Break out the violins…

When it comes to the current churning of the economy affecting the livelihood of various people, about this group I have three words: Took long enough…

CEO compensation at the biggest U.S. corporations dropped sharply last year, reflecting in part the rough business conditions at top-tier banks and other large financial firms, a study has found.

The study, released Thursday by consulting firm Mercer, a unit of Marsh & McLennan Cos Inc, is one of the most comprehensive reports to date analyzing chief executive pay data for companies’ most recently completed fiscal year.

The study looked at pay data in annual proxy filings for 350 companies of varying sizes and industries in the Fortune 1000. […]

The study found that the CEOs of 50 large U.S. companies — companies with median annual revenue of $66.2 billion — took the sharpest cut in total direct compensation in the last fiscal year on a percentage basis, down 15.8 percent from the previous year.

This group of companies includes many big financial firms such as American International Group, Citigroup and Merrill Lynch & Co Inc that have been hurt by woes in the mortgage and credit markets.

“Companies are correlating their payouts more closely to performance,” said Diane Doubleday, global leader of Mercer’s executive compensation group in San Francisco. “I think we will see that play out in 2008 again.”

Median total direct compensation for CEOs in this group was nearly $14 million in the fiscal year covered by the proxy, Mercer said.

It should’ve been tied to performance all along anyway. If they aren’t serving a purpose to the company then honestly WTF are they there for? Only on corporate boards do you get this sense of amazement at the concept of not showering people with money for half-assed effort, meanwhile the people doing the actual work are seen as little more than walking cost.

The response? Panic:

With business leaders facing rising scrutiny from shareholders and lawmakers about their compensation, a new organization wants to tell corporate America’s side of the executive pay story.

Leaders of the Center on Executive Compensation, an industry-backed group based in Washington, say they want to offer a reasoned view about how to create good pay practices. […]

Great, yet another interest group. How much representation do they need?

CEOs themselves play no direct role at the new center, an offshoot of the HR Policy Association, which represents human resources officers at big U.S. companies.

The center has a 16-member advisory board made up of chief HR officials at companies such as American Airlines, International Business Machines and Lockheed Martin Corp.

So the new organization saying “not so fast!” about CEO compensation is made up of people whose job is to keep everything below the board whittled down enough to maintain the boss’ unjustified high life. Operationally, the difference is moot.

Shareholder rights activists say they do not have high hopes that the executive compensation center will advocate for investors.

“This is part of the effort of the business community to protect the status quo from angry shareholders and a concerned Congress,” said Richard Ferlauto, director of pension and benefit policy at the American Federation of State, County and Municipal Employees (AFSCME), a frequent critic of executive pay plans. “It just shows that the business community is mobilizing, rather than reforming pay,” he said.

Well no screaming eagle shit, Sherlock…

The center was formed at a time when union pension funds and other activist investors have proposed pay reforms, such as measures to give shareholders nonbinding votes on top managers’ pay plans. These measures won majority votes at annual meetings of some companies this year, such as at Motorola Inc, but have failed to pass elsewhere, including at Citigroup.

The executive compensation center opposes the “say-on-pay” investor proposals and a bill pending in Congress calling for a mandatory shareholder vote on executive pay, saying they could end up forcing companies to adopt “cookie-cutter” pay plans aimed at winning shareholder support rather than be in the corporations’ best strategic interests.

“People, what are you doing? I can barely keep my private jet fueled these days! It feels like you’re snatching the lobster from my kids mouths! What are they supposed to have for breakfast, eggs?”

They claim that popular proposals from the shareholders that just happen to thin their obese wallets and limit their potential for self-aggrandizement hurt the interests of the company, and should thus be blocked. Yet the entire reason these things are so popular is the rampant abuse of trust in the corporate world. This is basically the same argument that politicians make when people criticize their power: “you don’t understand! You’ll just weaken us!”. In the long run, even when the ones involved don’t realize it, that’s the point.

Considering the illegitimacy of corporate structure, and the similarity to the design of the modern State, these kind of internal fights can be seen as cracks in the wall. The purpose, then, of radicals is to encourage questioning of the point of the wall itself, and to hand out increasingly more effective chisels and mallets until it all comes down.

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About b-psycho

Left-libertarian blogger & occasional musician.
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