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CEO Compensation Doesn't Trickle Down

March 22, 1992

The news that regulatory changes might be in the offing to allow stockholders an advisory role in setting executive salaries is long overdue.

But excessive executive pay is merely the tip of the iceberg. The fact is that we need comprehensive reform--a stockholder bill of rights, if you will--of the whole process by which ownership of a company is exercised.

A disturbing number of companies act like little fiefdoms controlled by insider good old boy networks instead of the stockholders. When did a golden parachute help a stockholder?

Companies often emphasize short- over long-term earnings, and blame investment funds and stockholders for forcing such action. But stockholders have shown many times that they are willing to wait for increased earnings.

Giving stockholders the power to advise about salary levels may be emotionally gratifying, but it is an exercise in toothless micro-management and has the smell of a plan to divert all of us from the real solutions.

MICHAEL STRIEBY

Chatsworth

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