Why is public outrage not bringing down pay?

Posted by Marc Hodak on May 24, 2012 under Executive compensation, Reporting on pay | Be the First to Comment

From the Chronicle of Higher Education, an article on What Public-College Presidents Make. Their peculiar take:

Public outcry over presidential pay has intensified, but it appears to have done little to affect what presidents earn at public research institutions.

The underlying premise in this statement is that public outrage should have an effect on pay.  This premise is, in turn, derived from the widely accepted managerial power narrative of executive pay, which asserts that the pay of corporate leaders, which could encompass university presidents, is set so arbitrarily that if you simply criticize it, the powers that be will be shamed into reducing it.

This assumption has been repeatedly frustrated by actual history.  Still, the purveyors of this narrative stubbornly refused to accept the possibility that boards might be more reluctant to see their chosen president or CEO go away simply in order to make the bad press go away.

‘Say on Pay’ vote destroys $500MM+ in shareholder value

Posted by Marc Hodak on May 9, 2012 under Executive compensation, Reporting on pay | 3 Comments to Read

It had to happen.  At some point, the CEO pay critics second-guessing the board of directors would lead a CEO to say “Screw it,” and leave the shareholders to deal with the aftermath.

Yesterday, Aviva’s shareholders, saw the departure of Andrew Moss, their CEO, after his pay package was voted down.  While it’s difficult to interpret any given Say on Pay vote, it’s a fair assumption that these votes respond to headline news about a company.  In the case of Aviva, the headline appeared to be “Insurer performing badly; CEO pay goes up.”  So, here is what the shareholders have wrought:

Read more of this article »