To Rein In CEOs' Pay, Why Not Consider Outsourcing the Post?
For several years now, chief executives of U.S. companies have been telling lots of employees that they have gotten too expensive. Since it is possible to find qualified but cheaper workers to write software and perform other labor in India, China, Turkey and dozens of other countries, it makes competitive sense, they say, to outsource jobs.
Perhaps it is time for American CEOs to include themselves in this strategy. Certainly the directors who determine their compensation should take a close, hard look at the colossal sums they are offering and do some global-labor cost analysis.
Many countries don't require publicly traded companies to disclose top executive pay, as the U.S. does, so precise comparative compensation figures can be hard to come by. Still, there is enough data available to show that American CEOs are by far the most costly.
The median salary plus cash bonus for U.S. CEOs in office for at least a year totaled $2.3 million in 2004, according to an analysis of 421 large companies by Boardex, of London. That compares with $1.2 million for the heads of the 304 United Kingdom companies surveyed, $857,000 at 104 French companies and $386,000 at 95 Swedish concerns.
The pay gap between U.S. and Asian business leaders is even larger. According to an analysis by Mercer Human Resource Consulting, the heads of the 248 Indian companies surveyed earned a median salary and bonus of $88,117 as of July 2004, compared with $317,864 for the heads of 187 Japanese companies, $302,078 at 174 Hong Kong companies and $263,301 at 394 Singapore concerns.
None of this means U.S. directors should disregard American management talent when filling CEO spots -- and pay fairly for it. What is galling is how rarely, even in a time of heightened governance sensitivity, compensation is linked to performance. Newly named CEOs are guaranteed a trough of money before they've done any work. When they fail and are dismissed, they are handed even more money.
That is the case at Morgan Stanley, where ex-CEO Phil Purcell received a severance and retirement package estimated at $106 million, including a new $44 million cash bonus for being shown the door. Former Co-President Steve Crawford is walking away with two years of severance estimated at $32 million after 3? months on that job.
The investor furor that erupted last week when news about these packages surfaced forced newly named CEO John Mack to give up an agreement guaranteeing him $25 million for each of the next two years, however he performs.
Such excesses might be easier to accept if they were anomalies. But "Morgan Stanley isn't unique," says Arthur Levitt, a senior adviser for Carlyle Group, a private-equity firm and a former chairman at the Securities and Exchange Commission. "This is symptomatic of the fraternal culture at many boards that want to avoid any lingering bad feelings" when executives are dismissed and are willing to offer generous guarantees to their replacements before they lift a finger.
Carly Fiorina left Hewlett-Packard this year with severance of $14 million, plus a $7 million bonus and $23.5 million in restricted stock and pension payouts. Mark Hurd, her successor, will receive a base salary of $1.4 million a year and a $2 million signing bonus. Along with long-term performance-based incentives that include option grants and a $4.2 million to $12.6 million cash bonus, Mr. Hurd is eligible for an annual bonus of $2.8 million to $8.4 million, based on hitting performance-related targets, and received a $2 million signing bonus.
"But when you look at the fine print of his contract, you see that a chunk of that annual bonus is virtually guaranteed," says Lucian Bebchuk, a Harvard law professor and co-author of "Pay Without Performance." "The main justification for escalating CEO pay levels is the need to generate powerful incentives -- but in reality the links between pay and performance aren't strong," he adds. Indeed, a big portion of executive compensation, including rich guaranteed retirement payments and "stealth" benefits such as free lifetime use of corporate jets, are completely divorced from performance.
Meanwhile, the gap between CEO pay and just about everyone else except investment bankers and hedge-fund managers keeps growing. Last year, the median salary and bonus for CEOs rose 14.5%, while paychecks of nonunion salaried staffers rose 3.4%, according to Mercer. In 1960, CEOs earned an average of two times as much as the president of the U.S.; today they earn an average 62 times as much as the president, notes Rakesh Khurana, a Harvard Business School professor. "It's been three years since Sarbanes-Oxley, the broad governance reform law, took effect, so directors no longer have the excuse of saying 'well we negotiated this before we recognized the problems,' " he says.
So other than outsourcing CEO jobs, what's the solution? For starters, boards must stop rewarding incompetence. "When a CEO is dismissed, it usually means the company's performance has weakened, and you weaken it even more" if you then hand out exorbitant severance, Mr. Khurana says. In addition, directors must learn the art of "arm's length" negotiating and put a price tag on all forms of compensation so shareholders know what they are paying. It is shareholders' money, after all, that directors are giving away.
