WYNN WILLARD
This paper questions the utility of increasingly common oversight of executive compensation that produces unintended or even opposite effects. It focuses on the accumulation of ineffectual government oversight and demonstrates its three flaws. Chief Executive Officer (“CEO”) pay averages less than 2.5% of after-tax earnings of S&P 500 companies, making it a rounding error on the corporate profit and loss statement (P&L), but it makes headlines and may be the one thing that rouses the passions of those otherwise uninvolved with the corporation. It is axiomatic that any given issue of The Wall Street Journal reports companies losing money on this or that, yet daily reports of spending far exceeding amounts paid to the CEO or the entire executive team do not generate Congressional action or public rebuke, unlike with executive pay “excesses.” Further, it does seem to matter just whose pay is at issue. Forbes reports that Tiger Woods is America’s (and the world’s) top-earning athlete, and Tyler Perry the top-earning actor, both at $78 million. This produced no debate on the floor of either the House or Senate. Madonna and Lady Gaga together pulled in $205 million as the two highest-paid musical acts, yet public concern appeared not to progress beyond a Yahoo! Answers webpage poll that simply queried “Madonna vs. Lady Gaga?”
