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Opinion

Greed has its limits

Hasan Rizvi
Opinion columnist 

Lee Raymond, the former CEO of Exxon Mobil is being sent off with a nice parting gift. In 2005, Raymond was compensated approximately $140 million. He is still entitled to a long-term compensation deal that is worth about $258 million.

Exxon Mobil is defending the deal. They point out that during Raymond's reign, the stock value of Exxon Mobil rose 500 percent and replaced Wal-Mart as the new No. 1 corporation on the Fortune 500 list. This may be true, but how much of Exxon Mobil's record profits are due to the skyrocketing price of crude oil and refinery bottlenecks rather than Raymond's managerial skills? Even if Raymond was 100 percent responsible for the killing Exxon Mobil is making, when does a CEO's salary just become obscene? 

Exxon Mobil is the latest corporation on a growing list to fail what billionaire investor and venture capitalist Warren Buffet has coined as the "Acid Test" of corporate governance reform. Corporate boards can keep on elevating a CEO's salary through compensation consultants or compensation boards. Most corporate board members are actually nominated by the CEO. 

The dubious structure of corporate boards and how a CEO's salary and benefits are determined unmistakably sets up a conflict of interests. Are we to think the individuals on the corporate board are supposed to forget who put them in power when determining who sits on the compensation board? 

Skyrocketing executive pay is not, as some like to suggest, a result of market forces. The looting of corporations only happens because it's allowed to happen. The U.S. Security and Exchange Commission is currently considering whether or not to implement rules that would allow for stockholders to nominate individuals to sit on corporate boards. 

I'm sure you can guess who is lobbying against such provisions. Shareholders should determine how much or how little a CEO is compensated rather than some cronies intent on rewarding a CEO as much as humanly possible. The epidemic of bloated CEO salaries is all happening at a time when many companies are cutting the benefits of their employees because they can't "afford" to do otherwise. 

Despite the old adage "Greed is good," it needs its limits. In capitalism, people work for their self-interests. This seems to work well, but as we now see with the Enron saga folding out in a downtown courtroom, unchecked greed can bring on numerous negative repercussions. I'm not suggesting what Exxon Mobil has done is illegal but it certainly seems unethical to me. 

I'm sure the average person who is suffering because of gas prices -- from which Exxon Mobil and other energy companies benefit -- will certainly disapprove of the lunacy of Raymond's retirement package.
 

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