Outlandish CEO Pay: How to Fix the Problem

When Stanley O'Neal stepped down as CEO of Merrill Lynch in November 2007, the company sent him out the door with $162 million, effectively doubling his earnings from nearly five years as chief executive. Over the next five quarters, Merrill lost more than $30 billion from deals that were largely brokered during O'Neal's tenure. Merrill's stock price was at $44 when O'Neal became CEO, $66 when he left in 2007, and $11 a year after he left, when a hobbled Merrill was taken over by Bank of America (BAC). O'Neal publishes his golf scores, but he's never taken responsibility for Merrill's implosion—or offered to return any of his money. And shareholders have no way of demanding it back.

This, of course, is a familiar, if grotesque, Wall Street story. Charles Prince earned nearly $160 million for serving as CEO of Citigroup (C) for four years, even though he left the bank crippled when he departed in 2007. The company's stock price was $47 when he took over in 2003 and $38 when he left in 2007. Today, with Citi a ward of the state thanks to disastrous moves under Prince, the stock wallows at less than $5. Martin Sullivan pulled a similar stunt during three years as CEO of AIG, signing off on derivatives deals that ultimately wrecked the company, brought the global economy down with it, and required an $85 billion taxpayer bailout. Sullivan's reward? $100 million. Nice work if you can get it.

CEOs weren't always entitled to nine-digit paydays for 11-digit losses, and we may finally be at a pivot point where CEOs get paid for building and running healthy companies, not just for showing up. The Federal Reserve and Treasury Department are developing rules that would link executive pay at 5,000 banks to the riskiness of their loan portfolios and long-term performance. Congress is readying other executive-pay rules that could be more severe. To head off intrusive government solutions, some industries and corporate leaders are proposing their own reforms, including a recent report by the nonprofit Conference Board prepared with input from big companies like Hewlett-Packard (HPQ), Nucor (NUE), Kroger (KR), and Caterpillar (CAT).

Fixing the problem of outlandish CEO pay isn't complicated, although anybody who wants to perpetuate the status quo could certainly obfuscate and make it seem that way. Here are five basic principles of reform that most experts agree on:

Link pay to long-term performance. O'Neal, Prince, and Sullivan earned millions for driving their companies into the ground because their bonuses and other incentives were linked to quarterly or annual results, not to the company's health in three, five, or seven years. That led them to take risks that boosted short-term performance without worrying about long-term consequences, which obviously didn't work out so well. Most proposals for reforming executive pay call for bonuses to be paid out over much longer periods of time, so executives focus on long-term stability. Compensation committees at each company need to devise specific formulas for measuring long-term performance, but in most cases it will be some combination of earnings per share, revenue growth, return on assets, and other metrics that reflect the company's financial health.

Allow claw-backs. If you buy a computer or refrigerator that doesn't work out the way you expect, odds are you'll be able to get your money back. But CEOs have been able to wreck companies and walk away unscathed, without returning any of their pay. "Claw-back" provisions would give companies the legal right to reclaim CEO pay if unhappy surprises surface after the boss has pocketed bonuses and other compensation. That might dissuade CEOs from inflating revenues or profits to boost short-term results or concealing risks that could become a problem later on.

Brian Hall, a compensation expert and professor at Harvard Business School, writes:

I automatically advise any board I work with to make claw-backs a part of their compensation plan. Why wouldn't you want the right to go after that money? This doesn't mean you don't trust your top executives. It's just good sound governance.

Claw-backs are rapidly catching on even without new laws requiring them. In 2006, just 18 percent of big companies had claw-back policies, according to the Conference Board. In 2008, 64 percent of big companies did.

Shareholders need to be more involved. One way to empower shareholders is to enact "say on pay" rules that allow them to have at least an advisory vote on executive pay packages. But the image of widows and pensioners clinging to a few shares of stock while the CEO exploits their trust isn't quite accurate. The majority of shareholders in most companies are institutional money managers who don't necessarily buy and hold shares for the long term; they trade every day and dart in and out of companies to exploit momentary gains and losses. By some accounts, those institutional shareholders have contributed to an emphasis on short-term results rather than long-term performance.

