I Thought some might be interested in this MARKETWATCH report on Executive Pay---

Executive pay returns to the crosshairs
1:38p ET January 16, 2007 (Marketwatch)
WASHINGTON (MarketWatch) -- Bolstered by new federal disclosure rules and a slate of news about outsized pay packages, lawmakers and fed-up investors are coming out swinging ahead of this year's corporate proxy season and promising to press companies harder than ever about spiraling levels of CEO pay.

Packages like the $210 million given to former Home Depot Inc. CEO Bob Nardelli have helped to reignite outrage in Washington and among investors' advocates over huge executive pay, and the combination of likely legislative proposals in Congress and shareholder initiatives at upcoming annual meetings may force companies to rethink the way they pay top executives.

New House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, is planning hearings on CEO pay this year, and wants to give shareholders more of a say in approving compensation. Last year, he introduced a bill that would've given shareholders a vote about pay and "golden parachute" packages for CEOs.

It's unclear if Frank will reintroduce the bill or write a new one--Frank's spokesman, Steven Adamske, says the congressman hasn't decided what course to take this year. But one way or another, analysts say, sentiment is moving toward an even tighter process for approving corporate chiefs' salaries and benefits.

One such way to raise the bar is by requiring shareholder approval of pay packages, a right already enjoyed in the United Kingdom.

"I think that there's large shareholder momentum behind the concept," says Richard Ferlauto, the director of pension and benefit policy for the American Federation of State, County and Municipal Employees. "Given the continued revelations about egregious pay packages...it'll be difficult to vote against something like this," Ferlauto predicts. His group has called for non-binding votes by shareholders on pay packages.

Investors have seen a growing number of CEOs step down with big compensation deals. Nardelli walked away with $210 million after battling with Home Depot Inc. shareholders. Ex-Pfizer Inc. chief Henry McKinnell got a $200 million retirement package in spite of presiding over a 49% slide in the value of the pharmaceutical giant's stock between 2000 and 2005. ExxonMobil leader Lee Raymond left with $357 million.

With proxy season approaching, more revelations are expected, thanks to new Securities and Exchange Commission rules about pay disclosure.

"It's going to be one of the, if not the, hottest issues this proxy season," said Amy Borrus, deputy director of the Council of Institutional Investors, a pension group that focuses on shareholder rights. Most companies hold annual meetings in March, April and May.

Observers say there are several avenues to reining in pay and benefits packages, including congressional legislation, new federal rules and shareholder proxy initiatives.

Yeah, well, I'd love to see the federal government get completely out of the issue. No SEC would be my solution. Good ole caveat emptor.

Liked this piece and thought I would share - as usual, Thomas Sowell has said it better than I can.

January 23, 2007
The 'Greed' Fallacy
By Thomas Sowell

In an era when our media and even our education system exalt emotions, while ignoring facts and logic, perhaps we should not be surprised that so many people explain economics by "greed."

Today there are adults -- including educated adults -- who explain multimillion-dollar corporate executives' salaries as being due to "greed."

Think about it: I could become so greedy that I wanted a fortune twice the size of Bill Gates' -- but this greed would not increase my income by one cent.

If you want to explain why some people have astronomical incomes, it cannot be simply because of their own desires -- whether "greedy" or not -- but because of what other people are willing to pay them.

The real question, then, is: Why do other people choose to pay corporate executives so much?

One popular explanation is that executive salaries are set by boards of directors who are spending the stockholders' money and do not care that they are overpaying a CEO, who may be the one responsible for putting them on the board of directors in the first place.

It makes a neat picture and may even be true in some cases. What deals a body blow to this theory, however, is that CEO compensation is even higher in corporations owned by a few giant investment firms, as distinguished from corporations owned by thousands of individual stockholders.

In other words, it is precisely where people are spending their own money and have financial expertise that they bid highest for CEOs. It is precisely where people most fully understand the difference that the right CEO can make in a corporation's profitability that they are willing to bid what it takes to get the executive they want.

If people who are capable of being outstanding executives were a dime a dozen, nobody would pay eleven cents a dozen for them.

Many observers who say that they cannot understand how anyone can be worth $100 million a year do not realize that it is not necessary that they understand it, since it is not their money.

All of us have thousands of things happening around us that we do not understand. We use computers all the time but most of us could not build a computer if our life depended on it -- and those few individuals who could probably couldn't grow orchids or train horses.

In short, we all have grossly inadequate knowledge in other people's specialties.

The idea that everything must "justify itself before the bar of reason" goes back at least as far as the 18th century. But that just makes it a candidate for the longest-running fallacy in the world.

Given the high degree of specialization in a modern economy, demanding that everything "justify itself before the bar of reason" means demanding that people who know what they are doing must be subject to the veto of people who don't have a clue about the decisions that they are second-guessing.

It means demanding that ignorance override knowledge.

The ignorant are not just some separate group of people. As Will Rogers said, everybody is ignorant, but just about different things.

Should computer experts tell brain surgeons how to do their job? Or horse trainers tell either of them what to do?

One of the reasons why central planning sounds so good, but has failed so badly that even socialist and communist governments finally abandoned the idea by the end of the 20th century, is that nobody knows enough to second guess everybody else.

Every time oil prices shoot up, there are cries of "greed" and demands by politicians for an investigation of collusion by Big Oil. There have been more than a dozen investigations of oil companies over the years, and none of them has turned up the collusion that is supposed to be responsible for high gas prices.

Now that oil prices have dropped big time, does that mean that oil companies have lost their "greed"? Or could it all be supply and demand -- a cause and effect explanation that seems to be harder for some people to understand than emotions like "greed"?

Copyright 2007 Creators Syndicate