The Executive Pay Drama: From Comedy to Tragedy

Over the past century, an interesting play has been performed in the United States called Executive Pay, Starring Your Local CEO. The play opened as a comedy, with executive bonuses and stock options rising at ridiculous rates compared to the pay of factory workers, teachers, and engineers. The performance didn’t get a lot of laughs, but people would smile and shake their heads as if the surprise of ever-escalating pay was an amusing disclosure. During economic downturns there were fewer smiles, and some outspoken critics were remarkably blunt in labeling executive pay practices as “enormous,” “immoral,” and “outrageous.” The title of the cover story in a 2003 Fortune article forthrightly asked “Have They No Shame?” This article described dozens of CEOs who accepted millions of dollars in bonuses and stock options while their firm’s shareholder returns plummeted.