The Conference Board says:

Shareholders ... have a responsibility to avoid a 'check the box' approach to advisory votes on executive compensation and critically examine recommendations of proxy advisory firms.

The Lake Wobegone effect needs to be curtailed. Most big companies hire outside consultants to evaluate what CEOs get paid at other similar firms, a practice that inevitably leads to pay inflation. The consultants typically determine a pay range for "peer group" companies, with a figure that represents median pay. But some critics claim that compensation committees, which are usually friendly to the CEO, often cherry-pick a peer group with the highest possible salaries. And even then, paying your own CEO the median implies that he or she is mediocre, so compensation committees often aim to pay their cherished leader at or above the 75th percentile for the peer group. As a result, most CEOs get above-average pay and the peer group median goes up and up, a practice that has boosted CEO pay to about $8.4 million per year, according to Hewitt Associates.

Lavish perks should be reined in. The list of questionable CEO privileges includes huge severance packages that can be multiples of annual pay, unrestricted use of corporate jets, "gross-ups" that reimburse executives for taxes on perks that count as income, lavish "golden coffin" death benefits that accrue to families, and any other payouts not approved by shareholders. One rule of thumb would be to avoid any perk or payment that's generally controversial and, if in doubt, put it to a shareholder vote. Companies already seem to be heading in this direction. In 2007, according to the Conference Board, just 35 percent of firms allowed executives to use company aircraft for personal travel, a sharp drop from the year before, when 67 percent of big companies allowed it. But clipping CEO wings for a while doesn't mean they'll stay grounded. Another hand on the yoke would help.

Disclosure: no positions

Comments

[markfl:]

Just yesterday behemoth Royal Bank of Canada announced more deferred compensation aimed at long term performance along with claw backs in cases of malfeasance. I think they may be on the right track here.

Sep 23 02:53 AM

[eo:]

All those CEO´s should only be paid with toxic assets as long as there are some left. They created the stuff in the first place now just pay them with their own crab.
eo

Sep 23 03:36 AM

[CLH:]

I cant think of anything more immoral than govt. determining wages and salary. Both minimum and maximum pay should be determined only by the owners of the corporations and not the govt. who know nothing about anything.

Sep 23 07:07 AM

[Attila the Hun:]

Couple of simple ways to fix this issue:

Make companies disclose the complete pay package, base salary, stock, ALL benefits, as a line item thats voted on by shareholders. Little check box that allows the shareholders to select a maximum ratio of how much the top brass gets paid compared to their base salary college new hires. 10:1, 20:1, 50:1, etc. Option/grants are 5-7 years out and again go into the the ratio thats voted on for the year.

Keep the government out of this, but allow the investors to decide. If they have to go so far, make it a rule on the exchange. If you want your stock traded publicly on this exchange you have to allow for shareholder votes on executive compensation ratios. Not just the top guy/gal either the top 5-10% of the company. So if the CEO gets voted to have a 20:1 ratio then the VP's get 15:1 etc.

Sep 23 07:42 AM

[HenrikRClausen:]

It's easy. Stop the money-printing, AKA 'Quantitative easing', AKA 'growth in money supply', AKA 'monetizing debt' etc.

Once this artificial blood supply to the financial sector is cut, the bloodsuckers will go on a cold turkey. Leaving the productive part of the economy much better off, once the initial crisis is over.

Sep 23 08:28 AM

[HenrikRClausen:]

CLH:
"I cant think of anything more immoral than govt. determining wages and salary. "

Didn't that work well in the Soviet Union? Doesn't that work well in France? 'No' you say? Guess you have a point...

We need free market solutions to the problems. Demand for regulation is merely a symptom that something is broken elsewhere.

Sep 23 08:30 AM

[Mickey2010:]

I can't think of anything more immoral than letting fat cat CEO's and their captive boards rip off companies for big pay while the average worker and shareholder gets the shaft. It is obvious by now that shareholder governance isn't working. I'd rather have the government step in than let this country continue to be a corporate kleptocracy. Anyone who is not a fatcat CEO who supports these fatcats is a tool.

Sep 23 08:38 AM

[kenyon52:]

Tie a CEO's pay to a multiple of the lowest paid employees. Slow the insane drift back into aristocracy.

