Executive Compensation in Product, Not Stock

President Obama’s plan to limit the salary of an executive whose company takes federal bailout money to $500,000 does little to address the source of most CEO wealth – stock options.   “The average CEO doesn’t make more than $1 million in salary…they take the bulk of their compensation in stock,” said Jian Luc Clementi of the Stern Business School at NYU in an article in the Boston Metro.  Obama’s plan would require only that a CEO wait until the company pays back the bailed out money to the government to cash in or perhaps more appropriately, cash out in that golden parachute.  And there are no retroactive provisions to take back the “rescue” bonuses already paid out to the fattest cats of them all – executives at Goldman Sachs, Bank of America, JPMorgan Chase, Morgan Stanley, and AIG.

The same article highlights 6  CEOs and their salaries. One, Yum Brands CEO David Novak, earns $54.91 million including $12 million in “other” income.  Yum brands includes those bastions of fast food:  KFC, Taco Bell and Long John Silver who keep the citizens of our great planet comfortably plump.  Hungry?

The Metro entertained the idea that perhaps Mr. Novak’s “other” income    came from KFC or Pizza Hut gift certificates.  Give the gift that keeps on giving….pounds.  And why not?  Shouldn’t CEOs be paid in product instead of stock options?  Google’s Eric Schmidt made a cool $480,000 and acquired tons of Google stock.   I say give him his own personal search engine.   Actually, this could bring untold fortunes.  Imagine a tiny motorized robot that could find anything you’ve lost.  Misplaced your keys?  No problem, leave it to the search engine.

Proctor and Gamble CEO Alan Lafley earns $1.7 million and receives $4 million in bonuses.   Instead of a yearly bonus, why not give him a monthly tube of Crest (flavor of his choice), bountiless roles of Bounty (the quicker picker upper), a busload of Pringles, and a four year supply of Fusion razors.  I’d work for that.

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