C'mon, it's a free country and CEOs compete in a free market for their jobs, same as everyone else. Why not compare the average salary of a baseball player to the guy selling peanuts? What would that prove? Just think back to the disparity between the landed gentry and peasants and you'll see things have improved immensely.

Heath,

I have to say that your post does not make surprising reading.

I have a theory that the CEO business is a cabal controlled by a small elite carde of top teir Headhunters. This small group controls and shapes the executive community with very little regulation. It is usually the Headhunter who brokers the compensation package, despite the fact that they themselves are paid a percentage of this package as the finders fee. The group that they cut the deal with are on the whole individuals who were placed in the roll by them.

The rewards for failure that some CEOs are paid on both sides of the atlantic are out of all economic value, with the Europeans saying that we are in a global market for talent and benchmark compensation with US competitors. Whats is needed is a return to a compensation culture that looks at the economic value add provided by the executive team on much the same basis as before the market boom of the late 90s.

It is only the fall of the markets that see CEOs taking their rewards in cash afterall in nthe boom no one complained that the CEOs of Nortel, Cisco etc were making millions from stock optiopns. Could it be becasue we were all doing well playing the markets as well. Now with no sign of the finacial security enjoyed by our parents we are starting to take offense at the rewards for failure.

It certainly points out a flaw in the way that Congress implements market reform.

They change the rules to attempt to correct a problem, and the CEO's find another way to make money.

What did they think was going to happen?

It's the same problem with Campaign Finance Reform, and taxing the wealthy. Congress should focus on transparency, not regulation.

Gray Davis had this problem in California. He sent bureaucrats to negotiate long-term power contracts with MBA's. Then he complains that they made too much money following the rules.

You pose and interesting ethical question with the raises of the CEO.

Let's start with the basic question: Does the CEO's job performance warrant a raise at all? Immediate logic would point to NO. After all, the company didn't lay off all those workers because it was making money. So, a company that close to financial distress that it must start lightening the load shouldn't take on the added weight of several hundreds (or more) percentage points increase to its highest single salary, should it? Well, if you look at it that way, the answer is NO.

So, let's look at it another way. The CEO's salary in a public company is generally regulated by the board of directors. Follow me on this one. The board of directors are generally made up of the largest individual stakeholders in the company. Layoffs, when done right, unfortunately, prime the stock prices. When the stock prices go up, the CEO is doing his or her job. Thus they get a major increase. Justified!

Now, although I can present that point of view, I don't buy it. First of all, this post is under the heading of "Ethics." Is it ethical to put a number of people out of work and then take a raise as large as the examples given? Now, don't get me wrong, I understand how a company comes to believe that layoffs are the best option for its operating and financial future. For several reasons though, I wouldn't consider the raises ethical in this situation or even in a top performance situation. First of all, when any other employee does a superb job are they eligible for raises that big? No? What a surprise. What ever happened to leading by example? Herb Kelleher did it--having years without a base pay to support his company and encourage employees who would not be getting a raise that year. I don't think Herb is living out on the street because of it. That is an example of strong ethics.

Scott Airitam