Sep 23 08:53 AM

[ResourceWise:]

It is reasonable to be angered by these examples where CEO pay is clearly unrelated to performance. However there is no silver bullet (e.g. CEO pay caps) that can prevent future melt downs of the markets. Reform is needed across all aspects of the market. Some of the many areas to examine:

1. Establish a clear link between pay and performance for all employees not just CEOs, where performance covers short term results as well as the actions taken to protect the longer term health of the franchise. Pay variable compensation i.e. bonuses based on net income not on revenues.
2. Risk rate revenues and treat the higher risk revenues to higher capital requirements.
3. Separate customer funds from bank funds (revive some form of the Glass Steagall Act, 1933).
4. Examine the social usefulness of activities that take place in the financial markets e.g. short selling, spread betting, high frequency trading, and tax arbitrage. Ban those activities that can cause harm to others.
5. Examine product structures that enable banks to profit from risk taking and pass on all risk to third parties (e.g. to customers, counter parties and tax payers). The cost of risk needs to be fully borne by the originator of the transaction and should not be passed on to other market participants without their specific agreement.
6. Bring all market participants (e.g. banks, hedge funds, private equity funds, insurance cos. etc) onto the same level playing field - with clearly marked boundaries, switch the lights on and let the games begin – in full sight of the regulators.
7. Simplify regulations, consolidate regulators and provide them with massive teeth.
8. Restrict gambling to clearly designated and regulated casinos – not the stock/bond/currency/co... markets.

It is clear to even a casual observer that many aspects of the current markets need substantial redesign. Let’s do that instead of demonising individuals who have just tried to take advantage of a crooked table with loaded dice.

Sep 23 08:58 AM

[I am not a ...:]

The Government needs to interfere in the pay packages,not just because of the apparent obscenity being exhibited but because these robber barons are the same ones who are directly responsible for last September...or have those of you not in favour of government intervention forgotten already?
As some one said last week " the music may have changed but the dance remains the same."
It's the very same thinking by these thieves which caused events such as such as the French revolution,the russian revolution ,the cuban revolution.
30% of the American population can afford Medical insurance,a tiny percentage of 1% can call themselves wealthy .
300 miliion Americans who have the right to bear arms may just decide that one more financial break down because of untrammeled greed is a just reason for a revolution .
Something to think about before slapping of backs is contemplated.

Sep 23 08:59 AM

[HenrikRClausen:]

<i>I can't think of anything more immoral than letting fat cat CEO's and their captive boards rip off companies for big pay while the average worker and shareholder gets the shaft.</I>

I can. The money-printing that makes this possible, even profitable...

Sep 23 09:01 AM

[hParker:]

To adapt the evaluation of children in Lake Wobegone: "All the CEO are above average.

Sep 23 09:02 AM

[Leslie Jack:]

I think the comment above by Attila the Hun is correct and which suggestion has been around for several years, if indeed it hasn't been the accepted practice in the corporate economy in the past; give the upper management a multiple compensation equal to the lower paid company employees. I saw one suggestion years ago that the CEO should not receive more than twenty times what the lowest full time salaried employee gets. Although this may be somewhat low you get the point - make it fifty or a hundred times or even in some cases fifteen times - a decision that the Board of Directors makes.

Sep 23 09:03 AM

[mariposa:]

Something, somehow needs to be done. The article is very good.

Sep 23 09:06 AM

[Uncle Mouse:]

I don't expect companies will step up to this on their own. After all, why should the CEOs and their buddies even allow it to come up for discussion? As much as I hate government involvement, I expect it will at a minimum require a legal change at the state level (esp. Delaware) or at the federal level (1) to make the results of shareholder votes binding on the company, and (2) to make the choices on the ballots reflect "for", "against", and "abstain" rather than only "for" and "abstain" .

Sep 23 09:14 AM

[john s. gordon:]

tie pay to long term performance (not just quarters) - yes.
encourage clawbacks where malfeasance is clearly evident - yes/
place limits on perks - yes.
executive compensation 'consultants' are corrupted by the pay they get from the board of directors, so you get unwarranted inflation in executive pay. eliminate or severely limit the practice.
> jack

Sep 23 09:18 AM

[americaninc...:]

There was a time, not that long ago, when the problem of high pay in the US was solved with marginal income tax rates above 90%. I hope we do not return to those days. While the problem of excessive CEO pay is in the limelight, is it any worse than an outlandish payment to a baseball player who does not bring in a championship?
In some sports the salaries were killing the business, so the owners got together and created some rules regarding total team salaries. In business the owners have to be the key. Don't have an owners' vote on the compensation itself but on the makeup of the compensation committee.

