Wednesday, June 24, 2015

Paying top dollar for….what?

Robert Samuelson chipped in another gratuitous defense of outrageously high CEO pay in his column on a few days ago.

He cited one of the standard rationales for sky-high executive pay: companies are forever and feverishly "...competing for managerial talent..." This is of course true, but Samuelsson took pains to sustain the myth that there is a bona fide linkage between top talent and top pay.

In fact, there is no hard data of any kind that suggests or confirms that paying a CEO less will cause him/her to seek other employment. In any event, there is no hard data measuring the comparative "talent" of CEOs. Not only is it true that no one knows how much you have to pay to get top talent, it’s also true that no one knows how little you can pay and still recruit and retain top talent.

The mantra "we have to pay top dollar to get top talent" is deliberately deceptive. It doesn’t describe any measurable, repeatable course of action that corporate directors do or could do to obtain and keep really superior managers in the top executive slots.

David Zaslav, as CEO of Discovery Communications, was paid $156.1 million last year. I wonder what he would have done differently if he had been paid a mere $137.8 million?

Copyright © Richard Carl Subber 2015 All rights reserved.

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