Ethics of Executive Compensation Hot Topic in Post-Election Washington - 10 Nov 2008

DW - Governments around the world move to control or limit Executive Compensation.  Has this impacted your planning?

Ethics of Executive Compensation Hot Topic in Post-Election Washington

http://www.globalethics.org/newsline/2008/11/10/exec-compensation/

Nov 10th, 2008 • Posted in: News

It’s news in Europe, too, with several nations considering caps on salaries

WASHINGTON and LONDON

In the combined aftermath of the U.S. election and the worldwide
economic implosion, executive compensation is back on the ethics radar.

TheStreet.com reports that president-elect Barack Obama appears
poised to endorse the concept of clamping down on excessive CEO pay,
and quotes CtW Investment Group director Michael Garland as predicting
that the time is ripe “to push for more meaningful reform.”

“People are disgusted not only by the level of pay,” Garland says,
“but also by the perverse incentives that our current pay system has
fostered.”

CNN notes that there is growing opposition to big Wall Street
bonuses on both sides of the aisle. Republican and Democratic lawmakers
have put several banks and securities firms that received government
bailout funds on notice that the rescue money should not be used to pay
bonuses.

But in an opinion piece published in Crain’s New York Business,
editorial director Greg David argues that slashing bonuses could be
both unfair and counterproductive to the economy. “True, Wall Streeters
make more than just about anyone else — an average of $360,000 in
recent years. But there are some economic facts of life that need to be
recognized…. People in the securities industry don’t get almost equal
installments each month with a small added dollop of cash at the end of
the year. Their monthly checks are small, with their contingent
compensation, usually paid out early in the year, accounting for half
and sometimes two-thirds of their take-home pay. Eliminating their
bonuses is not like skipping other people’s.”

The Financial Times notes that excessive executive
pay has become a hot topic in some parts of Europe. In France,
president Nicolas Sarkozy has imposed legislation forcing the head of a
firm that accepted a government bailout to forfeit his golden
parachute. Measures to cap executive pay also are under consideration
in Germany, the Netherlands, Sweden, and the United Kingdom, according
to the Financial Times.

Sources: TheStreet.com, Nov. 7 — Financial Times, Nov. 4 — CNN, Nov. 4 — Crain’s New York Business, Nov. 4.

For more information, see: Related Newsline story, Oct. 20 — Related Newsline story, Oct. 14 — Related Newsline story, Oct. 6 — Related Newsline story, Sep. 29 — Related Newsline story, Sep. 22.