Thursday, January 20, 2005
Executive compensation
Whole forests have been cut down in service of the global argument over executive compensation that began during the boom of the Clinton years and accelerated after the financial scandals of 2001. As a compensated executive, I have a lot of thoughts on the subject (both principled and self-serving) that I may spew out in some future post. Until then, may I simply say that I am really tired of executives who own a large proportion of their company -- perhaps because they are the founder -- complaining about the high salaries of other executives who are not otherwise big stockholders. For example, the CEO of the Burlington Coat Factory had this to say:
Piggish it may be, but CEOs who are worth hundreds of millions or even billions of dollars should examine the height of the horse they are riding when they declaim on the right compensation for executives. They have no interest in bidding for the services of another CEO, and virtually all their own wealth derives from the shares they own, not their salary. This is not to say that founders in their capacity as stockholders are not entitled to complain about high executive compensation -- and I might agree with them in the abstract -- but it is beyond sanctimonious to cite their own small salary as evidence of their own virtue.
By the way, it is even more annoying when extremely wealthy portfolio managers think that the executives who make their investors wealthy are overpaid.
'Nuf said.
Monroe Milstein didn’t collect a bonus last year from Burlington Coat Factory Warehouse, even though he is chief executive and essentially sets his own pay....
The 77-year-old clothing retailer’s $336,400 salary is less than it was two decades ago, and his pay package is smaller than that of the company’s chief operating officer. One of his few perks is a company car: a 1993 Lincoln Town Car.
Milstein looks at the rising tide of executive compensation in the United States and shudders.
“I’m hailing from a different planet than they are,” said Milstein, who with his sons own a controlling stake of Burlington Coat Factory, of Burlington. “It’s unfathomable to me the amount of money that people have taken. It’s very piggish.”
Piggish it may be, but CEOs who are worth hundreds of millions or even billions of dollars should examine the height of the horse they are riding when they declaim on the right compensation for executives. They have no interest in bidding for the services of another CEO, and virtually all their own wealth derives from the shares they own, not their salary. This is not to say that founders in their capacity as stockholders are not entitled to complain about high executive compensation -- and I might agree with them in the abstract -- but it is beyond sanctimonious to cite their own small salary as evidence of their own virtue.
By the way, it is even more annoying when extremely wealthy portfolio managers think that the executives who make their investors wealthy are overpaid.
'Nuf said.
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