Many of us think CEOs are way overpaid, especially those whose companies are losing money. Talk about pay for performance. How can we expect to pay teachers for performance when we overpay executives for underperformance?
You can find a good article on just how broken the system is at "Pay dirt: the executive pay system is broken", by Alistair Barr and Matt Andrejczak, MarketWatch, 2009-05-12
The authors describe a spiraling of cozy relations that make it harder and harder for people to say no. Some, but not enough, CEOs, board members, and shareholders are saying enough is enough.
What can you do?
If you own shares directly, be sure to vote your shares against board members and other compensation matters. I really think it is bad for somebody to get $50,000 a year for a part time job as a board member and for executives to get over $1,000,000 in salary. I also think it is bad to dilute shares by giving away shares or selling them at well-below market value to those who voted to give themselves the shares. I am finding that I almost always vote to withhold my vote for board members.
And should any employee of the company be on the board of directors? Maybe a founder, but not an outsider. Too many times the CEO being on the board is a conflict of interest.
If you own shares of a mutual fund, let the mutual fund know that you think executive compensation is out of line. Ask that they consider your interests in reigning in executive compensation. If they waffle, let them know you may put future money in a mutual fund that does agree with you.
Enough rant! You'll fall asleep if I write anything more.
See also "Talk about Boards with Conflicts of Interest", Melvyn Magree, Reader Weekly, 2000-04-27
