and former chairman and chief executive of Global Center, president and CEO of AT&T (NYSE:T) Broadband and president and CEO of Tele-Communications, believes that the ratio of CEO compensation to regular employee compensation is totally out of whack. "CEOs aren't worth that much," he writes. "Michael Eisner ... was paid $800 million by Disney over a thirteen-year period. In that period, he delivered returns to his investors that were less than they would have gotten from investing the same money in T-bonds. And Eisner is considered by some to be a good CEO."

CEOs in the United States on average are paid more than twice what their counterparts in other industrialized nations make. And the imbalance between CEO pay and ordinary-worker pay is some instances as much as 2,500 to 1. Corporate boards, Hindery says, must find ways to close that gap and end the climb of executive pay.
Among the suggestions Hindery offers is to rein in abuse of stock options by expensing them, not allowing them to vest on a short-term basis or to reload.

http://pajamasmedia.com/newsml/html/united_states/2005/11/17/6419651_Author_would_lik.shtml

[Phoebe Loosinhouse]

1. Publicly held companies DO NOT exist for the purpose

of transferring the assets (wealth) of the company into a few pockets at the very top. These executives and Boards of Directors violate their fiduciary responsibilities to their shareholders when they award themselves these outrageous salaries. Some companies are nothing short of a legalized Ponzi scheme. This money could and should go to the investors in the form of dividends or be re-invested into the company in the area of R&D, or go to fund some of these undercapitalized pension plans we keep hearing about, or go to reward good employees.

Since so many employees of various companies usually own some stock if they participate in a 401K, I continually wonder when they are going to wise up and start raising a ruckus at the shareholder meetings or turn over their proxy for someone who will fight for their interests as both employees AND stockholders.

[smirkymonkey]

2. Kicked and recommended!

Have to run off now to help my CEO get richer!

:kick:

[Phoebe Loosinhouse]

3. Fitzgerald agrees! Here are his comments today about this very topic

http://www.washingtonpost.com/wp-dyn/content/article/2005/11/17/AR2005111700910.html


Fitzgerald issued an arrest warrant for Black, 61, whose whereabouts are unknown. He faces as much as 40 years in prison and $5 million in fines if convicted on all charges. Fitzgerald said he would seek Black's extradition if he does not turn himself in.

"Officers and directors of publicly traded companies who steer shareholders' money into their pockets should not lie to the board of directors to get permission to do so," Fitzgerald said in a statement. "The indictment charges that the insiders at Hollinger -- all the way to the top of the corporate ladder -- whose job it was to safeguard the shareholders, made it their job to steal and conceal."