Nov. 17, 2005 (KRT News delivered by Newstex)
When Leo Hindery suggests cutting the pay of many top corporate executives and redistributing the excess among employees, a lot of people suggest that he's off his rocker. Others, says Hindery in his new book, "It Takes a CEO," respond that such a move would amount to only a symbolic gesture, punishing the big guys without substantially helping the little guys. "Not so," he writes. "If the `CEO tax' (that is, the excessive compensation) paid by Occidental Petroleum (NYSE:OXY) in 1997 had been distributed across that huge company's workforce, everybody would have gotten an extra $8,199."
He adds that if the excessive compensation paid other top Occidental executives had been similarly redistributed, everybody would have gotten an additional $16,398. "How many average Joes at Occidental would have turned up their noses at an extra sixteen grand?" he asks. "Not too many. And lest we forget, those are the people who actually earned most of the money for the company."
The author, managing partner of the private equity firm InterMedia Partners and former chairman and chief executive of Global Center, president and CEO of AT&T (NYSE:T) Broadband and president and CEO of Tele-Communications, believes that the ratio of CEO compensation to regular employee compensation is totally out of whack. "CEOs aren't worth that much," he writes. "Michael Eisner ... was paid $800 million by Disney over a thirteen-year period. In that period, he delivered returns to his investors that were less than they would have gotten from investing the same money in T-bonds. And Eisner is considered by some to be a good CEO."
CEOs in the United States on average are paid more than twice what their counterparts in other industrialized nations make. And the imbalance between CEO pay and ordinary-worker pay is some instances as much as 2,500 to 1. Corporate boards, Hindery says, must find ways to close that gap and end the climb of executive pay.
Among the suggestions Hindery offers is to rein in abuse of stock options by expensing them, not allowing them to vest on a short-term basis or to reload.
http://pajamasmedia.com/newsml/html/united_states/2005/11/17/6419651_Author_would_lik.shtml