Sunday, March 07, 2004

The C.E.O.'s Mad, Mad World:
"Many companies have not yet filed their reports detailing executive pay. But the reports of 57 that have done so show just how good it is to be a chief executive.

Base salaries and bonuses have climbed, and the value of unexercised options has rocketed, largely because of a rising market. Salaries at the companies rose 8.3 percent last year, to an average of $818,000. Annual bonuses climbed 13 percent, to $1.06 million. But the median value of stock options that were exercisable surged 53 percent, to $8.3 million, from $5.4 million in 2002.

Indefensible pay patterns are sure to be Topic A among irate shareholders this year. TIAA-CREF, the giant pension fund, is in discussions with 50 companies it has tagged for board independence issues. 'Every one of those companies has an executive compensation problem,' said Peter Clapman, chief counsel for corporate governance at the fund. 'Executive comp is going to be the hot button going forward. The numbers always look bad, but the process that got us there has a totally wrong smell about it.'"

What chief executives cannot seem to get through their skulls is that they do not act in isolation, that they are not boys in a luxurious bubble.

For example, many chief executives take big pay increases happily, while in the real world their stocks are languishing and thousands are losing their jobs.

http://www.nytimes.com/2004/03/07/business/yourmoney/07watch.html

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