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"Golden Parachutes"

“Don’t blame Wall Street, don’t blame the big banks. If you don’t have a job and you are not rich, blame yourself!”   Herman Cain

One (of the several) messages from the Occupy Wall Street gang (or occupy wherever) is that corporate CEOs are making too much money, that they should “share the wealth.” And they decry so-called “golden parachutes” that CEOs receive.

And here is a quote from the OWS Manifesto: “They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions.” One of the manifesto’s closing statements is: “Exercise your right to peaceably assemble; occupy public space; create a process to address the problems we face, and generate solutions accessible to everyone.”  [both emphases mine]

So, OWS gang, which is it? Even though y’all are trying, y’all can’t have it both ways. CEOs, whether y’all like them or not, are employees.

Corporations attract talent that doesn’t grow on trees by offering “golden parachutes” to potential CEOs, usually in the forms of severance pay and stock options. It is the responsibility of the corporation’s Board of Directors to identify, select, and compensate CEOs. If a CEO doesn’t work out, why blame him (or her) for exercising for what he bargained? Perhaps I am incorrect (and if so, please let me know), but the “blame” for golden parachutes should rest with Boards of Directors. And the Boards of Directors are elected/appointed by stockholders. So, ultimately, who controls CEO compensation and golden parachutes?

The news is replete with recent CEO failures and their golden parachutes. Yet we never hear about successful CEOs, ones who do NOT utilize golden parachutes. Here are five successful CEOs who have not utilized golden parachutes.

You can see 25 more by visiting this site.

A recent study by PricewaterhouseCoopers (PwC) of 1110 boards of directors found that compensation committees should pay close attention to three factors. Eighty-three percent of respondents said directors need to (1) make sure a firm’s peer companies (those they compare their CEO pay to) are realistic. Eighty-two percent said boards need to (2) reevaluate compensation benchmarks, and 65 percent said (3) minimum stock ownership guidelines could be a suitable approach to keeping pay issues in check. Interestingly, none of these issues are directly dealt with under the Dodd-Frank legislation.

Many directors also disagree with the usefulness of investor say-on-pay votes, with 82 percent of those surveyed stating they did not believe that investors should have a ‘say on pay.’ “Directors inside a boardroom know how complex it is to structure compensation,” said Catherine Bromilow, partner in PwC’s Center for Board Governance. “In a director’s mind, it is difficult for a shareholder to understand the total elements of a CEO’s pay package.”

Please don’t misunderstand me. I have personally lost money because of failed CEOs. But, I have forfeited my right to vote for boards of directors. By doing so, I also forfeited my right to complain about the failed CEOs. So what do I personally do? I ask the current boards to be more careful when vetting potential CEOs and/or vote to have board members who selected failed CEOs replaced.

But that’s just my opinion.

Rich Mitchell is the Sr. Managing Editor of Conservative Daily News. His posts may contain opinions that are his own and are not necessarily shared by Anomalous Media, CDN, staff or .. much of anyone else. Find him on twitter, facebook and google+

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  1. Brian Cook says:

    excellent article. Bottom line is that the left can’t handle the fact that “the rich” in this country are rich because they EARN it! 9 out of every 10 “millionaires” in the US (as in net worth of over $1,000,000) are FIRST GENERATION RICH!! Meaning, they started out in a class OTHER than the rich class (aka the HIRING class).