The days of Enron and WorldCom-sized corporate malfeasance scandals may seem like they just ended, but another debate regarding corporate ethics is reaching critical mass in boardrooms across the country – the issue of executive compensation. Adding fuel to the fire were the recent lucrative severance packages for Home Depot CEO Bob Nardelli ($210 million) and Pfizer CEO Hank McKinnell (estimated at $198 million). Unions are now finding new ways to voice their rage over executive pay – resolutions seeking a shareholder “say over pay” have been filed at 44 companies with more surely to follow. Richard Ferlauto of the American Federation of State, County and Municipal Employees believes that shareholder votes are a fair and necessary way to democratize the process of executive pay. Stephen Mader of Christian & Timbers, an executive search firm, says a shareholder vote is needless. Both were on “Power Lunch” to debate the issue.
Ferlauto says his organization aims to have shareholders support a proposition that would make a company’s management put its CEO compensation package up for vote at an annual meeting. But Mader says the issue about executive pay and the war for talent that companies face in an increasingly competitive world are far too complex to just be voted up-or-down. Picking CEOs and deciding their pay packages is a strategic issue as far as firms are concerned, and it’s an issue that belongs in the boardroom, Mader says.