Capping their pay would certainly help slow graft and corruption. Serious prison sentences in general population would, too. But prison is only for the little people who can't afford a team of highly paid lawyers who were born without a conscience.Most US corporate leaders believe chief executives are overpaid and do not provide value for money for their comÂpanies, according to a study that will embolden critics of excessive compensation.
The findings – to be published today by the National Association of Corporate Directors – are likely to strengthen calls by investors and politicians, including George W. Bush, US president, for restraint on executive pay at a time of growing income inequality in the US.
Top executivesÂ’ criticism of their peersÂ’ compensation levels could also encourage activist investors and hedge funds to target underperforming companies with highly-paid leaders at shareholder meetings.
Four out of six chief executives or company presidents polled by the NACD in July and August said the compensation of top executives was high relative to their performance. Only 2.2 per cent of the nearly 70 chief executives and presidents involved in the survey said compensation was too low, while a third deemed it “just right”.
Their views were backed up by outside directors, with more than 80 per cent of them saying chief executives were overpaid.
| None of whom actually do anything about it. |
The issue is particularly sensitive because the gap between rich and poor in America has reached its widest point in more than 60 years. Figures released last week showed the share of national income claimed by the wealthiest 1 per cent of Americans had reached 21.2 per cent – a postwar record – partly because of booming company profits.
Mr Bush last week told The Wall Street Journal that he thought some executive compensation was excessive and that some boards needed to improve their oversight of this.
Nearly 60 per cent of the directors polled by the NACD said the reason for excessive pay packages was the absence of objective ways to measure an executiveÂ’s performance. Nearly half criticised the use of options and equity awards that reward executives when the companyÂ’s share price goes up, rather than when its operations improve.
Investors have become more vocal in attacking what they often call “pay for failure” – large severance packages awarded to ousted chief executives.
Maybe I could get me one of those packages?