How to stop corporate scandals: Raise CEO salaries.

Commentary about business and finance.
July 16 2002 5:21 PM

Give That CEO a Pay Raise!

(Continued from Page 1)

From the public's perspective, the shift away from cash salaries served to muddy the waters. While base salaries are easily comprehensible, incentive-based compensation packages are frequently opaque. It is difficult for laypeople to determine the value of options and restricted stock. As a result, the media frequently offer conflicting numbers when reporting on executive salaries.

Let's imagine, for a moment, that the $1 million limit was rescinded, and paying cash became the most tax-efficient means of compensating top executives instead of the least. Companies would pursue the path of least tax resistance and pay larger base salaries. And the clarity of a salary, its comprehensibility, its easy comparison with our own, would shine a bright light on executive compensation. It would provide a clear picture of precisely which shareholder resources are being doled out to the bosses. Many companies that currently have no compunction about dishing out options grants worth $50 million would not dare to write $50 million checks to top executives. If Enron had disclosed that it paid Jeffrey Skilling and Kenneth Lay $30 million or $40 million salaries, investors and regulators would likely have raised red flags far earlier. And if Enron cut back on its lavish stock options, Skilling and Lay might not have used accounting trickery to boost the company's share price.

TODAY IN SLATE

Doublex

Crying Rape

False rape accusations exist, and they are a serious problem.

Scotland Votes to Remain in U.K.

There’s a Way to Keep Ex-Cons Out of Prison That Pays for Itself. Why Don’t More States Use It?

The Music Industry Is Ignoring Some of the Best Black Women Singing R&B

Can Democrats Keep Counting on Republicans to Offend Women as a Campaign Strategy?

Culturebox

Theo’s Joint and Vanessa’s Whiskey

No sitcom did the “Very Special Episode” as well as The Cosby Show.

Television

The Other Huxtable Effect

Thirty years ago, The Cosby Show gave us one of TV’s great feminists.

Cliff Huxtable Explains the World: Five Lessons From TV’s Greatest Dad

Why Television Needs a New Cosby Show Right Now

  News & Politics
The World
Sept. 19 2014 11:36 AM Breaking Up Countries Is Still Hard to Do
  Business
Business Insider
Sept. 19 2014 11:37 AM Why Urban Outfitters and Other Brands Troll Their Customers
  Life
Lexicon Valley
Sept. 19 2014 11:32 AM Why Do Pirates Talk Like That?
  Double X
The XX Factor
Sept. 19 2014 11:33 AM Planned Parenthood Is About to Make It a Lot Easier to Get Birth Control
  Slate Plus
Slate Picks
Sept. 19 2014 12:00 PM What Happened at Slate This Week? The Slatest editor tells us to read well-informed skepticism, media criticism, and more.
  Arts
Behold
Sept. 19 2014 11:51 AM This Is All That’s Left of New York’s Once-Thriving Borscht Belt 
  Technology
Future Tense
Sept. 19 2014 11:40 AM Apple Invented the Perfect Way to Handle Your Giant New Phone
  Health & Science
Bad Astronomy
Sept. 19 2014 11:33 AM The Curious Incident of the Supernova in the Nighttime
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.