Word: ceos
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Some companies slashed pay unilaterally. Ford CEO Harold Poling, for example, took a 6.6% pay cut last year, while Avon boss James Preston froze his salary at $610,000 and lowered his bonus 23%. IBM chairman John Akers took a 40% cut, reducing his compensation by $1.1 million, to $1.6 million. Others are revamping their pay structure. AT&T junked its stock-option plan in favor of an incentive package based on staggered performance targets...
...Coca-Cola chairman Roberto Goizueta stood up before shareholders and defended his 1991 pay of $86 million, which included a record $80 million in stock grants, on the grounds that under his management, Coke stock had increased 1,300%. Goizueta was interrupted four times -- by thunderous applause. U.S. Surgical CEO Leon Hirsch, who earned $118 million in salary and stock incentives, maintains that he's worth it. "I'm not paid enough," he says. Since 1988, U.S. Surgical's market capitalization has, to his credit, increased 1,350%; in the past three years, shareholders have enjoyed a 22% return...
Kevin Murphy, associate professor at Harvard Business School, charges that the campaign against CEO pay "is a disguised attack on wealth." By holding CEO pay up to public criticism, he says, "we run the danger of driving our best people out of the boardroom...
...CEO pay has emerged as a populist issue that no politician can resist. This year Michigan Senator Carl Levin introduced the "Corporate Pay Responsibility Act," which, among other things, would permit shareholders to vote on the policies directors use to set compensation. The real target of the bill is stock options, which Levin describes as "stealth compensation" because the value of options does not show up on the books of companies as expenses. So long as companies don't have to expense the value of options against earnings, says Levin, executives will be generous about awarding themselves this form...
...contemplating new rules that would force companies to disclose executive compensation more fully in proxy materials. In addition, it would compel boards to justify in the annual report or proxy statement what a CEO's pay really is -- in all its components -- and why it's reasonable. Companies would be required, for example, to spell out in a new summary table which elements of executive pay are cash and what the present values of stock grants and options are -- something only compensation experts are able to calculate...