本帖最后由 qxn_1987 于 2009-12-26 00:57 编辑
But today it is becoming radioactive, as governments step in to rescue failing companies and ordinary people are forced to tighten their belts.
Is the anger justified? Some argue that executive pay is a long-standing（长期存在的） disgrace. Pay is often not tethered to performance. Huge rewards for the few demotivate the rest of the workforce. Others are more sanguine. Successful executives, such as Jack Welch, former CEO of General Electric, can add hugely to a firm's profitability, benefiting workers, managers and shareholders alike. The growing pay of executives has to be balanced against the growing difficulty of their jobs, particularly as turnover in the boardroom increases. 背景资料： Executive compensation is the total remuneration or financial compensation a top executive receives within a corporation. This includes a basic salary, any and all bonuses, shares, options, and any other company benefit. Over the past three decades, executive compensation has risen dramatically beyond the rising levels of an average worker's wage. Executive compensation is an important part of corporate governance, and is often determined by a company's board of directors.CriticismMany newspaper stories show people expressing concern that CEOs are paid too much for the services they provide. In Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs, Harvard Business School professor Rakesh Khurana documents the problem of excessive CEO compensation, showing that the return on investment from these pay packages（综合工资） is very poor compared to other outlays （费用） of corporate resources.
Defenders of high executive pay say that the global war for talent and the rise of private equity firms can explain much of the increase in executive pay. For example, while in conservative Japan a senior executive has few alternatives to his current employer, in the United States it is acceptable and even admirable for a senior executive to jump to a competitor, to a private equity firm, or to a private equity portfolio company. Portfolio company executives take a pay cut but are routinely granted stock options for ownership of ten percent of the portfolio company, contingent on a successful tenure. Rather than signaling a conspiracy, defenders argue, the increase in executive pay is a mere byproduct of supply and demand for executive talent. However, U.S. executives make substantially more than their European and Asian counterparts.
Shareholders, often members of the Council of Institutional Investors or the Interfaith Center on Corporate Responsibility have often filed shareholder resolutions in protest. 21 such resolutions were filed in 2003. About a dozen were voted on in 2007, with two coming very close to passing (at Verizon, a recount is currently in progress). The U.S. Congress is currently debating mandating shareholder approval of executive pay packages at publicly traded U.S. companies.
The U.S. stood first in the world in 2005 with a ratio of 39:1 CEO's compensation to pay of manufacturing production workers. Britain second with 31.8:1; Italy third with 25.9:1, New Zealand fourth with 24.9:1.[14]
routinely（例行公事地）
executive compensation
hedge fund bandits（强盗）
crunch. bailed out
thrash out（研究解决） focuses heavily on
walk away with（顺手拿走；偷走；拐逃）
Strikingly off his hands（不再有某人负责）
deadliest sins（不可饶恕的罪行）
margin calls（补充保证金通知，增收保证金，征收保证金的要求）
But thereafter, starting in America and slowly spreading to the rest of the world, the multiples increased exponentially. Today many American workers earn in a year what their boss takes home in an evening. Isn't this a disgrace? Critics of executive pay worry that even mediocre（普普通通的） bosses are given outsized rewards. Robert Nardelli received a $20m pay-off when he left Home Depot even though the share price had fallen during his six-year tenure. Carly Fiorina was $180m better off when she left Hewlett-Packard despite a lacklustre tenure. Defenders of executive pay argue that great bosses such as Louis Gerstner, the former boss of IBM, and Jack Welch, the former boss of General Electric, are worth every penny because they create huge amounts of wealth for both shareholders and employees. Critics argue that boards do not respond to market forces, but, instead, are dominated by or are over-generous to their CEOs. Boards are criticised for not tying CEOs' pay to performance. These criticisms have been exacerbated by the financial crisis and the desire to find scapegoats（替罪羊）. 背景资料：
Boards ：
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. The body sometimes has a different name, such as board of trustees, board of governors, board of managers, or executive board. It is often simply referred to as "the board."
