Kevin Drum and Gregg Easterbrook think CEOs are overpaid. NYSE chairman Richard Grasso is the target. Easterbrook:
Bear in mind that like all grotesque CEO overpayments, Grasso’s money is not popping out of the air–it is popping out of your pocket. Corporations pay a fee to have their stocks listed on the NYSE. That fee reduces the amount they could otherwise issue as dividends to stockholders or declare as profits that would raise stock prices; this in turn reduces your mutual-fund and retirement income so that Dick Grasso can wallow. A check for $140 million handed to a man for sitting in a government-protected leather chair, who will now cackle as he counts his gold and millions of Americans–one in eight live in poverty–go to bed crying in anxiety over small sums.
Not to mention all those starving kids in India, for whose sake we should all clean our plates. Easterbrook’s a bright (Brookings) fellow. Surely, he doesn’t think that, if we cut Grasso’s pay, it would somehow be transferred to the needy? Or that, if we replaced Grasso’s chair with a crappy one, it would staunch the flow of tears from the sobbing masses?
Kevin adds,
When are shareholders finally going to figure out that executive compensation in America is no longer just a few people making a little bit more than they should, and therefore not something that really affects the bottom line? The truth is that in most large companies today executive compensation is fantastically higher than it should be, and the overpayments are a serious drag on corporate profits. Reduce the pay of the top 5% of executives at Fortune 500 companies by 50%, and corporate earnings would improve measurably with no loss in the work habits of the top officers.
After all, does anyone seriously think that Grasso would have worked only half as hard if he’d been paid a mere $70 millon? The question answers itself.
I guess the question is whether, if his salary were a mere $70 million, someone else would lure him away. I personally haven’t a clue. Presumably, the NYSE board is betting they would.
I don’t quite get it, either. Still, presumably the market says these guys are worth this much money.
Katie Couric makes $13 million a year, and all she has to do is look cute and get up early. You’d think someone could be found with that skill set for, say, $40,000. But somebody thinks the value on keeping Couric, rather than allowing her to go to a competing network, is worth $13 mil.
Ditto athletes, movie stars, and corporate execs. One would think that Coca-Cola could pretty much run itself at this point; but somebody thinks the CEO adds millions to the bottom line. It’s quite possible that they’re wrong, I guess.
