Friday, March 26, 2004

Executive compensation is "seriously off-track"

Title: "Other People's Money" by Walter B. Wriston

Walter B. Wriston is the former Chairman and CEO of Citicorp/Citibank. Here is what he has to say about executive compensation in this article:
    "Most reasonable people would argue that executive compensation in America is seriously off-track. Directors responsible for setting salaries and benefits have been treated to a kind of a ratchet approach invented by consultants. It works like this. Consultants come into the boardroom with their power point presentations that show the salaries being paid to other top executives in the same industry. The chart often makes it clear that your CEO is only in the second quartile. This is unacceptable, since your executive is clearly better than competitors. So, a raise is voted and justice done.

    The consultants then go to the next corporation and the process is repeated over and over. No reorganization of corporate governance will make a dent in this ploy. Only people with a sense of proportion, and the courage to speak out can halt this deleterious progression."
If we do not speak out, we will be imprisoned by this process. Wealth and power will concentrate to a point where it harms not only the economy, but the basic freedoms of the citizens of the United States.


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