The Association of U S West Retirees



Getting exec pay out in the open may be our best bet to end gluttony
Curiosity about someone else;s paycheck is natural. And for public companies, disclosing pay and perks of the top executives is the law.
By Lou Gelfand, Columnist
Minneapolis Star Tribune
Tuesday, August 7, 2006

The newsroom manager across the table seemed to be eyeballing someone behind me.  Her head bobbed up and down, then sideways.  But the only folks in the room were seated around the table.

Not until the end of the shift, as I was washing my hands, did I satisfy my curiosity.  It was payday and, looking into the mirror, I saw my paycheck folded in a shirt pocket, the gross amount showing.

She was curious about my salary.  I understood.  I was curious about hers.  At the time, a decade ago, newsroom gossip centered on alleged bountiful raises for some members of the union.  It got so think that the union executive committee voted to open the books -- dues are based on compensation levels -- so that members could compare pay.  That quashed a lot of rumors.  In those days there was rarely water-cooler talk about top management salaries.  The closely held company's stock was not traded on a major public exchange and only a trifle was held by employees who had gained it through a profit-sharing program.

The coverage of executive compensation in publicly held Minnesota companies also was minimal until the 1970s, when the Minneapolis Tribune initiated an annual accounting of executive pay taken from stockholder reports and proxy mailings.  In this year's Star Tribune survey of the 100 highest-paid Minnesota CEOs, the study found that 66 received $1 million or more in total pay -- a record.

In a previous job, the security chief of a public company had thrashed me for allowing the Star Tribune to publish the compensation of the chief executive office because, he said, "You've set him up for a kidnapping."

Such was the thinking at the time.  But these are public companies that are required by law to disclose executive pay and perks.  By the late 1980s, executive pay surveys had become a news media staple.  The Wall Street Journal has conducted its annual survey since 1989.

The galloping greed of chairmen and CEOs has once again caught the interest of the Securities and Exchange Commission (SEC).  In January, it issued a 372-page proposal outlining new rules concerning how executives are compensated, ordering corporations to provide additional information such as the total cost of retirement benefits and why stock options were approved.

The commission told the New York Times that the more than 20,000 responses to the proposal was the most in SEC history.

The rules, which go into effect in mid-December, will apply to an estimated 3,500 corporations or more.  They must identify a summary pay chart for the top five executives that provides total compensation, plus tables disclosing retirement benefits and deferred compensation, when and how stock options are granted, and a table showing director compensation.

As examples of annual pensions for chairmen and CEOs. Edward Whitacre of AT&T Inc. will get $5.4 million, William McGuire of UnitedHealth Group Inc. will get $5.1 million and Samuel Palmisano of IBM will be paid $4.7 million.

The new rules cannot prevent Enron-style corruption or WorldCom-style greed.  But public awareness of private gluttony might create the public indignation necessary for ordinary citizens to overcome the power of the insiders.  It's a long shot, but it's all we have.

Lou Gelfand  *