Bank of America is rushing to repay its government bailout funds, not because it has more money, but it doesn't want a government cap on CEO pay ("Bailout Refund Is All About Pay, Pay, Pay", Andrew Ross Sorkin, New York Times, 2009-12-08).
BofA and other large corporations want to pay their executives "competitively" to attract "top talent". My question is what has happened to "rising through the ranks"? Wouldn't people inside the company know more about running the company than an outsider? And if someone inside the company who was a real contributor, feeling shunted aside in favor of an outsider, quit to go elsewhere for a top job. This person would be contributing to the company's competitors and speeding the upward spiral of executive compensation.
Of course, if the board hires an outsider at a "competitive" salary, then they will have to pay themselves a competitive salary. I often think a board should work only for the long-term benefit of the personal investment they made in shares.
I think this behavior belies the myth of capitalism and free enterprise. Many corporations are run for the benefit of the top executives with employees, small shareholders, customers, and communities coming in a distant second.
See also my columns "Talk about Boards with Conflicts of Interest!", Reader Weekly, 2000-04-27 and. "Sauce for the goose is sauce for the gander", Reader Weekly, 2006-04-27.
But for the real clincher, see "Why Changing the CEO May Not Change the Company", Jason Zweig, Wall Street Journal, 2009-12-01. Hm! this sounds like a liberal opinion coming from the Wall Street Journal:) Note that the link may be temporary.
