The New York Times reports that Citigroup not only paid its chairman, Sandy Weill, $21.5 million last year, it also paid the taxes for his many benefits.
In addition to his huge salary (par for the course at the top of major US financial institutions), Weill has personal wealth in the billions. Why on earth does he need Citigroup to pay for anything? Two explanations come to mind: blind greed or the kind of moral blindness that afflicts emperors surrounded by fawning courtiers. Or maybe a combination of the two. The same outrageousness appeared when the details of Jack Welch’s retirement benefits from GE were revealed a few years ago. He made a fortune, so why did he need GE to continue keeping him in the style to which he was accustomed?
During my many years in Britain, I felt the media and public obsession with so-called fat cats (corporate leaders, often of privatized utilities who were paid lots of money) was unhealthy. But equally matters have gotten completely out of hand in the US, with the vast sums paid to top executives (far more than any British fat cats) taking a big chunk out of corporate earnings and generally having little to do with performance.
When there were still people at the World Economic Forum who solicited my advice, I remember suggesting that a session on executive pay be renamed “How much is enough?” The issue is far beyond how much is too much: of course current pay is vastly too much. There comes a point when enough is enough.
The argument that you need to pay the best people the market rate has always struck me as absurd. My observation of many, many CEOs over the years suggests that most are far more interested in the power and challenge of the job, rather than the pay. It could well be a workable solution — if there were brave companies — to pay senior executives healthy sums, but cap CEO pay at something liveable at the top end, say $1 million. I don’t believe there are more than a handful of major CEOs who would forgo power for money. Many of them would do the job for $1, like Steve Jobs at Apple.
By the way, I don’t in any way begrudge the fantastic sums made by some successful entrepreneurs (the source of Weill’s own fortune). They took risks and reaped rewards. More power to them. It’s the salaries and benefits of today’s executive class that is totally out of whack.