surprise: overpaid execs have friends on the board of directors

[lindisfarne]

Behind Every Underachiever, an Overpaid Board?
By GRETCHEN MORGENSON
Published: January 22, 2006
NY Times (select)
Lucien A. Bebchuk, professor of law, economics and finance at Harvard Law School and director of its program on corporate governance, said compensation paid to the top five executives at all public companies in the three years ending in 2003 reached 10 percent of those companies' earnings.
<snip>
To address this problem, Mr. Steininger has written a shareholder proposal related to how public company directors are compensated and has muscled it onto the proxy statements of seven companies. The proposal requires that shareholders approve director pay each year and that precise details of the compensation paid to directors - including charitable contributions and other perquisites that involve the use of company assets - be made public annually. The companies whose shareholders will vote on the proposal later this year are Bank of New York, Cendant, Exxon Mobil, Home Depot, Honeywell, Merrill Lynch and SBC Communications, now known as AT&T.
<snp>
Too many boards remain stacked with top management's pals, Mr. Steininger said. He cited an academic study from 2002 by Ivan E. Brick, Oded Palmon and John K. Wald at Rutgers Business School in Newark and New Brunswick, which concluded that excessive executive pay was associated with ineffective "monitoring" by directors, or "cronyism." The study examined pay at 2,404 businesses from 1992 to 1999. Executive pay has risen steadily since then. "There is evidence that directors who enjoy high director compensation are more likely to pay excessive C.E.O. compensation and that high director pay coupled with high C.E.O. pay correlates with underperformance of the company."

[Lasher]

1. There should be a law

It should be illegal for a CEO to be a member of any Board of Directors - most important of all, not with his own company, but top executives should also be strictly prohibited from membership in any other BOD. This applies to nonprofits and charities.

I think they get paid enough where they shouldn't have to go find an outside job.

[unhappycamper]

2. lindisfarne:

In the future, please make the thread title the same as the article title and include a link to the article.

TIA,

uhc

[lindisfarne]

3. Behind Every Underachiever, an Overpaid Board?

http://select.nytimes.com/2006/01/22/business/yourmoney/22gret.html?8hpib
you can only get access with a paid subscription.
(regarding the moderator's message: the rules for this forum do not state what you mentioned ("In the future, please make the thread title the same as the article title and include a link to the article.").