TS ISSUE #11

Bring the price of stock up to increas shareholder wealth.

In large part becasue the shareholders wish to reward company leaders for the increase int he stock price

CEO's received an average 22% raise in salary

It is a voluntary contract among investors to increase their wealth by legal means, but is charted and protested byt he state, in the service of the state's long-term interest in thriving economy.

Political pressure by some for greater shareholder or government control over executive compensation

That annual pay for most executive moves up and down significantly with the company's performance both financial and stock related

The California PUblic Employees' Retirement System and the AFL-CIO

Whether that CEO creates an adequate return on the company's investment (ROI) in executive compensation

a) Executive pay is high compared to low-level corporate positions and it has risen dramatically faster than inflation and faster than the average employees pay. But pay ususally tracks total returns to shareholders

b) Executive stock ownership has risen dramatically and high CEO stock ownership are correlated with and most likely cause of companies' high financial and stock performance

c) Executives are paid commensurate with the skills and talents they bring to the organization and underperforming executives are routinely receive pat reductions or are terminated

d) CEOs who are recruited from outside a company and have little influence over its board recieve compensation that is competitive with and often higher than pay levels of CEOs promoted from within

e) At the vast majority of companies even extraordinarily high levels of CEO compensation represent a tiny fraction of the total value created by the corporation under that CEO's leadership

CEOs have now become easy targets for social critics

The renetic behavior of boards charged with filling the top position when a CEO retires or departs. THet legimate market driven bargaining power of CEO candidates in pay negotioations to obtain pay commensrate with their skills

Top executive talent expects and can command financial protections commensurate with the level of risk they assume, and boards should have these agreements as part of the package they create to attract and retian talent.

It si a significant source od comparative advantage for the nation's economy driving higher productivity, profits, and stock prices