Executive Pay and the Designated Hitter Rule

My real-life news delivery guy Bruce dropped this morning’s dead-tree edition of the Akron Beacon Journal on my porch with a thud — even before I made my way out the door early a.m. And I chuckled when I saw the headline on the front page: “Compensation for Goodyear CEO up 40%.”

Wonder if Robert Keegan, Goodyear’s CEO, and the company’s communications staff are yucking it up this morning as well? Probably not. When I was working in PR at Goodrich, these “how much did he/she earn” stories were guaranteed to trigger angst among the highly paid executives and a less-than-pleasant phone call to the senior communications staff member — ah, at one point, me.

And, nah. This isn’t a rant about Keegan and his compensation — listed in the ABJ based on an Associated Press formula as being valued at $14 million for 2009. I own a small number of shares of Goodyear stock — and it strikes me that Keegan has done a decent job during his tenure at the company, certainly better than his predecessor.

Whether Keegan and other executives in business, government, not-for-profit organizations — and increasingly education — are being paid too much, too little, or just right is an open question. And when taxpayer money is involved, there seems to be plenty of room for righteous indignation these days.

And I know that when you are talking about executive compensation in the business world you are touching a lot of bases: performance-based pay and shareholder value, ability to hire and retain executive talent, corporate governance and the independence of board members who set compensation, growing compensation divide between those at the top of the organization and those in the middle and below, and so on.

The view of the Goodrich chiefs was that yes this was public information — but was it really information that the public needed to know about via the front page of the daily hometown newspaper? And I’ve got to admit it. They have a point. By all means, print the information in the business section — but is it really the most important story of the day?

Executive pay to me these days is much like baseball’s designated hitter rule. There are strong opinions on both sides — but not much the average person can do about either.

So I chuckled when I read the ABJ headline.

And began what I hope will be an enjoyable day — knowing that there wouldn’t be any phone calls from the executive offices.

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One response to “Executive Pay and the Designated Hitter Rule

  1. The question isn’t whether absurdly huge bonuses paid to top managers is worthy of the front page, but why it never was before. We know the answer: recent financial disaster. Perhaps more public awareness of such numbers in the past might have worked to make boards less complacent. I can’t document it, but I remember reading a few years back that the top pay at Toyota was 77 times that of the average hourly wage earner in the company. At pre-bankruptcy GM the difference was 700 times. No argument can convince me such a ratio–then or now–makes any kind of sense.

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