Are executive salaries too high? Should shareholders have a say in how much chief executives are paid? Should the government?
The Obama administration last week hired Kenneth Feinberg as a "pay czar" to manage the compensation at companies that have taken taxpayer dollars, and announced support for legislative and regulatory efforts aimed at holding directors more accountable for the pay packages that they approve.
Treasury Secretary Timothy Geithner also laid out broad principles on executive compensation, such as tying incentives to long-term performance to reduce short-term risk-taking.
At a time when the average pay of the top five most highly compensated executives in a company is eating up about 9 percent of corporate profits, we asked shareholders what they thought of current pay practices.
Their comments should serve as a wake-up call to laissez-faire corporate directors. More than a dozen shareholders who commented, free-market theorists and social workers alike, said they were disgusted with executive pay levels. They disagreed about whether -- and how -- to limit executive pay but concurred that members of company boards should be held responsible for their actions.
Some support legislation; others want the Securities and Exchange Commission to give shareholders greater rights to oust negligent directors. One suggested throwing the bums in jail.
"I believe in limited government control," said Andy Krinock, a 71-year-old retired certified public accountant. "The suggestion to have government approve salaries is a farce. They are not qualified to judge what a reasonable salary is for a CEO. Many have never held a 'real' job in the private sector."
Krinock contends that corporate boards need an overhaul to ensure that "truly independent directors, not cronies of the CEO" are making decisions on behalf of shareholders. And compensation committees should be prepared to justify their salary decisions to shareholders, who should be able to vote on them for approval, he said.
Stephen Thomas, a 63-year-old retired social worker from Whittier, Calif., said, "More attention needs to be directed toward boards of directors that seem all too willing to play footsie with the CEOs and compensation committees. It's pretty hard to believe that the same class of business wizards that created a house of cards founded on the securitization of mortgages contributes so much more than workers who produce the goods and services that they deserve astronomical paychecks."