CEOs Oppose Shareholder's Say on Executive Pay

Last Updated Jul 17, 2009 7:26 PM EDT

The anti-CEO vitriol is thick these days. Here's an example of some of the reader comments I've gotten recently:
We continually hear that CEOs deserve huge salaries/bonuses because they take risk. I don't see any risk in these jobs. You bankrupt the company, you get a severance bonus (bribe) to leave, keeping all the money you've extracted in previous bonuses.

Where's the risk in this? A risk that your bonus is only a million instead of $10 million? Give us a break. The pension plan beneficiaries (who thought management looked out for stockholder interests) and ex-employees are now sleeping under bridges. Now that's risk.

- From bjnbrown on "Does Your CEO Value Himself Over Shareholders?"

And yet, according to USA Today, "-- no matter how low their image sinks, nor how shrill the outrage, executives have remained steadfast in their opposition to one thing: They are roundly against legislation that would force companies to let shareholders vote on CEO compensation packages."
That conclusion is based on an unscientific poll of 31 CEOs, 77 percent of which were against say-on-pay legislation that would give shareholders a nonbinding vote on executive pay packages.

Here are a couple of noteable CEO quotes, first from the majority "against":

"Say-on-pay is just another government regulation and intrusion into free enterprise," says Howard Putnam, former CEO of Southwest Airlines.

"I wonder if the congressmen backing this legislation would propose similar laws governing their own compensation," says Steve Hafner, CEO of travel search engine Kayak.

And from the minority "for":
According to Patrick Byrne, CEO of Overstock: "The CEO is hired by shareholders. He works for them, just like a farmhand works for the folks who own the ranch."

"Giving shareholders a voice 'takes away the frustration that is out there,'" says Aflac CEO Dan Amos, "people just want to be heard."

Just to get some data in here, median CEO compensation at S&P 500 companies rose 23% from 2003-2008, but took a nosedive by 7.5% to $8 million from 2007 to 2008, according to Equilar, which tracks that sort of thing. And say-on-pay legislation is probably inevitable, if you listen to the rumblings coming out of the Obama administration and the democratically-controlled Congress.

This may surprise some of you, since I am a former executive, but I actually think say-on-pay makes a lot of sense. It's nonbinding, so boards of directors still have the final say, but it at least clues them into what shareholders are thinking. How can that be a bad thing?

I know, executives are simply against government intrusion into the private sector, and so am I. But by allowing executive compensation to spiral out of control, corporate America's boards and CEOs have pretty much done this to themselves, don't you think?