exec pay out in the open may be our best bet to end gluttony
Curiosity about someone else;s paycheck is natural. And for
public companies, disclosing pay and perks of the top
executives is the law.
By Lou Gelfand, Columnist
Minneapolis Star Tribune
Tuesday, August 7, 2006
The newsroom manager across
the table seemed to be eyeballing someone behind me. Her
head bobbed up and down, then sideways. But the only folks
in the room were seated around the table.
Not until the end of the shift, as I was washing my hands,
did I satisfy my curiosity. It was payday and, looking into
the mirror, I saw my paycheck folded in a shirt pocket, the
gross amount showing.
She was curious about my salary. I understood. I was
curious about hers. At the time, a decade ago, newsroom
gossip centered on alleged bountiful raises for some members
of the union. It got so think that the union executive
committee voted to open the books -- dues are based on
compensation levels -- so that members could compare pay.
That quashed a lot of rumors. In those days there was
rarely water-cooler talk about top management salaries. The
closely held company's stock was not traded on a major
public exchange and only a trifle was held by employees who
had gained it through a profit-sharing program.
The coverage of executive compensation in publicly held
Minnesota companies also was minimal until the 1970s, when
the Minneapolis Tribune initiated an annual accounting of
executive pay taken from stockholder reports and proxy
mailings. In this year's Star Tribune survey of the 100
highest-paid Minnesota CEOs, the study found that 66
received $1 million or more in total pay -- a record.
In a previous job, the security chief of a public company
had thrashed me for allowing the Star Tribune to publish the
compensation of the chief executive office because, he said,
"You've set him up for a kidnapping."
Such was the thinking at the time. But these are public
companies that are required by law to disclose executive pay
and perks. By the late 1980s, executive pay surveys had
become a news media staple. The Wall Street Journal has
conducted its annual survey since 1989.
The galloping greed of chairmen and CEOs has once again
caught the interest of the Securities and Exchange
Commission (SEC). In January, it issued a 372-page proposal
outlining new rules concerning how executives are
compensated, ordering corporations to provide additional
information such as the total cost of retirement benefits
and why stock options were approved.
The commission told the New York Times that the more than
20,000 responses to the proposal was the most in SEC
The rules, which go into effect in mid-December, will apply
to an estimated 3,500 corporations or more. They must
identify a summary pay chart for the top five executives
that provides total compensation, plus tables disclosing
retirement benefits and deferred compensation, when and how
stock options are granted, and a table showing director
As examples of annual pensions for chairmen and CEOs. Edward
Whitacre of AT&T Inc. will get $5.4 million, William McGuire
of UnitedHealth Group Inc. will get $5.1 million and Samuel
Palmisano of IBM will be paid $4.7 million.
The new rules cannot prevent Enron-style corruption or
WorldCom-style greed. But public awareness of private
gluttony might create the public indignation necessary for
ordinary citizens to overcome the power of the insiders.
It's a long shot, but it's all we have.
Lou Gelfand *