Non-Performance Based Executive Compensation

Business Press: Messin' with da' Man
By James K. Strawman

Posted: Friday, May 2, 2003

"Have They No Shame?" screamed the headline of the cover story of one of the magazines, adorned with a picture of five ravenous pigs eating cake amid piles of money.    The subhead: "Their performance stank last year, yet most CEOs got paid more than ever. Here's how they're getting away with it."

The story heaped ridicule on such executives as John Chambers of Cisco Systems, Hank Greenberg of American International Group, and David Cote of Honeywell, with the clear implication that they were plundering corporate assets.   American Surprise Institute takes issue with this vicious slander.  C'mon, these are ASI donorswe're taking about here!  Vital bits of operating funds come from those troughs, I mean, corporations.The other magazine headlined its cover story, "Dealing With Despots." Its point was that oil companies were in bed with "brutal military dictators," paying off unsavory characters in order to feed the insatiable appetite of morally oblivious consumers for more and more energy. We know that this is a terrible slander.  When Rumsfeld went and met with Saddam Hussein, here at ASI we know it was to increase trade in playground equipment for the poor, poorly equipped Iraqi playgrounds.   It had *absolutely* nothing to do with selling a huge Bechtel pipeline project in Iraq.  And besides, Saddam didn't buy it anyway.

According to a caption: "To keep America's SUV owners happy, oil companies get in bed with bad guys."  Another slur, bed?  Its about money, ignorant scum.

Two magazines, two outrageously distorted articles about greed - with little in the way of the type of rigorous analysis or factsmade up to back up the claims. Instead, the guiding principle behind both is a kind of vulgarly Marxist power theory.  Goddamn Pinkos.

We're not talking about the latest issues of left-wing pinko tabloids like The Nation or Mother Jones. =?
The cover stories appear in the current issues of two U.S. business magazines. Fortune (May 5) has the CEO pay article and Forbes (April 28) has the oil-and-despots article.

What the hell is going on here? Fortune, founded by Henry Luce in 1930,  had a proud history of serious writing. Forbes, owned by the same illustrious family since 1917, has as its publisher Steve Forbes, the supply-side Republican candidate for president. Is Steve not paying attention?  It is the job of not just editors to stamp out news, but more importantly, owners. Has something profound changed since the retirement of Jim Michaels, probably his generation's best magazine editor?  Have a bunch of commies picked up the editing quills?

Maybe the explanation is that business magazines, getting thinner and thinner from declining advertising, have to shout and sensationalize to keep their circulation up. Thank god think tanks don't have to shout or sensationalize.  9/11!  9/11!

Whatever the reason, Fortune and Forbes are sliding, in quality and, and more importantly, ASI's respect.   The latest cover stories indicate why. It's true that many corporate CEOs continue to glean high salaries, bonuses and stock awards and options even though their firms' stock prices have been declining. But from the top of my perch high in this ivory tower, I must ask why should that be surprising? When the economic wind is at your back, it's easier to make lots of money. In tough times, with a declining revenue pie, businesses need great managers more than ever. How to attract them? Give them the biggest piece of pie.  Still hungry?  Hand them the spatula.  
Sheese, that's not very complicated, is it?
Fortune it has been frothing at the mouth about high pay since 1982, with a cover story titled, "The Madness of Corporate Compensation." But the last 20 years have been among the most productive in the history of U.S. business. The American economy outstripped the rest of the world, with average growth of over 3 percent annually. The Dow Jones Industrial Average rose from 777 in August 1982 to over 8000 today. U.S. businesses now lead the world in nearly every major industry, from semiconductors to retailing.
Therefore, it only follows that increasing the slice of pie going to CEO's and the tip-top of the pyramid, is the key to economic growth.

Er, even if the economy is shrinking and the stock market is in the tank.

Can't you see that?

Increasing executive pay, regardless of corporate performance, is the best for everybody.  And for those pinko rags that lionize Warren Buffet and other real producers who keep a lid on pay, we at ASI say this,  Get serious. Have you no shame?

James Straman sets them up at the American Suprise Institute

See other ground breaking research at http://www.stinktank.org