Growing up, I occasionally heard my father use the term "windshield reality." Defined, it's when a situation like a divorce or a family death impacts you with such trauma that you feel as if you've been emotionally thrown through a windshield. I was reminded of that feeling when I recently browsed my online checking statement to see that my available balance was $52.28.That was like the airbag deploying. What actually sent me through the windshield happened shortly afterwards, when I read that the new chief executive of Ford Motor Co. was paid more than $28 million for his first four months on the job. This, mind you, was on top of an $18.5 million "golden hello" given to him when he was lured away from Boeing.
Now assuming that he, like many chief executives, works at least a 60-hour week, that's roughly $29,000 per hour, or over 500 times more than yours truly receives on an hourly basis. It was rather puzzling to see the beleaguered automaker, which lost $12.7 billion last year (under a different CEO), earmark that kind of money for top-level recruiting efforts.
I don't profess to know much about the auto industry, but for a lot less than $29,000 an hour, I, as chief executive, could assure the board of directors that the company wouldn't post nearly $13 billion in red ink. But I digress.
The disclosure of Ford's executive compensation package comes on the heels of a report compiled by governance watchdog Corporate Library, which found that the median year-over-year percentage increase in chief executive pay for 1,000 of the largest U.S. companies was just short of 10 percent for 2006 - the first single-digit increase in executive pay since 2002, and roughly seven points lower than the 2005 survey results. Unsurprisingly, the report found that rises in executive pay within the S&P 500 were far higher than those for their peers in smaller companies, with the median increase topping 23 percent, and median total pay over $10 million.
The issue of executive compensation was one of those continually addressed by William McDonough during his tenure as chair of the Public Company Accounting Oversight Board, and is now a pet project of Rep. Barney Frank, D-Mass., the chair of the House Financial Services Committee, who recently proposed legislation to allow company shareholders to register their approval or disapproval of executive pay packages without the government directly regulating pay. His measures would direct the Securities and Exchange Commission to develop rules requiring far more complete disclosure of pay and perks for top execs, as well as disclosure of the performance levels or targets used to determine bonuses.
Its progress bears watching, if for no other reason than to see how far either side of the aisle will bend to push it though Congress.
But before that happens, perhaps I should have a little talk with our company CEO about my raise ... .
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