« Cafe Classic: The Truth About Great Compensation Design | Main | It's Time to Talk about Milestones »

02/26/2020

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Excellent post on a massive, giant and very complex dilemma, Chuck!

A brilliant CEO of General Dynamics once ran full-page ads in TWSJ with mostly white space, leaving a tiny center space for each short text message. My favorite was, "If you can't write your message on a business card, it's not a clear message."

That said, I've personally handled literally hundreds of IRS "reasonable deductible executive compensation" challenges as the outside "expert" for one side or the other. My simplest explanation for general public consumption is that top exec pay is governed by public laws enforced by the IRS, the SEC and Congress. Some states also limit exec remuneration at non-profits, per IRC 4958. All such total reward decisions are primarily made (or directed/approved) by the people who OWN the enterprise.

Those who put their money into the biz are the principals who (pretty much) totally control top executive remuneration, which encompasses a whole lot more than "mere cash".

Those truly interested in actual facts vs partisan polemics should read the comprehensive classic Waxman House of Representatives Committee Report on Consultant Conflicts of Interest in Executive Compensation matters and any of the many articles I've posted here on exec comp and excessive compensation.

Bottom line: what is "reasonable" is all basically a matter of option, anyway... even though the US Tax Court pretends it is "a matter of objective fact."

In sum, owners have the same rights YOU have as private citizens, although theirs are far more constrained by laws and regulations. Do you criticize a neighbor for buying an expensive new car? Would you snarl at a family that scrimps and saves to buy a much better house? By what right does one condemn the pay decisions of anyone about what they want to pay THEIR workers from THEIR money?

Remember... "fair" usually means, "I want MORE".

The comments to this entry are closed.