A recently published article has the title which really says it all, "How to protect executive compensation amid falling oil prices." A consultant offers helpful advice, as consultants do, about how to save the poor executives from pay packages shrinkage due to falling commodity prices. (Here's a link: http://www.bizjournals.com/...)
Of course it isn't the execs' fault that oil prices are falling. That's absolutely right. But I don't recall any CEO, or consultant, pointing out that it wasn't anything an executive did that made oil prices rise. And as oil prices rose, compensation at those companies rose. And now those packages must be saved. That leads me to the word in the title of this diary: entitlement. More below the orange thing . . . including what you can do.
Entitlement is a dreadful attitude. No one likes the arrogance. My kids use the phrase, "he thinks he's all that" and it sums it up well. The Republicans years ago painted "entitlement" as an attitude of the poor. Maybe there were people who felt entitled to food, and crazy things like that. Maybe that struck a chord with some people who had encountered a personality attribute they found offensive. But it is time -- past time -- for Democrats to point out the danger of the entitlement of the 1%. For when these individuals feel entitled the financial costs are so much higher for all of us.
I've been working for years in the area of shareholder activism around CEO pay, and I've read proxy statement after proxy statement that displays this attitude. CEOs who've made 10s of millions, but claim that wouldn't be motivated if they didn't get another huge options grant. These were CEOs who were lucky enough to get mega grants at the bottom of the market who saw stock price climb sharply, not becuase of their personal brilliance, but because the economy recovered.
The indictment of Blankenship -- the CEO of Massey Energy -- offers a number of insights, but one that struck me is that when managers warned about safety concerns he pushed back, and reminded them of the value of their stock options. We know this because the deaths of the miners sparked investigations that gave prosecuters inside looks at the company email. How many similar emails are there that we don't know about?
As to the question of what you can do: if you are a shareholder you have a right to vote on CEO pay. If you own shares through a mutual fund, you have a right to find out how your fund votes, and to encourage them to vote appropriately.
The organization I work with, the As You Sow Foundation, is issuing a report in a few weeks,on the 100 Most Overpaid CEOs: Executive Compensation at S&P 500 companies. The report is designed to provide investors an overview of companies that overpay their CEOs, and the structures and factors behind the high pay. The report will include sections identifying compensation committee directors and mutual funds votes on say on pay at these companies. If you are interested, there's a webinar as well that you can sign up for. www.asyousow.org/webinar/ceopay