Wednesday, January 31, 2007

Bush Backs Linking of Executive Pay and Performance - New York Times

Bush Backs Linking of Executive Pay and Performance - New York Times:
"President Bush took aim Wednesday at lavish salaries and bonuses for corporate executives, standing on Wall Street to issue a sharp warning for corporate boards to 'step up to their responsibilities' and tie compensation packages to performance.... He said some workers are being left behind in the booming economy and the disparity between the rich and the poor is growing.

'The fact is that income inequality is real. It has been rising for more than 25 years,' the president said. 'The earnings gap is now twice as wide as it was in 1980,' Bush said, adding that more education and training can lift peoples' salaries."
Why is the gap increasing? There are many reasons, but technology, larger firms, and the the flattening of organizations have played key roles.

That said, it is easy (and often, bit not always correctly) say that managers are paid too much. The evidence is mixed in this regard. Yes, there are some CEOs who get paid too much and whose pay is not tied to performance, but they seem to be the exception and not the rule.

1 comment:

ExecutiveOpinion said...

Executive pay is so a touchy subject. I know quite a few that work endless hours. While on vacation they can be reached via laptop or Blackberry, and quite often work online at their destination.

It really is those few exceptions captured in the media that can be quite sickening. Especially when reviewing the past five years of ugly corporate scandals.