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Record W268065395

What the Private Sector Can Do to Corral Runaway CEO Pay

2010· article· en· W268065395 on OpenAlexaboutno aff
Franklin Strier

Bibliographic record

VenueSouthern business review · 2010
Typearticle
Languageen
FieldBusiness, Management and Accounting
TopicCorporate Finance and Governance
Canadian institutionsnot available
Fundersnot available
KeywordsLegislaturePresidential systemExecutive compensationShareholderBusinessAccountingPolitical scienceEconomicsLawPoliticsFinanceCorporate governance
DOInot available

Abstract

fetched live from OpenAlex

In 2008, three prominent politicians each proposed a separate legislative measure to stanch runaway CEO pay. Then U.S. Senator Barack Obama, U.S. Senator Hillary Clinton and U.S. Senator John McCain all proposed bills requiring that shareholders be given the right to an advisory vote on new executive pay packages. Whether sincere efforts or just campaign tactics, these proposals by major presidential hopefuls for a legislative answer to increasingly spectacular CEO pay reflected mounting public sentiment.The Problem: Runaway CEO PayThe impetus for these legislative initiatives is stark and unambiguous. CEO compensation at major U.S. companies continues to escalate unabated - in both absolute and relative terms.An Embarrassment of RichesIn 2005, average total compensation for the CEOs of 350 leading U.S. corporations was $11.6 million, down slightly from $11.8 million in 2004 (Lublin, 2006). To help conceptualize the relative size of CEO pay, a key reference has been the ratio of average CEO pay to average worker pay. An Institute for Policy Studies report found that this ratio rose from 42-to-l in 1980 to 411-to-l in 2006. While smaller than the 2000 peak of 525-to-l, it is nearly 10 times as large as the 1980 ratio (Institute for Policy Studies and United for a Fair Economy, 2006).What major U.S. corporations pay their CEOs is also out of kilter with what is their counterparts at major European corporations. American executives continue to leave European executives in the compensation dust. According to an Associated Press survey, in 2006 the 20 highest-paid European managers made only onethird as much as the 20 highest-paid U.S. executives (Institute for Policy Studies and United for a Fair Economy, 2007). In 2005, the average U.S. CEO earned 475 times the average employee's pay. In the same year, the multiplier was 11 in Japan, 15 in France, 20 in Canada, and 22 in the UK (Hermanson, 2006).The popular appeal of CEO pay reform may be due in part to a perception that the CEO/ average worker pay comparison is a microcosm of growing wealth inequality among Americans. Data from 2005-2006 indicates that income inequality is the highest it has been since 1928. The top 1/10 of lpercent (0.1%) of Americans- 3 00, 000earn as much as the bottom 150 million combined, and for every three-year period since 1981, the same top 0.1% of American taxpayers have gained, on average, $100 billion in total earnings, while the bottom 80 percent have lost $100 billion (Hindery, 2008).Even at companies faltering badly, CEOs have enjoyed extravagant compensation packages. According to the website of the U.S. House of Representatives Financial Services Committee:Increasingly, research indicates that executive compensation does not appear tied to company performance. Others have noted that in many instances senior executives appear to be being paid for failure. As this Committee has seen first hand, even executives of institutions that lose money, restate earnings, and face extensive regulatory scrutiny have received (and retained) substantial compensation packages (U. S. House of Representatives , Financial Services Committee, 2007).Examples of high pay despite performance abound. Consider the severance package of Angelo Mozilo, former CEO of the recently failed Countrywide Financial Corporation - considered by many the poster child of the subprime mortgage meltdown. Mozilo was going to receive: a $36.4 million cash severance payment; $400,000 per year for consulting services; plus perks that included the use of a private airplane. He walked away from most of these after a public outcry, but still left with at least $23.8 million (Alazraki, 2008). Yet Mozilo's severance pay pales in comparison with that of former Merrill Lynch CEO Stan O'Neal, who left in 2007 with a retirement package worth more than $160 million (Heisel, 2008) after Merrill suffered the biggest losses in its 93 years (Thomas & Anderson, 2007). …

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How this classification was reachedexpand

Full frame distilled prediction

Teacher imitation

Not calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.

metaresearch head score (Codex)0.000
metaresearch head score (Gemma)0.000
Version: codex-gemma-dda1882f352aValidation status: machine_predicted_unvalidated
Candidate categoriesInsufficient payload (model declined to judge)
Consensus categoriesInsufficient payload (model declined to judge)
DomainCandidate signal: none · Consensus signal: none
Study designCandidate signal: Not applicable · Consensus signal: none
GenreCandidate signal: Empirical · Consensus signal: Empirical
Teacher disagreement score0.811
Threshold uncertainty score1.000

Codex and Gemma teacher scores by category

CategoryCodexGemma
Metaresearch0.0000.000
Meta-epidemiology (narrow)0.0000.000
Meta-epidemiology (broad)0.0000.000
Bibliometrics0.0000.001
Science and technology studies0.0000.000
Scholarly communication0.0010.001
Open science0.0010.000
Research integrity0.0000.000
Insufficient payload (model declined to judge)0.0010.003

Machine scores (provisional)

The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.

Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.

Opus teacher head0.018
GPT teacher head0.222
Teacher spread0.203 · how far apart the two teachers sit on this one work
Validation statusscore_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from it

Classification

machine, unvalidated

Machine predicted; both teacher heads agree on what is shown here.

Study designNot applicable
Domainnot available
GenreEmpirical

How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".

Quick stats

Citations0
Published2010
Admission routes1
Has abstractyes

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