Compensation Follies Executives Learning about Accountability the Hard Way

By Comerford, Mike | Daily Herald (Arlington Heights, IL), April 27, 2003 | Go to article overview

Compensation Follies Executives Learning about Accountability the Hard Way


Comerford, Mike, Daily Herald (Arlington Heights, IL)


Byline: Mike Comerford Daily Herald Business Writer

Area executives have long been living by different pay and pension rules than their employees.

Yet as the fortunes of many firms flounder, the executive rule book now often looks more like an open checkbook.

This is the time of year when corporations are revealing the compensation of their top officers, which has produced some embarrassing moments for several of the area's biggest companies.

In the wake of the brouhaha raised over the special bonuses and pension guarantees given to AMR's American Airlines' executives, Chief Executive Officer Donald Carty was forced to resign on Thursday.

The largest airline at O'Hare International Airport, American has 10,000 Chicago-area employees. Its unions have each agreed to deep pay cuts.

Yet Carty leaves his post with at least $3.8 million in severance benefits, three years of medical coverage and more unspecified compensation, according to published reports.

Even business publications such as Forbes and Fortune magazines are shining a light on executive compensation outstripping company performances.

Fortune this month named Abbott Laboratories CEO Miles White and Lucent Technologies CEO Pat Russo to its list of "12 Piggy Offenders."

Russo made $38 million in total compensation last year as the 2002 shareholder return at Lucent, which has operations in Naperville and Lisle, fell 75 percent, according to Fortune.

White received total compensation worth $30 million, although shareholder return at Libertyville Township-based Abbott fell 27 percent, the magazine said.

"White's compensation reflected (strong) 2001 Abbott performance," said H. Laurance Fuller, compensation committee chairman at Abbott and former co-chairman of BP Amoco, according to Fortune.

On Friday, Forbes.com hammered the tenure of Motorola Inc. CEO Christopher Galvin. It gave his six years at the helm of the Schaumburg-based electronics firm a grade of "F."

It estimated the firm's annualized total returns were a negative 12 percent, with an average annual CEO compensation of $3.2 million.

During his tenure, 56,000 jobs were cut from Motorola's payroll and shares fell more than 60 percent. Last year the firm lost $1.09 a share but the grandson of the founder got a $1.5 million bonus for profitable quarters.

However, Forbes notes Galvin's compensation is modest in comparison to other corporate high-fliers.

Tenet Healthcare CEO Jeffrey Barbakow made $117 million last year.

The mid-range CEO salary and bonus rose to $1.8 million in 2002, a 10 percent improvement from 2001, according to a survey of executive compensation at 350 large publicly held companies conducted by Mercer Human Resource Consulting.

At the same time, investors have lost an estimated $7 trillion since the stock market's 2000 peak. The jobless ranks swelled by another 1.6 million people last year alone.

"Times are tough, but executives are still living like we're in the Roaring '20s," said Brandon Rees, research analyst for the AFL- CIO, which is lobbying for compensation reform. "It's mind boggling."

Simultaneous to compensation boosts, a number of large companies are setting aside millions of dollars to protect pensions of top executives. Just such a plan caused a firestorm at American Airlines this month. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Compensation Follies Executives Learning about Accountability the Hard Way
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.