Vox Clamantis: Proper Compensation
By Marcel Wolff
Published on Thursday, February 12, 2009
To the Editor:
I found the column on Monday by Andy Kim '10 ("Aligning our Incentives," Feb. 9) to be very enlightening. Originally, I supported limits to executive compensation for companies that had accepted government bailouts, but Mr. Kim's reasoning that "a $500,000 salary will bring $500,000 worth of performance almost every time" convinced me that placing limits on executive compensation is wrong.
When I consider that:
Richard Fuld, the CEO of Lehman Brothers, who received a bonus of $22 million in 2007, bankrupted the company in the largest bankruptcy in American history.
John Thain, the CEO of Merrill Lynch, who received a pay package of $83 million in 2007, ran a company that lost $15 billion in the last quarter of 2008, and was later sold to Bank of America in a deal that almost bankrupted both companies.
Alan Schwartz, the CEO of Bear Stearns, who received $36 million in compensation in 2007, saw his company implode and its stock price plummet from a 52-week high of $133 a share to $10 a share.
I truly shudder to think what might have happened if these titans of the financial markets had been only paid $500,000. Could capitalism survive? Would Marx's predicted Communist revolution be far off? Would DASH be replaced by gold coins? I propose that as of next year, all executive compensation be doubled. Can an end to the recession be far behind?
Marcel Wolff '12