The Corpus Callosum

CEO Compensation: It costs YOU

This is not
exactly news, but it is nice to have some specifics that put the issue
in perspective.  

href="http://www.latimes.com/business/la-fi-execpay10jun10,0,3379172.story?coll=la-home-center">CEOs’
compensation can significantly impact shareholder value

By Kathy M. Kristof, Times Staff Writer
1:11 PM PDT, June 9, 2007

Compared with the pay of celebrity chief executives such
as Oracle Corp.’s Larry Ellison, the $7.3 million in total compensation
pulled down last year by Synnex Corp. CEO Robert Huang is practically
paltry.

But set against the tech-product distributor’s fiscal 2006 profit of
$51.8 million, Huang’s pay looks a lot bigger. In fact, his
compensation amounted to 14% of the company’s earnings, the highest pay
relative to earnings at California’s 100 largest public companies.

Anger among investors has intensified in recent years as executive pay
has escalated. One reason for the growing fury, according to corporate
governance advocates: Compensation increasingly is taking a noticeable
slice out of corporate profits.

Last year, among the state’s top 100 companies, the typical CEO’s pay
amounted to 2% of net income, The Times found in its annual report on
executive compensation in California…


That may not be representative of all the companies in the country, but
it is at least a big enough sample to give us an idea of what we are
dealing with.  And remember, the CEO salary is only part of
what is given to the top executives in a company.  

I have no problem with people making a lot of money.  Sure, a
million a year is fine.  What bugs me, though, is when
corporate tycoons do things that are immoral, borderline illegal, to
make a profit, and then try to justify it by saying that the
shareholders expect/deserve it since they have invested their money in
the company.  If the goal of a company is to maximize
shareholder value, then how does the CEO justify taking 2% of that
value?