为限薪，何不把CEO也外包了？
这些年来，美国企业的首席执行长一直向众多员工表示，你们的收入太高了。由于从印度、中国、土耳其和其他许多国家能够找到符合要求而且廉价的人员编写程序或从事其他工作，他们认为将工作外包是一种提高竞争力的做法。
现在也许是美国CEO将自己也纳入到这种战略之中的时候了。显然决定他们薪水的董事们应该好好审视一下所提供的天价收入，进行一些全球劳动力成本分析。
许多国家并未像美国那样要求上市公司披露高级管理人员的薪资，因此精确地对比薪资数字可能难以做到。然而，仍有足够的数据显示目前美国CEO的收入要高得多。
根据伦敦Boardex对421家美国大公司的分析，在2004年，任职至少1年以上的美国CEO的工资加现金奖金中值为230万美元。而接受调查的304家英国公司的CEO工资加现金奖金中值为120万美元，104家法国公司为857,000美元，95家瑞典公司为386,000美元。
美国与亚洲公司领导人间的收入差距则更大。根据美世咨询(Mercer Human Resource Consulting)的分析，截至2004年7月，接受调查的248家印度公司CEO的工资加现金奖金中值为88,117美元，187家日本公司的负责人为317,864美元，174家香港公司的负责人为302,078美元，394家新加坡公司的负责人为263,301美元。
这一切意味著美国的董事会在选择CEO时不应在没有对他们管理能力进行充分考察的情况下就同意他们支付丰厚薪水。真正令人惊讶的是，即使在对企业治理高度敏感的情况下，薪酬也很少同绩效挂钩。新任CEO在没有完成任何工作前，就获得了不菲的收入保证。即使因表现不佳而被解雇后，也会获得一大笔钱。
在摩根士丹利(Morgan Stanley)就是这种情况。前CEO裴熙亮(Phil Purcell)得到了1.06亿美元的遣散费和退休金，其中包括4,400万美元的现金奖金。前联席总裁克劳福德(Steve Crawford)在此职位上工作了3个半月后，也获得了两年的遣散费，约为3,200万美元。
在这些补偿的消息上周公布于众后，投资者爆发的愤怒情绪迫使新任CEO麦晋桁(John Mack)放弃了与绩效无关的今后两年每年2,500万美元的薪酬。
如果是个别现象，如此高的薪酬可能较容易被接受。但私人资本运营公司凯雷投资集团(Carlyle Group)的高级顾问、前美国证券交易委员会主席莱维特(Arthur Levitt)说，摩根士丹利的现象不是个例。这是许多董事之间一团和气的文化的体现，他们不希望在解除CEO职务时给人留下不好的印象，并愿意在新任CEO未有任何业绩之前就对他们提供慷慨的保证。
卡丽?费奥瑞娜(Carly Fiorina)今年离开惠普公司(Hewlett-Packard)的遣散费为1,400万美元，外加700万美元奖金和2,350万美元限制性股票和退休金补偿。她的继任赫德(Mark Hurd)将获得每年140万美元的基本工资和200万美元的签约奖金。除了期权和420万至1,260万美元等基于绩效的长期激励性奖励外，根据完成绩效目标的情况，赫德还可以获得每年280万美元至840万美元的奖金和200万美元的签约奖金。
但哈佛大学法律教授、《无功受禄》(Pay Without Performance)一书的合著者别丘俄克(Lucian Bebchuk)说，如果你看看聘用合同的细节，就会发现许多年度奖金基本是得到保证的。提高CEO薪酬的主要理由是需要产生足够的激励，但现实中薪酬和绩效之间的联系并不强。的确，管理人员薪酬中的相当一部分，如丰厚的有保证退休金和终生免费使用公司飞机等暗中的福利都完全同绩效脱钩。
与此同时，CEO薪酬同投资银行家和对冲基金经理之外的其他人之间的差距不断扩大。美世咨询的数据显示，去年，CEO工资和奖金的中值提高了14.5%，而非工会会员的正式员工的薪酬增长了3.4%。哈佛商学院教授库拉纳(Rakesh Khurana)说，1960年时，CEO的平均收入是美国总统的两倍；现在，已经是美国总统的62倍。他说，《萨班斯－奥克斯利法案》(Sarbanes-Oxley)已经生效3年了，因此董事会没有借口称在认识到这个问题前就已经谈妥了。
因此，除了外包CEO的工作，还有什么解决办法？对新上任者而言，董事会必须停止奖励无能。库拉纳说，当CEO遭解雇时，这通常意味著公司的表现不佳，如果再拿出大笔遣散费，就进一步削弱了公司的状况。此外，董事们必须学会保持距离的谈判艺术，给所有形式的补偿明码标价，让股东清楚他们付出的是哪笔费用。毕竟，董事会给出的是股东的钱。