Sep 23 09:31 AM

[Albert Meyer:]

First, the IRS needs to withdraw the provision in the tax code that allows companies to deduct the discount at which they issue stock to employees. For years, companies have maintained that stock-based compensation was not an expense, but they have eagerly taken a huge tax deduction on that account in their tax returns.

Second, cash spent on buying back shares that were issued to employees in lieu of cash compensation should be reported in the operating section of the cash flow statement. If the IRS wants to grant companies a compensation deduction, then base it on these cash outflows. Cash outflows relating to stock repurchases should only be reported as a financing activity, i.e., an allocation of capital, once it has been shown that all dilution caused by stock-based compensation has been mopped up. Executives would have us believe that the stock-based compensation expense, as recognized in the income statement, is a non-cash expense. Cash spent on stock repurchases to combat dilution caused by stock-based compensation betrays this notion, and if properly disclosed as suggested above, would better inform shareholders of the true cost of share-based compensation.

Mutual fund, MIRZX, shuns companies that use stock-based compensation, unless used minimally, i.e., great companies like Telefonica, Nestle, Syngenta, TransCanada, StatOil, Tenaris, Southern Copper... to name a few.

Sep 23 09:54 AM

[David Sullivan:]

Boards of Directors represent shareholders and hire and fire management. They need incentives, regulations and customs to start doing their jobs. Board members of the world unite! Too often now, management de facto hires and fires boards of directors who spend more time golfing than governing at board meetings.
We need laws to shift the balance of power from management to boards. Silicon valley has done a much better job than wall street and should be a model. Managers should be paid mostly in restricted stock which they must hold for 5-7 years.

Sep 23 10:06 AM

[Paulretired...:]

I am a free market capitalist, but capitalism needs some controls. Lets face it, people try to get as much money from the rest of society as they can. A simple solution to outrageous compensation is to have a GREED TAX of 90% on compensation exceeding say $10 million/year.

Sep 23 10:11 AM

[bobbobwhite:]

When rich people still had some sense of social responsibility in the 50s, the highest tax rate was 92%. Rich people then accepted that they had to pay a higher share due to their success, but today they resent it as unfair and onerous.

The proof to me that those days were more as a country should be was that America cared more about the things that really matter in life, like honesty, duty and country, then they do in these days of "me, before everything else".

What's next in the logical progression of that hubris...... "only me"?

Sep 23 10:24 AM

[bob Allard:]

It is clear that the "owners" of public companies lack the governance structures to act as owners, which is a bigger problem than just compensation. Whenever someone is playing with other people's money, there must be a serious culture and consistently enforced transparency and accountability to protect the rights of those owners - this relates to government, non-profits or any other organization that profits due to their public role. "Good Governance", aka "right and wrong" used to be taught in grammar school and our churches, but we've somehow lost our way. When it's not your company (i.e. you didn't found it with your own money), then you don't have the right to take that which you didn't earn. There are so many examples of poor ethics that relate to this, it's hard to know where to start, but obviously we need a new model.

Sep 23 10:29 AM

[Midwest:]

Maybe this is too simple of a solution but it has its merits.

Only pay the CEO with profit that they actually helped generate. No stock options at all. No grants. No perks. No gross ups...

If you actually made a profit, then you get a share of that profit. Kind of how it works for everybody else in this world.

Sure, this could lead to window dressing and other sorts of problems but CEOs are more and more hesitant to overstate earnings for fear of straight up fraud allegations. Clawbacks would have to be in place in case of errors or lying.

No profit = smaller paychecks.

CEO pay coming off the bottom line would also generate far more interest from shareholders as they watch profit distributed to executives instead of themselves.

No more stock options. They're a crime waiting to happen. They're not incentives, they're theft from shareholders.

