This Is Just Stupid!

Executive compensation is out of control. The business section of my local paper had these three stories on the same page tonight.

First, our local bank has increased the bonus pool for its top executives to 350% of their annual salary. The article doesn't say whether all employees could achieve a 350% bonus or if most of them had to settle for raises in the 2-3% range.

The second article was about 14,500 baggage handlers, reservation agents and other workers voting on whether to take a 12% pay cut just to keep their jobs. Granted Northwest Airlines is in deep financial trouble today, but what have they paid their executives, on average, over the past 5-10 years?

And finally, the chairman of Tyco International Ltd., Edward Breen, received $16 million (USD) in compensation last year. This is the same company who last year saw its former CEO, Dennis Kozlowski, sentenced to prison for grand larceny, securities fraud and falsifying business records. The trial alleged Kozlowski and others stole as much as $600 million from the company for a lavish lifestyle that included spending $6,000 of company money for a shower curtain and having the company pay a substantial part of the $2 million cost of the birthday party he threw for his wife. No one is worth $16 million in annual compensation - period.

The excesses of a few make it that much harder for all the business executives who work as hard as everyone else for reasonable salaries.

There are a few bright spots in this area though. Read about Costco CEO Jim Sinegal who is smart enough to realize that Loyal Employees Make Business Profitable.

And for a little humor, here is a mock press release I wrote as an April Fools day piece at the beginning of the Enron ethics scandal, Enron Announces Repayment Plan.

What can you do about it? If you aren't the CEO or Chairman are you powerless? No. You can keep striving for that top spot and remember these lessons when you get there. Along the way, you can make sure that the employees who are entrusted to you are treated fairly and ethically. You may step on a few toes or ruffle a few feather to protect them, but that will help you understand whether you are a leader or just someone filling a manager's chair.