A board's activities are determined by the powers, duties, and responsibilities delegated to it or conferred on it by an authority outside itself. These matters are typically detailed in the organization's bylaws. The bylaws commonly also specify the number of members of the board, how they are to be chosen, and when they are to meet. In an organization with voting members, e.g., a professional society, the board acts on behalf of, and is subordinate to, the organization's full assembly, which usually chooses the members of the board. In a stock corporation, the board is elected by the stockholders and is the highest authority in the management of the corporation. In a nonstock corporation with no general voting membership, e.g., a university, the board is the supreme governing body of the institution. Typical duties of boards of directors include - governing the organization by establishing broad policies and objectives;
- selecting, appointing, supporting and reviewing the performance of the chief executive;
- ensuring the availability of adequate financial resources;
- approving annual budgets;
- accounting to the stakeholders for the organization's performance.
The legal responsibilities of boards and board members vary with the nature of the organization, and with the jurisdiction within which it operates. For public corporations, these responsibilities are typically much more rigorous and complex than for those of other types. I argue below that the critics are wrong and that there are many misperceptions of CEO pay. While CEO pay practices are not perfect, they are driven by market forces and performance. Contrary to public perception, CEO pay has not gone up in recent years. In fact, the average CEO pay (adjusted for inflation) has dropped since 2000, while the pay of other groups has increased substantially. Similarly, the view that CEOs are not paid for performance is wrong. In fact, the opposite is true and boards increasingly fire them for poor performance. And, most recently, consistent with market forces driving pay, the US and UK governments each hired a new CEO (of AIG and the Royal Bank of Scotland) for pay exceeding that of the median large company CEO. 背景资料： Stock optionsSupporters of stock options say they align the interests of CEOs to those of shareholders, since options are valuable only if the stock price remains above the option's strike price. Stock options are now counted as a corporate expense (non-cash), which impacts a company's income statement and makes the distribution of options more transparent to shareholders. Critics of stock options charge that they are granted excessively and that they invite management abuses such as the options backdating of such grants. Stock options also pose a conflict of interest in which a CEO can artificially raise the stock price to cash in stock options at the expense of the company's long-term health, although this is a problem for any type of incentive compensation that goes unmonitored by directors. Indeed, "reload" stock options allow executives to exercise options and then replace them in part (and sometimes in whole), essentially selling the company stock short (i.e., profiting from the stock's decline). For various reasons, including the accounting charge, concerns about dilution and negative publicity related to stock options, companies have reduced the size of grants to executives.
Stock options also incentivize executives to engage in risk-seeking behavior. This is because the value of a call option increases with increased volatility. (cf. options pricing). Stock options therefore - even when used legitimately - can incentivize excessive risk seeking behavior that can lead to catastrophic corporate failure.
In the Financial crisis of 2007-2009 in the United States, pressure mounted to use more stock options than cash in executive pay. However, since many then-proportionally larger 2008 bonuses were awarded in February, 2009, near the March, 2009, bottom of the stock market, many of the bonuses in the banking industry turned out to have doubled or more in paper value by late in 2009. The bonuses were under particular scrutiny, including by the United States Treasury’s new special master of pay, Kenneth R. Feinberg, because many of the firms had been rescued by government Troubled Asset Relief Program (TARP) and other funds.[2]
Compensation protectionSenior executives may enjoy considerable income protection unavailable to many other employees. Often executives may receive a Golden Parachute（黄金降落伞—企业的高级管理层或离任的政府官员在他们失去原来的工作后在经济上给予其丰厚的保障安排） that rewards them substantially if the company gets taken over or they lose their jobs for other reasons. This can create perverse incentives.
One example is that overly attractive Golden Parachutes may incentivize executives to facilitate the sale of their company at a price that is not in their shareholders' best interests.
It is fairly easy for a top executive to reduce the price of his/her company's stock - due to information asymmetry. The executive can accelerate accounting of expected expenses, delay accounting of expected revenue, engage in off balance sheet transactions to make the company's profitability appear temporarily poorer, or simply promote and report severely conservative (eg. pessimistic) estimates of future earnings. Such seemingly adverse earnings news will be likely to (at least temporarily) reduce share price. (This is again due to information asymmetries since it is more common for top executives to do everything they can to window dress their company's earnings forecasts).
A reduced share price makes a company an easier takeover target. When the company gets bought out (or taken private) - at a dramatically lower price - the takeover artist gains a windfall from the former top executive's actions to surreptitiously reduce share price. This can represent 10s of billions of dollars (questionably) transferred from previous shareholders to the takeover artist. The former top executive is then rewarded with a golden handshake for presiding over the firesale that can sometimes be in the 100s of millions of dollars for one or two years of work. (This is nevertheless an excellent bargain for the takeover artist, who will tend to benefit from developing a reputation of being very generous to parting top executives).
