It is shareholder annual meeting time of the year. I received a packet from a company I am invested in asking me to vote on a number of issues. This is a company with significant engineering resources so it hits close to home. In fact, knowing more than one engineer that works there is part of the reason I invested. One of the major issues, and actual the first thing to vote on, was executive compensation. Of the about 60 page packet, more than 20 pages were devoted to executive pay. Most of the pages are devoted to talking up the executives, how awesome the company and stock has done since they have been there, and how underpaid they are compared to comparable companies. Then finally 15 pages through the section the last three years of compensation is listed. About $19 million last year, about $18 million the year before and $13 million in 2010.
What kind of executive compensation innovations do I propose? A salary cap, not based on any government number, but as a ratio to the other employees in the company. Such as perhaps no one could be paid more than 100 times the lowest paid employee. Even at minimum wage that is $725 an hour, which is not terrible. Plus, if the CEO wants $800 an hour, then everyone in the company would probably get a raise. It brings everyone up at the same rate. Another idea, is to give the CEO the raise of the median worker every year. If that is only two or three percent so be it. I say that because the CEO's income is directly tied to the company and the people he manages. Some might say the CEO is the best employee at the company, give him the highest raise, but I say the CEO is the median CEO of the company who's fortune rises and falls with the success of the whole organization. Let his or her compensation reflect that.