The NY Times beats up my competition: I should be happy

Posted by Marc Hodak on October 22, 2007 under Executive compensation | Comments are off for this article

Instead, I’m disgusted.

Since I’m an expert on executive compensation, I guess I ought to comment on this stuff. However, I’m a little late to this story, in part because I no longer subscribe to the NY Times. Frankly, I can get rags for free from the worn out clothing generated by my growing kids. Nocera’s column on CEO pay is typical of the reason for my dropped subscription. (Please don’t encourage them; here is an ungated version.)

Nocera is pretending to debate Watson Wyatt’s Ira Kay about the social value of CEO pay, as if they are on the same intellectual plane.

I’ve heard Kay make this point before – and even debated him on it. He really does seem to believe that all of the great economic benefits enjoyed in the United States during the past two decades or so can be traced back, in no small part, to the way chief executives are paid.

I, on the other hand, believe he’s got the cause and effect exactly backward: that it was the rising market that made the lucky fellas running America’s corporations look like geniuses – and made them richer than they’d ever imagined, thanks to the shift to stock options as the primary way to reward executives.

Nocera is basically arguing his feeling against Kay’s experience. He goes on to admit as much: Nocera just doesn’t like the idea that CEOs make as much as they do, regardless of the reason. He doesn’t believe that their pay is the result of market forces, regardless of any evidence (amply provided by Kay). This is what passes for social commentary. Nocera finishes with one of the most disingenuous statements I’ve seen in a long time:

If it turned out that in a real market for CEO pay, their compensation remained in the stratosphere? I might not like it, but I could live with it.

Of course, it’s been a long time since I read the NY Times.