I’m on record as saying, more than once, that I think all the loud debate and incessant hand-wringing over supposedly excessive executive compensation are out of proportion to more pressing corporate concerns.
To clarify, I think that generally. There are limits, to be sure. If I held ultimate power over the entire corporate world, I surely wouldn’t give boards a blank check to pay executives – in many cases the board members’ friends and longtime colleagues, not that I’m charging rampant cronyism – any princely sums they wanted to.
When news came this week that Larry Ellison, the top-earning American CEO in 2012 at $94.6 million, scored only $78.4 million for 2013 (mostly in stock options, as usual), I didn’t spill any tears. Probably no one did.
The interesting part of that story, of course, was that Ellison, Oracle CFO Safra Catz and company president Mark Hurd declined to accept their scheduled bonuses for 2013, citing missed financial targets, according to Oracle’s September 20 proxy statement.
That got pretty wide play in the consumer financial media, and you can see why. Individuals turning down money owed them? Wow. Companies would never do that.
But none of the several published reports on this matter that I read bothered to point out something quite obvious. They noted that the forgone bonuses were in the amounts of $1.2 million for Ellison and $717,000 for Catz and Hurd. And, it was written, in addition to Ellison’s still-outsized earnings the total 2013 compensation for the other two executives was $43.6 million each. But the reports didn’t then state the next logical thought: that the money the three gave up was couch change.
Something similar crosses my mind when I hear a high-earning athlete interviewed for the regularly scheduled pregame show on TV or radio. Often the fellow will be awarded dinner for two at a nice restaurant or other such token of appreciation for his time. The Oracle folks don’t really need their bonuses any more than the ballplayer needs the free dinners – which he probably will never use but which, admittedly, are actually advertisements paid for by the restaurant.
Which leads me to chew on the motivation for the bonus rejection. On a straightforward, literal level, it’s “We didn’t perform well, so we don’t deserve a bonus.” Fair enough.
But is it more than that, even in a subtle way? You wouldn’t have to go all that far from the stated motivation to arrive at “publicity stunt.” The executives deprive themselves of paltry sums yet, maybe, get tongues wagging about their selflessness and their sense of responsibility to the company.