From a free market capitalist who is a market positioning veteran: Market reasons to curb executive compensation

The salaries, compensation packages and parachutes negotiated by today's corporate executive teams — especially in the financial services industry — have been appalling, repugnant, avaricious, arrogant and rapacious for years.  Now we know, with terrifying certainty, that they do very little to sustain a company's success or stave off failure. 

Here are the image and marketing issues executive teams and boards should consider while we await the terms of the taxpayer bailout of Wall Street.

  • Exorbitant packages contribute to an unnecessarily high cash burn rate — whether or not your company is hugely successful, it could be even more successful without the burden of executive over-payment.
  • The extra people you could employ and programs you could deploy with that excess cash you get could mean the difference between your products' mediocrity and excellence.
  • They reward reputation and networks at the expense of current, ongoing performance, especially when your parachutes remain unaffected by lackluster or disastrous results.  Without punishment for abject failure, there's no incentive to succeed.
  • They distract stakeholders — regulators, analysts, media, shareholders, customers, employees — from what you really want them to see about your companies' performance and sustainability.
  • They are a MAJOR public relations sinkhole. They invite your stakeholders to ignore your finer qualities and talents.  They invite your detractors to feast on your carcass.
  • The day of exorbitant packages is over, anyway.  You will look like a prince or princess if you lead the way and promote responsibility in the crafting of exec comp at your company. 

CEOs, if you think executive compensation is appropriate across the board, if you think folks like me are wrong, come forward and tell us why.  But if you agree that compensation is out of whack, then show us what you're doing about it. 

Either way, you have a huge opportunity to communicate with the marketplace and generate great good will for your companies and your leadership.  Talk to us.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s