FC NOW: The Fast Company Weblog
February 7, 2007
Play for Pay
Progressive leaders such as Whole Foods's John Mackey are capping their pay in order to lead by example. "The tremendous success of Whole Foods Market has provided me with far more money than I ever dreamed I'd have and far more than is necessary for either my financial security or personal happiness," Mackey wrote in a letter to employees. "Beginning on January 1, 2007, my salary will be reduced to $1, and I will no longer take any other cash compensation."
Jan. 1 has come and gone, and executive pay could well become an even bigger issue soon, even on the national stage. Earlier this week, an article in USA Today foreshadowed some possible changes to CEO payrolls.
Lawmakers in both houses of Congress plan to make laws affecting executive pay packages, and a new rule from the Securities and Exchange Commission is forcing companies to provide a simplified summary of top executives' compensation in their public filings. Even President Bush weighed in on the subject last week in New York, exhorting corporate boards to tie CEOs' salaries and bonuses to their success in improving companies and bringing value to shareholders.
It's interesting that President Bush is discussing the issue -- it indicates that concern about pay gaps might not follow party lines. That goes against conventional wisdom. What do you think?
Posted by Heath Row at February 7, 2007 10:23 AM | Category: |
7 Comments
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George Bush (either junior or senior) having anything negative to say about exec comp has me reaching for my wallet (to make sure it's still there).
I can't believe for an instant that his stance is anything other than a smokescreen. His policies have consistently favored widening the gap between the rich and poor.
If it sounds too good to be true...
I'm a big fan of liberty & free markets. So my hat's off to CEOs like John Mackey who voluntarily cap their compensation & put the company first. In our area, we've seen companies go bankrupt, leading to major cuts in worker benefits (pension, insurance, etc), while the CEO floats away with his "golden parachute" severance package of millions of dollars. Sickening.
Still, I hope our lawmakers remember that we're living in the land of the free. It should be interesting.
Talk about leadership. John Mackey certainly deserves an award for leading by example. When he's had enough of the material things, it's the challenge, the business and his people that matter. I wish mote execs had his values and put them into practice.
John Mackey is the type of leader that almost everyone can admire but very few would emulate. Who are we kidding? There are very few CEOs who would have the integrity and courage to do what he did. This should be one of the biggest business stories of this new century.
It's not the CEO's and their pay I have problem with, free market will dictate that. I do applaud Mr.Mackey for his stance. It congressional pay that is of the up most concern. "In my many years I have come to a conclusion that one useless man is a shame, two is a law firm, and three or more is a congress.'
- John Adams
It appears that President Bush and others are suggesting that CEOs of corporations be held accountable for the success of their companies...a novel concept that is overlooked much of the time in American corporations. Personally, I feel a corporation and it's board of directors or owners are the ones who should set any leader's pay scale. Why the government or any outside party would feel it their responsibility to do so (or to regulate such an activity) is purely interference. If a company wants to pay Mr. Smith in stock options and monetary compensation to the tune of $1 or $10MM a year, who can argue that but those that can approve such a salary?
What the stockholders, employees, and anyone else the CEO's performance affects directly or indirectly should feel obligated to hold over the leader's head is one thing: ACCOUNTABILITY. Clear expectations and clear consequences for failure to meet them are the breakfast of champions. This means that no one should have to read anything like FC's "CEO See Ya!" because a corporation would never let a CEO perform so poorly without taking immediate and appropriate action to deal with his or her failure to live up to established performance criteria.
Obviously, John Mackey doesn't feel that pay has anything to do with your status, perceived importance of your job in a company, or the only important compensation. Otherwise, he's becoming the most useless employee Whole Foods has (although, you didn't see him giving back the millions he already has, did you).
MAS
Accountability!
Talk about putting your money where your mouth is. Why is it that sales people are expected to work off a small base and commission plan but none of the executives are.
I am not talking about bonuses either I am talking about salary frame work that simply says you get X dollars as base (everyone in the company gets the same or maybe 2 or 3 tiers max). You salary comes from the performance of the company, the higher up the ladder you are the bigger your piece of the pie is, but there are no caps.
The dead weight across the company (employees and management)would quickly leave or be driven out. Just think what sort of motivated employees you would have then.