04 February 2009

Executive Compensation Proposal

My thoughts on Obama's $500k executive compensation cap.

It doesn't go far enough. Here's what I propose:

  • Cap cash compensation at the equivalent cash compensation as the organization's lowest paid employee.
  • All bonuses are in the form of stock options. If you lead your company well, then you will have money when you cash your options. If you lead poorly, then you will loose money when you cash your options. The value of your options at time of issue may not exceed 3% of your companies Annual Net Income.
  • Health/Life/ADD/401k/Tuition reimbursement/discounts/etc benefits are equal to that of your lowest paid employee.
  • You may use the corporate jet for business purposes. You may also use it for personal reasons, yet must show it as non-cash compensation for taxation purposes. (Essentially, same rules as exist today.)
  • Any other business asset used for personal reason must be shown as non-cash compensation (Same rules as apply today).
In short, if it's good for the front-line, why isn't it also good for the CEO and his/her directs?

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