Like many of you, I've often wondered how some people have gotten as far in their careers as they have. I have been forced on more than one occasion to report to people whom I wouldn't trust to park my car, let alone run a business. And to further rub salt in the wound, I usually became faint when I hear about their salaries.I'm sure you've all read where the CEO of a company whose share price has dipped below Paris Hilton's IQ was rewarded with a lavish bonus and lucrative stock options. Take the case of former Disney chief Michael Ovitz, whose disastrous 14-month tenure at the media conglomerate resulted in a $140 million severance package. That roiled shareholders of the Magic Kingdom to such a degree that they later took their case to court. In my opinion, Ovitz should have been fined $140 million for launching the thespian career of action star Steven Seagal. But I digress.
In my own field, one need only look at the stock grants given to New York Times chairman Arthur Sulzberger Jr. and president and chief executive Janet Robinson.
A report by proxy researcher and compensation watchdog Glass, Lewis & Co. gave the executive compensation at the "Gray Lady" a thisclose passing grade of "D."
Glass Lewis noted that restricted stock awards made to Robinson last year increased almost five times, to a level of roughly $2 million. Sulzberger's increased twofold, to more than $800,000. While not out of the ordinary when contrasted to some executive compensation, one should take into consideration the company's performance and stock price - both trended decidedly downward over the year.
Also keep in mind that the company scrapped a plan where employees were given a 15 percent discount to purchase its stock via payroll deductions. According to reports, in the two prior years, Times employees purchased roughly one million shares each year.
I bring up the issue of executive compensation only because, in a recent survey of chief financial officers, nearly three quarters of the respondents backed the Securities and Exchange Commission's proposal to expand disclosure of executive compensation.
In January, the regulator put out for comment a set of proposed rules that would amend disclosure requirements for executive and director compensation, related-party transactions and stock ownership of a company's officers and directors. The proposals also would modify reporting of executive compensation contained in the 8-K. And House lawmakers went a bit further, requiring shareholder approval of executive pay packages.
I'm unsure whether executive compensation needs transparency to that degree, but I'm sure few would argue that it needs to be spelled out in English, as opposed to the microscopic agate it appears in now.
Obviously, more stringent disclosure won't eradicate lavish executive compensation packages even when a company underperforms. But poor annual performance and a subsequent reduction in salary and perks would certainly serve as motivation for top executives to earn their keep.
Either that, or CEOs under siege should resign themselves to sitting through some very uncomfortable annual meetings.
