Arlington, Va.: Were you able to measure the 2002 performance of stocks of the 1,019 companies in the study? I wonder that compares with the S&P figure you mentioned.

Ben White: Greetings everyone on yet another grey rainy day in the Big Apple

That's a very good question, and no, I wasn't able to measure all 1,019 companies against the 23 percent drop in the SP500 for 2002.

Instead I tried to look at the performance for some of the companies where CEOs got the biggest bonuses and salaries and as you saw, the stock performance for some of those firms was pretty woeful.

Some of the CEOs of course did perform well but the question is does good performance warrant the outsize compensation packages these CEOs receive? A lot of people would say no. And of course there are thousands of others at these companies whose work goes a long way to determining corporate performance.

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Arlington, Va.: Why did the restricted stock number drop in 2002?

Ben White: Not sure exactly why but to some extent thats a cyclical figure. In years when a lot of CEOs renegotiate packages you will see stock awards go up.

That said, there is a lot of anecdotal information piling up that companies are issuing a great deal more restricted stock this year. There are number of reasons for that: options lass valuable to CEOs in a down market, pressure on boards to reward CEOs more for long term performance.

Of course critics will say stock restricted only by a certain number of years just rewards execs for sticking around and capitalizing on an overall market rise instead of creating exceptional shareholder value.

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Washington, DC: Any irony here that a Tyco exec was tops in pay? Is that guy facing any problems from the federal probe?

Ben White: Sure there is some irony there. And yes Mark Swartz, the former Tyco CFO was indicted along w/ Kozlowski for allegedly looting the company through unapproved loan payments and subsequent loan forgiveness. (among other thins)

To some, the abuses at Tyco are emblematic of the diseased culture of CEO pay, a culture in which a closed loop of directors who are at least indirectly beholden to top management approve lavish cash and stock awards

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Tucson, Arizona: Are these the same CEO's who will be contributing to Bush's reelection and are my tax dollars funding them?

Ben White: In some cases I'm sure these CEOs will contribute to the Bush campaign.

But they are often ambidextrous in their giving, making sure to contribute to any candidate w/ a serious shot at winning office and potentially impacting their bottom line.

That said Bush clearly has an advantage in fundraising among the corporate elite and because he is at this point the odds on favorite for reelection more money will flow his way.

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Bethesda, Md.: What are the tax incentives for keeping base salaries low and other forms of compensation high?

Ben White: As you probably know there is a cap of $1 million above which comanies cannot deduct pay that is not performance based or "at risk."

Trouble is companies find all sorts of ways to say pay in excess of $1M is at risk when in fact that performance targets are easy to meet or are changed when execs fail to meet them

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Alexandria, Va.: The last time I checked, unemployment was up, and there were lots of smart, white-collar types out there looking for work. If the labor market is loose, why is there such an upward pressure on CEO pay?

Ben White: Excellent question and several answers.

Corporate directors tend to focus on a very small universe of potential CEOs, pretty much people who have already been CEOs or CFOs or have risen through the ranks at a given company. They often think the market will only accept a proven name or that a big name will somehow guarantee big returns.

There is also a deeply held belief that you have to pay above your "peer group" to land a big fish CEO when in fact directors could probably find highly qualified candidates who would do the job for less money.

Finally you have an army of compensation consultants who constantly tell boards that they have to pay these outsize packages.

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Washington, DC: Anyone taking this kind of money while we approach 1 in 10 people being unemployed because of them should be considered a criminal.

This, to me, shows the sad side of capitalism. The unfettered greed or the super rich.

What can we do as a society to shame these people? The amount of their bonuses and raises could make such a difference, but it won't. It'll buy another home or car. There is no trickle down.

I think these people need to study the French Revolution, before they make the same mistakes.

Ben White: Well, part of what you can do is continue to participate in chats like this and part of what we in the media can do is to continue to report on the topic.

I think you are on to something in that a real cultural change is whats needed to address the issue, the creation of an environment in which huge pay packages just aren't acceptable.

CEOs are very susceptible to public shaming, particularly when it starts to impact their stock price.

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Boston, MA: When will the idea of the "war for talent" wear out? What alternative could take its place?

Ben White: Wish I knew the answer to that question.

There seems to be consensus in academic circles and among many in the general public that the "market" for CEO talent is a deeply flawed one. But the argument that these payments are what the market will bear continues to hold sway in the boardroom or at least compensation committee members profess to believe it

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Washington, DC: Who is the youngest/highest paid exec in our area?

