Wednesday, August 30, 2006

Defense Contractor CEO Pay Doubles Since 9-11

A study shows CEO’s of companies with extensive defense contracts are being paid almost double what they earned prior to September 11th, 2001. The pay is a combination of salary, bonuses and stock options.

Less than two weeks ago I looked at the needy defense industry, given extra time to fully fund their employee pension programs by Congress.

I found companies doing extremely well. CEO’s claim their performance enabled them to earn their increased income. How come it doesn’t enable them to fund their pension obligations in a manner consistent with other American employers?

The whole method of CEO pay is a farce, based on false assumptions, bad theory. Incentive pay and pay for performance will be the undoing of many organizations, as it encourages sub-optimization. Rather than focus on the work, people focus on their pay, what they need to do to manipulate it. There will be many more Ken Lays and Richard Scrushys. It is predictable.

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