Similar issues occur when a publicly held asset or non-profit organization undergoes privatization. Top executives often reap tremendous monetary benefits when a government owned, mutual or non-profit entity is sold to private hands. Just as in the example above, they can facilitate this process by making the entity appear to be in financial crisis - this reduces the sale price (to the profit of the purchaser), and makes non-profits and governments more likely to sell. Ironically, it can also contribute to a public perception that private entities are more efficiently run reinforcing the political will to sell of public assets.
Again, due to asymmetric information, policy makers and the general public see a government owned firm that was a financial 'disaster' - miraculously turned around by the private sector (and typically resold) within a few years.
The pay of people in the other groups has undoubtedly been driven by market forces; all are compensated in arm's-length markets, not by cronies. Technology, globalisation and scale appear to have increased the market value of these groups. CEOs have not done better and, by some measures, have done worse. Those who argue CEOs are overpaid have to explain how CEOs can be overpaid and not subject to market forces, when the other groups are paid at least as well and are subject to market forces. The final myth to bust is that CEOs control their boards and earn high pay through this control and not performance. In fact, CEO tenure has declined, from ten years in the 1970s to six years today, and boards have got tougher on their executives when they do not perform. Incentive compensation（奖金） rewarded executives for the quantity of transactions rather than the quality of transactions. It inevitably led to failures like the subprime disaster and the dominoes it toppled as it took the economy down with it. Worst of all, the avalanche of post-bailout bonuses and departure packages like the $53m Ken Lewis got from Bank of America have severely damaged the credibility of Wall Street and the American financial markets as a whole. The billions of dollars of losses do not come close to the reputational hit to American capitalism, which will increase the cost of capital for all US companies. Panglossian observers will always be able to find some metric to justify any level of pay.
（？）But the results speak for themselves. The decisions that led to the meltdown were made by executives who knew that they would be paid tens, even hundreds of millions of dollars no matter how successful the consequences of those decisions. Let us look at ground zero（“爆心投影点”组织，成立于华盛顿，宣传核爆炸的毁灭性） of the subprime mess, Countrywide, where Angelo Mozilo made more than $550m during his time as CEO. When the compensation committee tried to object to his pay levels, he hired another compensation consultant, paid for by the shareholders, to push them into giving him more. He also pushed for（奋力争取）, and was given, shareholder subsidies, not just for his wife's travel on the corporate jet but for the taxes on the imputed income（推算收入） from that travel. Instead of telling Mr Mozilo that he had no business asking the shareholders to subsidise his taxes, the board meekly signed off（停止活动） on it, making it clear to everyone in the executive suite that the pay-performance link was not a priority. By the end of 2007, when Countrywide finally revealed the losses it had previously obscured, shareholders lost more than 78% of their investment value. Meanwhile, in early 2007 Mr Mozilo sold over $127m in exercised stock options before July 24th 2007, when he announced a $388m write-down on profits. Before the bailout, Countrywide narrowly avoided bankruptcy by taking out an emergency loan of $11 billion from a group of banks. Mr Mozilo continued to sell off（廉价清卖；廉价清仓） shares, and by the end of 2007 he had sold an additional $30m in exercised stock options. There is the definition of outrageously excessive compensation. Countrywide responded to a shareholder proposal that year asking for a non-binding advisory vote on its pay plan by urging shareholders to oppose it because "Countrywide has been an outstanding performer" and because "The Board's Compensation Committee has access to the best information on compensation practices and has a thorough process in place to determine appropriate executive pay." They could hardly have done worse. And it is likely that some market feedback on the structure of the pay plan could have given compensation committee members Harley W. Snyder (chair), Robert J. Donato, Michael E. Dougherty and Oscar P. Robertson worthwhile guidance. These may be anecdotes, but they are illuminating ones. The numbers and details may be at the extreme, but the underlying approaches are representative. Even as outliers, they still demonstrate the failure of the system to ensure a vigorous, arm's-length system for determining pay and the inability of the system to require an effective incentive programme with a genuine downside as well as an upside. |
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楼主: 霁月难逢
发表于 2009-12-25 17:56:33
发表于 2009-12-25 20:57:04
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