The egregious mistake, now retracted and aplogized for, that AMR Corp. made in granting top executives bonuses even while pressuring its unions to accept huge pay cuts to avoid bankruptcy, has been in the spotlight lately.
But it would be a mistake to allow that one case -- as bad as it was -- to obscure a more important issue. That's what many people, including Warren Buffett, have called the "obscene" escalation of CEO compensation.
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In 1982, the average chief executive's pay was 42 times more than that of the average production worker. In 2001, it had skyrocketed to 411 times. An incredible -- and I think unjustified -- increase.
William McDonough, the president of the New York Federal Reserve Bank and newly named head of the SEC's accounting industry oversight board, called such a jump, "terribly bad social policy and perhaps even bad morals."
There's now a rising outcry about this situation from the nation's shareholders. Not enough outrage yet, but it's growing.
More than 1,000 shareholder resolutions have been filed with the Securities and Exchange Commission so far this year, 26 percent more than a year ago.
And nearly a third of those resolutions involve proposals to change how managements are paid. That's three times as many on that subject from a year ago.
The Investor Responsibility Research Center, which compiled those figures, says executive compensation has become the big issue of the year. Many of those proposals want stock options to be treated as an expense, and others also wantt CEO pay to be tied to performance standards.
Our own parent company, AOL Time Warner, is the subject of one such resolution, by a church group. It asks, among other things, that the board's compensation committee prepare a report comparing the compensation of the company's top executives with that of its lowest-paid workers. It also asks whether their total compensation packages are excessive and should be changed.
The company, for its part, says its pay practices are appropriate and in its proxy statement recommends a vote against the proposal.
Most shareholder resolutions come from public and private pension funds, unions and religious groups.
But even while their number is rising, so is compensation. One study found that the median CEO salary at large companies rose 6 percent last year, while bonuses gained 20 percent.
My hope is that corporate boards themselves will realize that executive compensation has shot up too high and take measures to curb it. Meantime, it's up to shareholders to keep the pressure on.
Myron Kandel is Financial Editor of CNN.
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