Tiffany Rowe (4E) offered new ideas for determining the compensation of top executives.
Negotiating the Executive Paycheck
According to calculations from the Associated Press, the highest paid CEO in America in 2008 was Aubrey McClendon of Chesapeake Energy Corp., whose total compensation package topped out at a staggering $112.5 million. The last name on the top 10 list was Jamie Dimon, JPMorgan Chase & Co., whose salary, stock options and other perks added up to $35.7 million.
Is anyone worth that kind of money?
Tiffany Rowe, a fourth-year evening student at Catholic University’s Columbus School of Law, makes a persuasive case that executive compensation is too often calculated by irrational standards.
Her Feb. 18 address at the law school, “Changing Executive Compensation, Widening the Lens and Focusing on Directors,” argued that the cult of celebrity that sprang up around well-known CEO’s in the 1990s directly fueled the astonishing growth of top executive paychecks over the past couple of decades.
“Public corporations spend nearly 10 percent of their earnings compensating senior management teams, yet the connection between compensation and firm performance remains weak,” Rowe has written.
Rowe’s remarks, offered as the 2010 inaugural lecture of the law school’s Student Scholar Series, suggested that members of the boards of directors that often determine a CEO’s compensation package should themselves be compensated with stock options instead of a flat salary. That way, she argued, board members would have the same stake in the CEO’s performance that other stockholders do, raising overall accountability in the system.
She also suggested that the idea of paying board members a small fee to attend meetings is a proven one that boosts attendance.
Rowe’s address was prefaced by introductions from Dean Veryl Miles and Professor A.G. Harmon, creator of the Student Scholar Series. The respondent was Professor David Lipton.
Tiffany Rowe, Professor A.G. Harmon
The Columbus School of Law Student Scholars Series was instituted in 2009 to recognize notable legal scholarship produced by members of the student body during the academic year, and also to foster the skills associated with presenting and defending that scholarship in professional conference-style setting.
Upcoming Student Scholars Series speakers include Nantz Rickard (4E) on March 25 and John Heekin (2D) on April 22.