News

A lengthy debate about the recent corporate scandals and the public perception of CEO's.

Part I of a two part series on executive compensation excess. Both segments provide an excellent debate for and against excess executive compensation. Part I examined the causes behind the rapid growth in executive compensation from the early 1990's to today. To summarize the segment, Tom Wyman, retired CBS CEO, stated "I think the environment changed and what became acceptable in the CEO world, seemed to be what everyone was doing. And Lord knows it was working in…as long as the market was flying."

Part II of the series examined whether market or non-market forces have an effect on excessive executive compensation. Two quotes can summarize the divergent views in this segment. Compensation consultant Joseph Bachhelder stated: "There aren't that many outstanding professional athletes, and not that many outstanding executives to lead major U.S. corporations. . . You want to get a certain price for your house. You want to get a certain price for your stock. Why shouldn't a CEO seek to get the price that he or she wants for his or her services." Peter Clapman, VP TIAA-CREF, stated: "We want them to have stock. We want them to buy stock. We want them to have significant equity holdings where they will feel the pain of a loss the same way we, you and I, feel the pain of a loss."

This segment provides a frank and candid debate related to the lack of ethics in executive compensation, greed at the top and a blind ambivalence throughout the market during the recent economic boom. ". . .in any capital society there is an implicit social contract between the rich and the others, and the idea is that the rich can get as rich as they like as long as the poor can also try to get rich." (James Grant of Grant's Interest Rate Observer)