Ben White: You mean its not you?

A good question but one to which I do not know the answer. There was Michael Saylor at MicroStrategies, a one-time billionaire. I doubt he tops the list anymore though I think last time I heard or read his company was actually making money.

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Alexandria, Va.: How did the Corporate Library compile all this data? Is it just for public firms?

Ben White: Yes its just public companies. They picked the biggest firms by market cap at which the CEO was in his/her post for all of FY 2001/2002.

For full methodology and other interesting ways to slice and dice the data I highly recommend reading Paul Hodgson's excellent report at www.thecorporatelibrary.com

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Baltimore: Does the Corporate Library have an iron in this fire -- i.e. are they proposing specific reforms to how CEOs are compensated?

Ben White: I think their only iron is that they are outraged by overall CEO pay levels. So they are not coldly disinterested in the subject.

And they do tend to take positions such as criticizing over-reliance on stock options, repricing of underwater options, stealth pay not clearly disclosed, changing of performance targets to guarantee fatter bonuses, not including the impact of pension shortfalls on bonuses when its convenient not to etc etc. and just generally saying that exec pay is way too high and totally untethered from morality and reality

In short they are gadflies who are very good at reasearch

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Fairfax, VA: What motivates a millionaire CEO to perform for the best interests of an ongoing business entity? I worked for a mid-sized company in the executive suite, and not one of them seemed motived to make policy in the best interest of the company.

They liked to talk about sports and personal investments. But there wasn't much hard work going on there. I kept spreadsheets for several of them on various gambling hobbies. I remember those big annual retreats - most of it deductible. They would come back all energized to downsize and streamline. That they could do with some enjoyment.

As you can tell, I don't like the current business model. It encourages stealing from the top, but doesn't call it stealing.

Ben White: Sounds like a pretty awful company.

Probably not fair to paint all CEOs w/ that broad brush.

Many, many do work extremely hard and well to grow their businesses in the long term.

Of course many, particularly in the late 90s, worked to goose the short term stock price so they could cash out their options in a big pay day before the larger investing world got wise.

There is endless talk about how to better align pay w/ performance and even more suggestions for how to do that: tie bonuses to return on invested capital or total shareholder return, tie stock grants to similar performance targets.

Some of this stuff probably works but the over-arching issues is whether total compensation, however you arrive at it, is just way way too high.

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Washington, DC: Where does the Corporate Library get its funding?

Ben White: While they give away a lot for free, they do sell proprietary research including access to huge databases of public companies and software that examines interlocking relationships between corporate directors, among other things

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Washington DC: My pay has been raised less then 4% each year for the last two years, with 3% being the average where I work. Who the heck are these CEO's and haven't they learned anything about corporate greed and it's consequences?

Ben White: Not sure they have learned all that much. The common refrain is they still don't "get it."

Lots of suggestions out there to tie exec pay to a multiple of the lowest paid employee. Not sure that works though because the labor markets are so different for the CEO and the lowest paid. (Not that the labor market for the CEO is a real functioning market).

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Richmond, Virginia: Any idea why people aren't outraged by this? Do you see any way the Democrats could use this issue in the next election?

Ben White: I think people ARE outraged by it. Stories like this invariably provoke great reader response. That outrage hasn't generated any change yet, however, as studies like this one show.

There needs to be some critical mass of companies totally altering the way they pay execs, and then those companies need to do better in the market and then watch the rest scramble to cut their ceo pay.

question, as always, is who jumps first?

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20005 -- DC: Just curious, did you calculate some of the perks upon retirement like office space, administrative help, ongoing club memberships, access to corporate planes, etc.

Ben White: Severance was not really a part of this study no, though in just looking through proxies you see tons of very lush packages still being awarded, even for CEOs such as Tenet Health Care's who resigned under pressure.

You have to work hard as a CEO not to qualify for the golden parachute the way contracts are currently drafted by comp committees

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Falls Church, Va.: Are there any companies that stood out as paying far less than the median?

Ben White: Yes. There were a handful noted in the study where the CEO's pay was either dramatically cut or eliminated altogether, generally at the CEOs request.
(still don't see too many boards busting out Hulk-style and saying, sorry pay, no check for you this year)

Rational Software and Aloca pop into my mind as two listed has having significantly reduced pay. It is important to remember that there ARE plenty of good actors out there

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Reston, Va.: I don't get it -- these CEOs are getting MORE money just because they managed their companies well during the downturn? Shouldn't CEOs (esp. those who are well compensated to begin with) accept a leaner paycheck during lean times?

