Lonely at the top--but often lucrative.

No one ever admits they're wrong anymore. Have you ever noticed how rare it is for labor unions to admit it when their own tactics are over the top? Or for media pundits to discuss publicly (other than in their own trade journals) the reasons for their diminished reputation for objective reporting? Or for elected officials to regulate lobbyists' influence over legislation and government largesse?

Not that there's anything wrong with that.

So, not fearing to go where fools rush in, I dare to use this space in a business publication to write about executive compensation. Oh, I'm not talking about those members of management teams who make $100,000, $250,000 or $400,000 a year--I'm talking about the really big bucks.

The SEC has just proposed a series of restrictions and mandated disclosures of executive compensation and pension plan grants. Seems like the federal government might actually mandate what boards of directors should have been enforcing all along.

One of the biggest knocks on business generally is the outsized compensation packages bestowed upon corporate leaders. Government officials and the media love trumpeting the outlandish packages some executives take home. They forget the long hours, including weekends; the fact that businesses rise and fall based on those executives' decisions; the burden of dealing with numerous constituencies; and the many other challenges.

But let's face it, some corporate leaders are getting fat (monetarily, and perhaps even physically) when their companies are struggling and layoffs of good people are implemented.

Valley salaries

Here are the top five Valley-based public companies' CEO compensation packages for 2004, according to the Business Journal's most recent Book of Lists. Any of these seem excessive to you?

Angelo R. Mozilo (Countrywide Financial Corp.): $23,187,000

R. Chad Dreier (Ryland Group, Inc.): $19,858,000

Michael D. Eisner (Walt Disney Co.): $8,312,000

Mark R. Goldston (United Online): $6,518,000

Larry C. Glasscock (Wellpoint Health Net works): $5,599,000

Mr. Mozilo, reported the Los Angeles Times, is also eligible for an executive pension that will be worth up to $3 million a year for life.

In just the past few weeks, the Los Angeles Times, the Wall Street Journal, Fortune magazine, and many more, have published lengthy articles on how Out of whack the compensation of senior American executives is, compared both to those of other nations and of our own workforce.

Options, pensions, a broad array of perks ... these all add up to packages that shareholders don't know about ... and almost never have an opportunity to approve.

Last month, the Wall Street Journal reported that the ratio of the average Fortune 500 chief executive to that of the U.S. President's salary in 1960 was two-to-one. Today, it is thirty-to-one. I don't think our Presidents have gotten any worse, but I also don't think our corporate leaders have gotten any better.

The average American CEO's salary is 475 times greater than the average worker's. "In Japan," the Journal reports, "it is 11 times greater; in France, 15 times; in Canada, 20; in South Africa, 21; in Britain, 22."

Are our CEOs really more than 20 times more effective than those of Great Britain?

Of course, there are many executives who have their compensation tied to the success of the company.

Allowing it

General Motors' CEO just announced that he is cutting his salary by 50 percent (but don't worry, he's not living in a Detroit homeless shelter yet). Another approach is that of John Mackey's, CEO of Whole Foods Markets, who limits his pay to no more than 14 times that of his average employee.

So, what's the point of it all? Well, as long as boards of directors are willing to pay outrageous salaries to their senior executives; as long as CEOs can avoid having shareholders know how much they're taking home (or should it be "mansion"?); and as long as the SEC lets those executives hide pensions, perks and Porsches, the situation won't improve.

There's another problem with off-the-charts compensation packages: they have become the most visible and obvious example of executive greed. And no one enjoys positioning outsized executive salaries as the jutting tip of an iceberg of corporate excess more than media columnists, anti-business bloggers, elected officials, and others who need a convenient scapegoat for business generally.

I'm not against big salaries for those who earn them and deserve them. I'm against the rewarding of mediocrity at the top, the opportunity these excessive salaries provide to those who criticize all business, and I'm against leaders of public companies who remember that we--the ones who buy the stock--are the real owners of the businesses.

There is hope, however. Just last week the Wall Street Journal reported that boards of directors may be paying attention to the outcry over inflated--and often inappropriate--compensation. According to the Journal's research, last year 30 of 100 major US corporations based a portion of their CEOs' compensation on meeting performance targets, up from 23 in 2004 and 17 in 2003.

Maybe we should all work toward relating senior executives' compensation--here in the Valley and across the nation--to the success of their enterprises.

By the way, Angelo, my grande nonfat latte at my Encino Starbucks has gone up from $3.05 to $3.15--brother can you spare a dime?

"Executive compensation is the acid test of corporate governance."

Warren Buffett 

Martin Cooper is chairman of Cooper Beavers Inc., marketing and communications. He is Immediate Past Chairman of VICA and Past President of the Public Relations Society of America-Los Angeles Chapter and the Encino Chamber of Commerce. He can be reached at [e-mail].