One CEO has embraced the idea of letting shareholders vote on his pay, and the “CBS Evening News” embraced him for it.
“In one work day, America’s average CEO earns more than the average employee makes all year,” CBS correspondent Mark Strassmann said, trotting out a favored class envy talking point on the April 29 show.
The segment showcased Dan Amos, CEO of insurance provider Aflac, Inc. According to the report, Aflac recently implemented a system that, beginning in 2009, will give shareholders the ability to vote on Amos’ compensation.
Strassmann indicated the vote is non-binding, but the entire story was based on the premise that the move could create a ripple effect throughout corporate America.
“Other CEOs may soon get the message – perform or you’re a sitting duck,” Strassmann said, attempting to make a witty correlation between CEOs and Aflac’s familiar symbol.
Following the report, anchor Anthony Mason sat down with “executive compensation consultant” Brian Foley. Foley, managing director of Brian Foley & Co. Inc., has been a go-to person on this issue for the media. He has commented on the [1]pay of embattled former New York Stock Exchange Chairman Richard Grasso, [2]restrictions on stock options for IBM executives and [3]full and open disclosure of executive compensation.
“At some companies, the pay packages are out of control,” Foley told Mason.
After Mason gave another example of what he considered a high CEO salary at a struggling company, he asked Foley: “Isn’t that just the sort of thing that gets stockholders really angry?”
“It gets people frustrated that the big guy makes that much money when their stock goes down,” Foley answered. “It gets the union people upset because their benefits have been cut or – or eliminated, or they’re facing layoffs.”
But not all shareholders agree that voting on CEO pay is the best idea. [4]Coca-Cola shareholders rejected compensation ratification and other proposed caps on executive pay earlier this month at the annual shareholders meeting.
The CBS report came in the wake of House [5]passage of a bill sponsored by Rep. Barney Frank (D-Mass.) that would give the shareholders of any public corporation an advisory role in executive compensation. Congressional Republicans and the White House opposed the bill for its allowance of the federal government to intrude upon corporations. The bill has yet to be passed by the Senate, but the platform was one of the issues touted by Democratic candidates in the 2006 elections.
Yet, Foley explained that the legislation is just a political show.
“I don’t think it will make a difference,” Foley said. “The shareholders already have the right to seek these proposals. Most of them have lost to date. In fact, they have all lost to date as far as I know. The vote itself is non-binding. It’s a straw vote. Last but not least, what does a yes-vote mean, what does a no-vote mean? Who knows?”
CBS joined ABC in the latest pay-criticism trend. [6]ABC’s “World News” took on hedge fund managers’ pay on its April 24 show.