The Corporate Law Group

Executive Compensation

The Buzz has watched with interest the increasing number of CEO’s who have made a bunch on their stock and have forgone their salary. Googlers Eric Schmidt, Sergey Brin, and Larry Page last year lowered their salaries to $1 (from the already-not-very-high $250,0000 for Schmidt and $150,000 for Brin and Page). Similarly Whole Foods Markets CEO John Mackey late in 2006 sent a letter to his employees stating that he was lowering his own salary to $1 for 2007. In a well written letter Mackey said that, “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.” Apparently in an effort to do even more good, Mackey also had the Board deposit $100,000 into a Whole Foods Global Team Member Emergency Fund, to be used by and made available to Whole Foods Markets employees with emergencies, and donated future options to two company foundations. Many people use their compensation as benchmarks for anticipated personal happiness, skill at a given endeavor, or societal value. Compensation has components of all of these things, but cash compensation truly measures none of them. Even stock compensation measures more of a collective effort, rather than an individual one. Though we are avid free-marketers, we generally applaud CEO’s whose desire for personal wealth has an end point (because most others’ greed has no bounds at all). But we find slightly disingenuous the protestations of Bill Gates, George Soros, and Warren Buffet. Their recent cries for “humanity” in business fall on deaf ears to the extent that they ignored that humanity while growing their own personal wealth. We find more honest the CEO who sets the stopping point well below the $1 billion mark. Just as compelling is the CEO who does not immediately layoff employees for a few more cents a share profit, or scheme endlessly to put a competitor out of business. Sure fiduciary obligations are important, but leaving a trail of scorched earth in your path may not be absolutely necessary to ensure that you are handling stockholders’ assets well.
Paul Marotta

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