5 Questions for Compensation Design Group CEO Frank Glassner
— -- Frank Glassner, founder and CEO of Compensation Design Group in San Francisco, has advised companies on pay practices for executives and other employees for three decades.
Q: Are business people and employees still angry about the financial debacle and rising pay to executives — especially on Wall Street?
A: The outrage is at the highest levels I've ever seen. There are too many non-performing CEOs whose pay does not conform to reality. Twenty years ago, CEO pay was 250 times higher than rank-and-file pay. Today, it's 600 times, even as the country slides into a recession.
Executives shouldn't recklessly gamble with everyone's money, then be allowed to paddle away. That's flat-out wrong. In the words of Tony Soprano, you get paid when we get paid, you get out when we get out.
Q: Given the $700 billion financial system bailout plan, will executive pay level off or keep growing?
A: Pay won't necessarily continue rising. People realize that trees can't keep growing into the sky.
I think pay will more closely match performance, and there will be an appropriate balance to executives' pay and the interest of shareholders.
I will say as long as there are guaranteed golden parachutes that allow executives to bail out of a crashing company while shareholders and employees go down, there will be no reform in executive pay.
Q: Is the bailout plan's limits on executive pay for companies that receive money a wise or dumb move?
A: Congress can't regulate this stuff. It's too complex. The imposition of unspecified pay limits really is a mistake.
Q: Who bears responsibility for too-high executive pay?
A: It's easy to point fingers and vilify CEOs. For every bad CEO, there are 99 good ones. Microsoft, Berkshire Hathaway, General Electric, Procter & Gamble — all are companies that clearly practice pay for performance.
We need to look around ourselves to find the responsible parties, and it's a combination: business people, boards of directors, Congress, institutional investors, mutual funds, the media — and let's not forget executive pay consultants.
