Alain Tanugi asked:


I think it was the Financier Leo J. Hindery Jr who once said: ‘I think there are people, including myself at certain times in my career, who because of their uniqueness warrant whatever the market will bear.’ But the questions beg HOW much is too much? and Should macroeconomic woes slow CEO pay growth?

I recently read in the Associated Press that even as the economy slowed down in America “CEO pay still chugged to yet more dizzying heights last year.’ The top 10 highest paid CEOs took home a total of more than $500 million, but half of those companies saw huge drops in profitability at their companies.

One of the most exasperating things to shareholders and the public is when a CEO receives millions or tens of millions of dollars of compensation regardless of performance. This practice goes fundamentally against the culture of rewarding on the basis of ability and merit that underpins the free market system. Recent examples include: Marriott International chief J Willard Marriott Jr – his 2007 pay was $44m, up 22%, just six percentage points lower than Marriott’s stock price drop or Stan O’Neal, Merrill Lynch’s former boss, left with $159m after losing $8 billion.

Shareholders and politicians are advocating bringing in rules for companies that would allow shareholders to vote on executive pay. Executives in Europe have home far less compensation than their American counterparts in the past. But with leadership compensation in Europe on the rise, these pay increases have citizens in European nations deeply unsettled. The public indignation on both sides of the Atlantic has contributed to a unique political debate over what to do about excessive executive pay. Executive pay figures in Asia are still not as widely accessible as in Europe and America and it is difficult to compare. A recent study conducted by the CFA Institute Centre for Financial Market Integrity said that reporting compensation of executives on an individual basis is the practice in the United States, Britain and Australia and is advocated by institutional investors worldwide. Prevailing regulations and practices in Hong Kong, Japan and Singapore however leave much to be desired.

Jean-Claude Juncker, president of the European Commission’s “Eurogroup” of finance ministers, recently called excessive pay a “social scourge” and demanded action. When L’Expansion, a French business magazine, calculated that pay for the country’s bosses went up 58% in 2007, the finance minister, Christine Lagarde, said it was “scandalous” and threatened regulation. Nicolas Sarkozy, president of France, and Horst Köhler, president of Germany, have also denounced high pay.

New legislation the Netherlands will see the law setting EU500,000 as the level of annual salary or severance payment at which extra taxes must be paid. Germany’s Social Democratic Party is calling for legislation to curb pay, though its partner in government, Angela Merkel’s Christian Democratic Union, has so far resisted. At the same time the European Commission is working on a response to the Eurogroup’s complaint.

Just how extreme IS executive pay in Europe? As European firms compete for global talent it certainly has risen substantially in the last 10 years. Foreign executives now run seven of the firms in France’s CAC 40 index and five of Germany’s DAX 30. American-style bonuses and long-term incentive plans are now commonplace.

However European firms still pay a fraction of what is paid to their counter parts in America. According to Hay Group, a management consultancy, the median European executive earns just 40% as much as his equivalent in America. It’s also notable that both American presidential candidates – John McCain and Barack Obama – have been making compensation a campaign issue.

There is an important difference though companies in Europe seem to be more determined than American ones to link compensation to performance. In America share grants are often not tied to performance, whereas European firms usually attach performance criteria to any share grants, typically depending on a comparison with a peer group. Dan Vasella, boss of Novartis, a Swiss pharmaceutical giant, and a favourite target of pay activists, earned SFr17m ($14m) in 2007, down 33% from 2006, because he missed his targets.

The extreme rise in European executive pay has sparked an intense debate in countries that have been characterised by a relatively strong sense of economic solidarity and impartiality in the past several decades. A July 2007 Financial Times/Harris public opinion poll found that over 60 percent of those surveyed in the UK, France, Italy, and Spain would like to see their government set caps on top business executive pay. In Germany, a 47 percent plurality supports pay caps.

In America, only 32 percent of the public supports an outright pay cap on executive earnings a recent poll shows. However 77 percent of Americans say corporate executives ‘earn too much.’ Some members of Congress have responded by introducing legislation to curb excessive pay through tax reform and giving shareholders the right to vote on pay packages.

I recently saw an interview with Sarah Anderson, who compiles the Executive Excess report on CEO pay on a yearly basis. She discusses some of the issues raised in this column in her interview and I recommend that you take some time to view it. (www.youtube.com/watch?v=X2lKfRFhG0M.)