Ben White: As noted above, some in fact do take leaner paychecks in leaner times.

But many boards find ways to bend over backwards to pat their CEOs on the back for not doing worse than they did.

Its getting to be a very tired cliche (much like the abysmal overuse of the phrase "perfect storm") but somehow the CEO world still is that mythical Woebegone where everyone is above average.

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Santa Monica, Calif. : I have been thinking about what they didn't teach me in biz school, but I have observed. I would like your opinion on my observation... of what I term the actual 'new' economy for the last thirty years...

This "new" economy is actually a series of 'boom and bust employment cycles' depending on which industry is 'hot'... and workers get shafted and are totally disposable....

CEOs and their consultants rape and pillage once stable companies that actually once produced goods or services in multiple industries to enrich themselves....by delivering only short-term returns to large stockholders and "stakeholders" who "churn" their investments at a constant rate.

Value investing timelines are compressed to such a degree that stockholders that hold anything long-term are losers; for it is not about company value, it is about "financial momentum."

In this "new" economy, long-term value equity is disregarded while short-term bottom line accounting, Mergers & Avulsions is embraced and drive these trends....

And corporate media promotes the "game" by giving no historical perspective on success of this type of decision making; and promoting small stockholder "consumerism" of "hot stocks" to keep the "crap game" going.

Debt is written down or hidden in the M & A process and by constantly moving operations and churning and laying off employees.

Now this bastardized concept of "value" has gone global.... which means foreign currencies and foreign players are MORE involved as transnational operations come on line, and though this will led to greater financial momentum, it will also lead to greater financial instability for local economies and of course employees.

And this Administration is making this situation much worse...since it is against any reform or regulation of corporations and the believes the free market is efficient in all markets and it is creating crushing national and government debt.

To me it looks like it is time to fasten your seat belts for MORE international economic turbulence....

Under this system the CEO functions not in a traditional management role, but more as a transnational celebrity ring master of corporate ceremony.... his/her job is to keep the buzz going for the financial momentum which now substitutes for sustained growth to continue.

If my observation is true; what may we do about corporate governance under such circumstances?
- Thank you.

Ben White: phew. thats quite a screed. "celebrity ring master of corporate ceremony...." nice phrase, though I'm not quite sure what you mean.

Not sure things are quite as dystopic as you make out. I think the smart long term stock market investor who diversifies and reduces risk nearing retirement can still do pretty well. And plenty of companies do go plodding along creating plenty of goods and (even more) services for the consumer.

That said, there has been a great amount of displacement for workers in the "new economy" and as a result of globalization. Lots of retraining, education needed.

But I don't want to get out of my depth. I'm not an expert dissector of the global economic environment. But it sounds like you could be an aspiring one!

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Olney, Maryland: Could you offer some commentary about well compensated higher education officials in relation to the rise in corporate pay?

Ben White: Hmm. Not sure if you are referring to college presidents, or school boards chairs or what. But I think that in any case their pay probably does not begin to compare to that of the CEO at a publicly traded U.S. company.

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Truth or Legend?: Ben and Jerry set their own pay at no more than seven times what their lowest-paid employee earned. When Unilever bought the ice-cream company, that policy was one of the first things to go.

Is this story accurate?

Ben White: Don't know, though I have also heard the tale repeated often enough, usually when polishing off a pint of Chocolate Chip Cookie Dough. Could be business urban legend.

But as I think I've mentioned before I'm not so sure this is a good idea (except perhaps as a marketing tool targeting the aging hipster) so maybe not so bad that Unilever dumped it, if they did.

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Chicago, IL: Has anyone calculated how many middle-income workers could have kept their jobs if the millions spent on CEO raises had been spent on them instead?

I'm reluctant to cry "class-warfare," but it sure looks like it. When millions of Americans are losing their jobs, can we as nation really afford to grant millionaires raises when the companies they run are struggling?

Ben White: No one that I know of has calculated that. Sometimes of course CEOs have to cut back on workers in a slow economy.

But it sure looks bad when they do this while also taking big fat bonuses or stock grants.

Anyway, I think that about does it for today. Thanks to all for posting and here's to hoping the sun comes out again one day.

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