Sunday, February 08, 2004

Executives concentrate wealth secretly

Title: Executive Pay, Hiding Behind Small Print
Source: New York Times
Date: February 8, 2004

From the article:
    INVESTORS have been understandably irate over executive pay recently. But because disclosure in the area is so woeful, they don't know the half of it.
Examples from the article include:
  • Wyeth's former chairman who is a consultant, earned $1.6 million in above-market interest alone on deferred compensation. A Wyeth spokesman declined to say how much Mr. Stafford has in total.
  • Robert J. Ulrich, chief executive of the Target Corporation, a retailer, earned $688,218 based on deferred pay in 2002, the most recent year for which data is available; four top colleagues there made a total of $470,000.
  • Last month, Hercules Inc., a chemical maker, restated third-quarter 2003 results to account for a $4.7 million pension benefit paid to William Joyce, former chief executive.
  • MONY executives will receive $98.2 million - more than 6 percent of the $1.5 billion transaction.
The article concludes: "Shareholders are paying these bills. They have a right to know the costs in plain, shocking English." That assessment is nearsighted. For example, the $4.7 million given to William Joyce could have just as easily been given to rank and file employees, or could have been returned to consumers in the form of lower prices. The $1.6 million paid to John R. Stafford is one tiny example of why medical prices are spiraling out of control. His actions are mimicked by tens of thousands of executives throughout the medical industry. Their greed comes at the expense of consumers, taxpayers and employers who are paying billions of dollars in extra medical expenses to fund these extravagances.

The executive compensation process is currently out of control. It is allowing executives of large corporations to concentrate remarkable amounts of wealth at the expense of other employees, consumers and tax payers. It will not stop without legislation.


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