The Controversy Over Executive Compensation
Recent corporate scandals have drawn attention to the high levels of executive compensation in the United States and to the possibility that some executive compensation plans may have been one of the causes of these scandals by fostering a corporate environment of greed and dishonesty. The Roundtable provides a number of recommendations that we believe will mitigate the potentially harmful effects of some executive compensation plans and should ensure a better alignment of managerial and shareholder-owner interests. Among these recommendations are (a) treating the granting of stock options as an expense in company financial statements, (b) repealing section 162 (m) of the U.S. Internal Revenue Code, (c) more disclosure of financial transactions by executives that affect the sensitivity of their pay to shareholder wealth, and (d) various corporate governance changes that will enhance the independence and responsibilities of corporate boards and their compensation committees, and give shareholders the power to monitor and control executive compensation.
