Michael Hiltzik: Bell and the American CEO
The term "shareholder democracy" deserves a place in the roll of honored oxymorons, like "military intelligence" and "compassionate conservatism." As my Sunday column observes, corporate shareholders have almost no power to exercise their will over top managers, who have countless tools available to entrench themselves in power and secure outsized compensation and retirement packages for themselves.
The story is told by the 2009 proxy scorecard of Institutional Shareholders Services--that is, the record of shareholder votes in which this clearinghouse for institutional shareholders took an interest. Precious few resolutions pertaining to executive compensation make it onto shareholder ballots, and only a tiny minority ever pass. For more information on corporate governance issues, the Corporate Library blog is a good source.
The column begins below.
As I beheld the sight of Robert Rizzo and his fellow Bell municipal bosses being frog-marched into court the other day on charges of having overpaid themselves outrageously at the expense of their suffering constituents, the following thought came to me:
Why not Ray Irani?
Maybe it’s unfair to pick on the longtime chairman and chief executive of Los Angeles-based Occidental Petroleum, since at $31 million last year, he places only fourth on Forbes’ latest list of America’s highest-paid executives.
If one is looking for overpaid CEOs, as ranked by their compensation relative to shareholder return, General Electric’s Jeffrey Immelt, Verizon’s Ivan Seidenberg and many others might deserve to stand ahead of Irani in the queue for the orange jumpsuit. (Those rankings come from Forbes too.)
But to some degree they’re all emblematic of the No. 1 scandal of American business — executive pay that bears scant relationship to what these people are worth.
-- Michael Hiltzik