From what I have read and heard in the last year signs point to a strong possibility that meaningful reforms to rein in excessive executive compensation could be a prospect, as many political leaders in Europe and the United States seem to be finally catching up to the public uproar. It has to be said though that compensation is a complex issue. Different circumstances and industries dictate different packages and even severance pay may be justified if a change of control is the end goal. One would hope though that politicians would reject laws about pay, which are too widespread to be useful. Strict legislation might well compel leaders away from listed companies and create compensation packages even more complex-and so much more difficult to monitor.

Chad asked:

After less than eight months in office, President Barack Obama’s administration is under serious scrutiny by some leading immigrant advocates.

As the legislative drive for health care insurance reform picks up steam, pro-immigrant groups are increasingly alarmed by proposals that target both documented and undocumented resident of the US.

In a telephonic press conference September 16, Latino rights, religious and political leaders blasted policy ideas circulating around the White House and Capitol Hill as not only an attack on the immigrant community

but a threat to public health as well.

“We’ve been deeply disturbed by developments in the health care debate and the treatment of immigrants in it,” said Frank Sharry, executive director of the Washington, D.C-based Americas Voice immigrant advocacy organization.

Sharry criticized Senate Finance Committee Chairman Max Baucus (D-Montana), President Obama and Democrats for bending over backwards to accommodate political opponents, especially Republicans like shouting South Carolina Congressman Joe Wilson, who “demonize immigrants.”

Sharry and other pro-immigrant leaders said they were deeply concerned by measures unveiled in the Senate Finance Committee and in other quarters on Capitol Hill that would exclude immigrants from participating in an insurance exchange even with their own money, prevent children of undocumented residents from getting coverage, probe the residency status of emergency room patients, and make verification of residency status an expanded, cumbersome process for both citizens and non-citizens alike.

According to Eric Rodriguez, vice-president of the National Council of La Raza (NCLR) an estimated 7 of 28 million legal immigrants do not have health insurance.

Under the plan released by Senator Baucus today, undocumented immigrants, who will be virtually barred from obtaining any kind of health insurance at all, would face fines of $950 and upwards if they managed to obtain any sort of emergency treatment.

US Representative Luis Gutierrez (D-Illinois) voiced dismay that the White House was considering keeping many immigrants out of the insurance exchange, especially after Gutierrez and other members of the Hispanic Congressional Caucus agreed that no public monies or tax credits could be used by undocumented residents in a new health insurance reform scheme.

Gutierrez contended that prohibiting undocumented residents from being in the exchange even with their own cash could result in masses of people losing their health insurance coverage.

“What about millions of undocumented workers who have health care through their employers?” Gutierrez asked. “Are they going to lose their benefits?”

“Health care policies should not be dictated by a heckler,” said NCLR President Janet Murguia, in a separate statement also made on September 16. Despite some improvements in the plan announced by Sen. Baucus,

Murguia warned that the legislation coming out of the Senate Finance Committee had the potential to “drive up costs, leave people uncovered and threaten public health.”

Kevin Appleby, director of migrant policy for the US Catholic Conference of Bishops, said that the Church, one of the largest health care providers in the country, often provides treatment to immigrants. The migrant

advocate characterized the denial of health care to sick people as a “fool-hardy” and “mean-spirited” policy. Asserting that the Obama Administration had “capitulated” to anti-immigrant forces, Appleby said

that elected officials had sacrificed public health care on the altar on politics.

Rev. Luis Cortes, president of Esperanza USA, said that it wasn’t too long ago when widespread concern surfaced about the H1N1 virus, but that current proposals on the table would jeopardize people in dire need of health care.

Both political parties, Cortes contended, are “running the fastest to see who is the harshest.” Judging looming actions by Congress and the White House, as “morally punishable by Christian scripture,” Cortes said that the political price could be high for Democrats as well as Republicans. Adding that the immigrant community was once hopeful of the Democrats, Cortes said that local elections would have to be examined “one-by-one” in the future.

Numerous analysts consider New American voters, immigrants and their children, a key voting bloc that swept the Democrats into the White House and Congress last year. Many pro-immigrant groups are growing increasingly frustrated by the pace of immigration reform promised by presidential candidate Barack Obama during the 2008 campaign.

Speaking to reporters, Rep. Gutierrez recalled how the Latino community was inspired by Obama’ candidacy, and took to heart the fellow Illinois Democrat’s pledge to bring undocumented workers out of the shadows and on to the path of legalization. “That’s the President I voted for, not the one who says you cannot have health care,” Gutierrez said.

The longtime Latino political leader and other participants of the September 16 press conference called for the end of “wedge” politics and the passage of comprehensive immigration reform.