Sep 23 10:50 AM

[farmer448:]

First and foremost the companies directors and Chairman of the board should be held accountable for their fiduciary duty. If the SEC comes after a company, the board and c-level executives should be responsible for all fines. They were responsible and should be held accountable (Bank of America).
Right now directors are not held accountable for their actions.

Sep 23 11:05 AM

[Nyetnichevo:]

Face it, these bankers and their salaries, perks, options, etc., broke the financial system and destroyed good companies, jobs, 401ks, and the hopes of millions of people. Yet no repercussions felt.
Then we recapitalized the same criminal outfits that perpetrated this massive fraud. That tells them it's okay to fail, the taxpayer can help us out. Stock price goes up, new criminals step forward and the game has begun anew.

Sep 23 11:11 AM

[Bad Dog:]

Having sex with young teen girls is not as immoral as the government determining wages, huh? Because nothing - NOTHING - is more immoral than that. Murder, arson, grand larceny - none of those are as bad as the government determining wages. Not that I am advocating this, but you are a loon.


On Sep 23 07:07 AM CLH wrote:

> I cant think of anything more immoral than govt. determining wages
> and salary. Both minimum and maximum pay should be determined only
> by the owners of the corporations and not the govt. who know nothing
> about anything.

Sep 23 11:21 AM

[Ferdinand E...:]

I wonder what this is all about? When mediocrities and losers get to decide who gets what, then the wrong people will automatically move into the top jobs. That's why there are so many rotten teachers in the universities, and I don't just mean Sweden. John Gordon has the right idea: tie pay to performance. Come to think of it, that's why I was fired from Hughes.

Sep 23 11:32 AM

[OnW:]

To "americaninc"
And what's wrong with marginal income tax rates above 90% ? Industry and society functioned OK during those years. The haves still had plenty left over compared with the havenots. I'm not a socialist, but I believe there should be less inequity in compensation. Who can justify earning over $50 million a year and still pay the same marginal rate as the guy earning $l million?

Sep 23 11:34 AM

[convex:]

Hows about a simple mathematical formula and LAW , that has to be built into every Corporations legal obligations in order to get incorporated ---This LAW would simply be : that NO CEO / Executive can make . including BOTH Salary and Bonuses , more than 100 Times that of the Least paid full time employee in that same corporation ...so if a CEO is making 3 Million dollars a year , the Lowest employee must make Thirty Thousand ... 4 million ? then 40 Thousand for each employee...for the CEO's to make MORE Money , they must bring the whole company along with thems...anybody that thinks ANY executive is somehow worth more that 100 times any of their employees is living in a fools dream ...this would NOT be a socialist concept , the capitalist greed factor would still be in play , only now all the Employees would have a vested interest in seeing a company grow & succeed , , not just a few at the top... call this the ONE PERCENT LAW...neat , sweet , complete....

Sep 23 12:09 PM

[MSimon:]

"4. Examine the social usefulness of activities that take place in the financial markets e.g. short selling, spread betting, high frequency trading, and tax arbitrage. Ban those activities that can cause harm to others."

What we need is price fixing so that no one can make a product at a price that will drive the competition out of the market.

Of course that is The Road to Serfdom

Sep 23 02:00 PM

[MSimon:]

And you can read about the Road To Serfdom here:

www.amazon.com/gp/prod...

Sep 23 02:01 PM

[MSimon:]

There is only one problem with that. What if the Brits are willing to pay more for a given talent?

But I have an idea. Why not limit what baseball players can get paid? After all they don't even produce anything. $100,000 a year ought to be enough for any one playing sports.

On Sep 23 12:09 PM convex wrote:

> Hows about a simple mathematical formula and LAW , that has to be
> built into every Corporations legal obligations in order to get incorporated
> ---This LAW would simply be : that NO CEO / Executive can make .
> including BOTH Salary and Bonuses , more than 100 Times that of the
> Least paid full time employee in that same corporation ...so if a
> CEO is making 3 Million dollars a year , the Lowest employee must
> make Thirty Thousand ... 4 million ? then 40 Thousand for each employee...for
> the CEO's to make MORE Money , they must bring the whole company
> along with thems...anybody that thinks ANY executive is somehow worth
> more that 100 times any of their employees is living in a fools dream
> ...this would NOT be a socialist concept , the capitalist greed factor
> would still be in play , only now all the Employees would have a
> vested interest in seeing a company grow &amp; succeed , , not just
> a few at the top... call this the ONE PERCENT LAW...neat , sweet
> , complete....

