USA Today Interview: 5 Questions for Compensation Design Group CEO Frank Glassner (ECE member)

Q: Are business people and employees still
angry about the financial debacle and rising pay to executives —
especially on Wall Street?

A: The outrage is at the highest levels I've
ever seen. There are too many non-performing CEOs whose pay does not
conform to reality. Twenty years ago, CEO pay was 250 times higher than
rank-and-file pay. Today, it's 600 times, even as the country slides
into a recession.

Executives shouldn't recklessly gamble with
everyone's money, then be allowed to paddle away. That's flat-out
wrong. In the words of Tony Soprano, you get paid when we get paid, you
get out when we get out.

Q: Given the $700 billion financial system bailout plan, will executive pay level off or keep growing?

A: Pay won't necessarily continue rising. People realize that trees can't keep growing into the sky.

I think pay will more closely match performance,
and there will be an appropriate balance to executives' pay and the
interest of shareholders.

I will say as long as there are guaranteed
golden parachutes that allow executives to bail out of a crashing
company while shareholders and employees go down, there will be no
reform in executive pay.

Q: Is the bailout plan's limits on executive pay for companies that receive money a wise or dumb move?

A: Congress can't regulate this stuff. It's too complex. The imposition of unspecified pay limits really is a mistake.

Q: Who bears responsibility for too-high executive pay?

A: It's easy to point fingers and vilify CEOs.
For every bad CEO, there are 99 good ones. Microsoft, Berkshire
Hathaway, General Electric, Procter & Gamble — all are companies
that clearly practice pay for performance.

We need to look around ourselves to find the
responsible parties, and it's a combination: business people, boards of
directors, Congress, institutional investors, mutual funds, the media —
and let's not forget executive pay consultants.

Q: What's the easy solution to a complex problem?

A: If we had very clearly defined regulations
based on the design of pay plans — rather than on caps and limits on
pay — we might go somewhere.

Just a few years ago, it was all the rage for
companies to peg executives' pay to earnings per share. Then, all you
had to do was to issue and buy back your company stock, and all of a
sudden, you were skewing earnings.

If a company performs well, you get paid. If it doesn't perform, you don't get paid.

Hopefully, the financial crisis will teach new lessons to everybody.