Sep 23 02:05 PM

[jimmy46:]

No more stock options. They're a crime waiting to happen. They're not incentives, they're theft from shareholders. """"""""

YES!
AND RAISE INCOME TAXES ON INCOME OVER $1,000,000/YEAR
TO 60-70%.
THEY AREN'T EARNING THE MONEY, THEY'RE STEALING IT,
SO WHY NOT TAX IT?

Sep 23 02:06 PM

[MSimon:]

How about we eliminate envy by driving all the rich people out of the country? I can live on $15,000 a year. Any one who makes more than that should be taxed at 105%. Just to teach them a lesson.

Sep 23 02:08 PM

[backtoreality:]

OnW..
Blame it on Steve Forbes and all the ninnies who think his agenda of the flat tax is the way to go.

Instead of the grauduated income tax, they believe the king in his castle should be taxed at the same rate as poor man working the land

years ago, when ronnie reagan got his first tax cut for the rich, a new boxing champion appeared on the tonight show, and said: "I have spent my whole life learning to hate the rich....and now I have to learn to hate the poor"

money corrupts


On Sep 23 11:34 AM OnW wrote:

> To "americaninc"
> And what's wrong with marginal income tax rates above 90% ? Industry
> and society functioned OK during those years. The haves still had
> plenty left over compared with the havenots. I'm not a socialist,
> but I believe there should be less inequity in compensation. Who
> can justify earning over $50 million a year and still pay the same
> marginal rate as the guy earning $l million?

Sep 23 02:14 PM

[MSimon:]

A GREED tax?

There is no corporation in the world as greedy as government.

Sep 23 02:15 PM

[RiskAverseA...:]

Do not shareholders effectively have a vote already, this with their decision to own a stock? I was just thinking how willingness to own shares of companies with lavish executive compensation packages has been, itself, a sign of the times. Plainly, too much money has been chasing too little value, and I do not suppose correction of this trend has yet run full course. Indeed, I imagine the market, itself, will have more impact correcting executive compensation imbalances than any concerted effort at reform (this is not to say, though, the effort should not be made). And I don't imagine executives will be such big fans of the free market on the way down as they were on the way up. For this reason alone, it might be better to forestall any reform effort until after nature has already run its course. The cream ought learn the hard way the price of clinging to a fantasy, just like everyone else.

Sep 23 02:25 PM

[Nettligent:]

Shareholders and Taxpayers are always a victim and biggest losers. SEC is snake guards hen house.
Crooks are everywhere you turn. Find a healthy companies, management with integrity, and stick with them.

Sep 23 02:42 PM

[User 490471:]

Then it should be against the law to bail them out with public funds and the CEO should be held legally accountable for the disaster they bring upon shareholders


On Sep 23 07:07 AM CLH wrote:

> I cant think of anything more immoral than govt. determining wages
> and salary. Both minimum and maximum pay should be determined only
> by the owners of the corporations and not the govt. who know nothing
> about anything.

Sep 23 02:44 PM

[Nettligent:]

The President of the United States is the head of state and head of government of the United States and is the highest political official in the United States by influence and recognition. The President leads the executive branch of the federal government and is one of only two nationally elected federal officers (the other being the Vice President of the United States).

Being the most powerful elected official, chief executive, head of state, and commander in chief in the USA, the President of the United States of America receives some of the best job benefits and perks in the world. Beyond the power, heart attacks, and the migrain headaches is the:

The Constitution prohibits pay raises for sitting presidents.
Presidential Salary $400,000.

In addition to his salary, the President gets numerous expense accounts including:

•General account ($50000)
•Official expenses of the White House office
•Entertainment expenses
•Separate entertainment expenses for official presidential functions

The White House is a wonderful home. While you don't have to pay rent or sign a lease. Of course, if they need to get away from it all or entertain some foreign dignitaries, the presidency also comes with a woodland retreat to Camp David and enjoy the cozy cottages. In addition, there is a huge collection of vintage wine which is still in stock from when Thomas Jefferson spent more than $10000 purchasing it.

The President does have a number of expense accounts.

When traveling on the ground, the preferred method is the Presidential Limousine. If traveling by air, short trips are typically made in Marine One, the presidential helicopter. Longer trips are made in Air Force One, a modified Boeing 747.

The POTUS has some of the most highly trained bodyguards in the world. The best and brightest of the Secret Service protect the life and health of the President and his family 24 hours a day, and in fact, for the rest of their lives.

The President may hire a total of 34 staff for domestic service and administration. This is above and beyond the positions already officially part of the Executive Branch of the federal government. In addition, the President may hire the temporary services (one year or less) of an unlimited number of professionals, experts, or consultants as required.

Retirement. The annual pension is equal to the yearly salary of a cabinet member (currently over $150000). Some examples include Bill Clinton who is expected to receive over $6 million and Ronald

Reagan who received more than $2 million during his lifetime. Interestingly enough, George Bush has declined his pension.

In addition to the pension, the ex-president receives free postal service for non-political correspondence, free office space, and $96000 a year to pay for office help. During the first 30 months after his term has expired, the president is also eligible for up to $150000 per year to hire a staff to help with the transition.

Presidential Library: For every administration since Herbert Hoover, a presidential library is built to honor the former president and is used as the official storage facility of all the president's official documents by the United States National Archives and Records Administration.

Sep 23 03:07 PM

[youngolf:]

yes, when they are allowed to pick their own board members, what do we expect? honesty, integrity?? LOL

Sep 23 03:23 PM

[tbado:]

I agree that pay needs to be streached over a longer period of time.
Here is another solution, it is government regulation to corporate governance where the owners shareholders have the final say on pay.
The Board submits a pay proposal to shareholders(listing total pay). The proposal is divided into the top 20% in 5% ranks & the Board. Any part that does not get approved is reduced by 10% until approved and a pay package cannot be increased until its’ predecessor is approved for a year. Rejected packages must be resubmitted for approval within 6 months and are reduced by 10% for each failed vote. When a new person moves into a new position, their pay can be increased by 5% over the previous pay until a new pay package is approved by shareholders. At which time it can be whatever is approved. This 5% increase is a one-time increase until a new package is approved regardless of how many successive people fill the spot until the new package is approved.
The government makes this a requirement for all publicaly traded companies with market caps in excess of 1 billion, and shareholders get to decide what they think is just. This also allows shareholders to allow higher pay for incentive performers while keeping a rein in on CEO and similar officers.

Sep 23 04:01 PM

[Joe Snow:]

The problem I see is that these guys are getting paid huge salaries and bonuses based on short term performance so they enter into deals that generate massive short term profits at the expense of long term stability then strap on their golden parachutes and bail out before the ugliness raises it's head. A new CEO should start with a relatively small salary with no bonuses which then increase over time as performance goes up. Any year where performance goes down their compensation goes down, too, and be sure they are locked into contracts of at least 10 years so they will be around when the crap hits the fan later so they won't be tempted to take so many risks.

Sep 23 06:46 PM

[kmarkt2:]

Easy - if you want money back; start criminal proceedings. Make a deal with your local district attonery - 10% for every $ recover. Good thing, tax payer already paid for court fees; the villian CEOs would have to cough up their $ for court time, plus $$ for attorneys.
The more $ recovered, the more $ budget for enforcement at every level of the game.
This action do not need a new Bill of Passage through Capitol Hill, its existing - hence, quick and cost effective. So , who is sleeping on this switch ?

Sep 23 10:56 PM

[1RuleNoRules:]

The consensus here seems to be government needs to fix it.
When we change he question, less government is the answer.

What is wrong with our economy and the labor market for CEO's that even bad CEO's get ridiculous amounts of compensation? Big government has decimated the "farm system" of small and intermediate businesses that should have been creating the super stars of enterprise.Unemployment and stagnation are only the last symptoms of an economy under stress. The first signs(that we ignored) were stagnant wages, disposable everything from cars to toasters. Before layoffs came insidious cost cutting and stagnant wages because of endless erosion of opportunity that began in the late 60's.

www.cato.org/pub_displ...

www.house.gov/jec/grow...

Sep 24 12:29 AM