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Home Depot dumped its CEO Bob Nardelli at the beginning of 2007, just over six years after he took the position.  During his tenure, the market value of Home Depot stock had fallen by 40 percent, according to one estimate.  Lowe’s, the main competitor for Home Depot, saw its stock price nearly double over the same period. Yet, Nardelli walked away with $240 million for his efforts.

In principle corporate directors should be looking to hold down CEO pay in the same way that CEOs look to minimize the wages of assembly line workers, clerical workers, custodians and anyone drawing a paycheck from the company. CEOs justify these efforts by the need to maximize returns to shareholders. In the same vein, directors should constantly be asking if they could get a CEO of comparable skills for less money.  

Corporate directors have badly failed in this responsibility in recent decades. As a result, the pay of CEOs and other top executives has exploded. CEO pay for Fortune 500 companies now averages over 300 times the pay of a typical worker. By comparison, in the 1970’s the average large company CEO received around 30 times the average worker’s pay.

In an effort to put some check on these bloated salaries CEPR - in partnership with the Huffington Post - will unveil a new website called Director Watch.  The idea is to call attention to the directors who are not doing their jobs. This is information that the public should know. Many directors are well-respected figures with successful careers in academics, politics, business or other arenas. They are not living up to their reputations when they agree to contracts that allow poor performing executives to pilfer their companies.

Director Watch will highlight directors who get large paychecks even as the companies they ostensibly oversee are going down the tubes. For example, Erskine Bowles, who served as President Clinton’s chief of staff and president of the University of North Carolina, has made several million dollars serving as the director of companies’ whose stock price has plummeted. He was a director at General Motors at the time it went bankrupt and at Morgan Stanley when it was bailed out by the government. He was also a director at Facebook during the period when the value of its stock fell by close to 50 percent.  (Click here to see CEPR’s Erskine Bowles Stock Index)

There are many other Erskine Bowles out there. Director Watch will call attention to these people. Director Watch will rely on crowdsourcing:  people submitting information on directors who failed to effectively restrict CEO pay and ensure that the companies they oversaw were on sound footing, but nonetheless got rich in the process. The staff of Director Watch will verify the information and post on the Internet in a user friendly and easily searchable form.

If corporate directors are getting rich at the expense of shareholders and the economy more generally, the public should know. Director Watch will make it much easier for them to find out, serving as a resource for community and labor groups, the media and any interested member of the public.      

Watch the video or learn more about it here.

Originally posted to ceprDC on Thu Apr 04, 2013 at 08:38 AM PDT.

Also republished by In Support of Labor and Unions.

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Comment Preferences

  •  I'll certainly be interested (1+ / 0-)
    Recommended by:
    wader

    I find this to be a useful tool:

    http://www.theyrule.net/

    (It takes a bit of playing with to learn how it functions)

    I can already see how your new site and that one will fit together neatly as research tools to get a very powerful and useful picture.

    Ever get the feeling you've been cheated?

    by ActivistGuy on Thu Apr 04, 2013 at 09:08:47 AM PDT

  •  CEPR (1+ / 0-)
    Recommended by:
    Catte Nappe

    No idea what "CEPR" is, and this doesn't tell me.

    Oklahoma: birthplace of Kate Barnard, W. Rogers, W. Guthrie, Bill Moyers & Eliz. Warren. Home to proud progressive agitators since before statehood. Current political climate a mere passing dust cloud; we're waiting it out & planning for clearer days.

    by peacearena on Thu Apr 04, 2013 at 09:12:35 AM PDT

    •  Poster's profile says: (0+ / 0-)
      The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives.
      And includes this link
      http://www.cepr.net

      That said, you are correct that we shouldn't have to go searching for it. And it would be to his/her/their advantage to not only spell out the organization's name, but link to it as well.

      "No one life is more important than another. No one voice is more valid than another. Each life is a treasure. Each voice deserves to be heard." Patriot Daily News Clearinghouse & Onomastic

      by Catte Nappe on Thu Apr 04, 2013 at 11:43:44 AM PDT

      [ Parent ]

      •  Sorry about that ... (1+ / 0-)
        Recommended by:
        Catte Nappe

        We are the Center for Economic and Policy Research, headed by economists Dean Baker and Mark Weisbrot. And we are apparently way too comfortable with acronyms :)

        •  Fond of acronyms (0+ / 0-)

          And not interested in publicity, either. I mean, no link to your group in your diary, no puffing it in a sig line for your comments? It could be very tastefully done, you know.

          "No one life is more important than another. No one voice is more valid than another. Each life is a treasure. Each voice deserves to be heard." Patriot Daily News Clearinghouse & Onomastic

          by Catte Nappe on Fri Apr 05, 2013 at 02:03:13 PM PDT

          [ Parent ]

  •  richard miller (may he rot in corporate hell) (1+ / 0-)
    Recommended by:
    Catte Nappe

    was made head of wang laboratories in 1990 after dr wang died.  he made $1,000,000 bonus every year the company was in the black.

    year one:  sell off foreign properties - $1,000,000
    year two:  massive layoffs - $1,000,000
    year three: more layoffs - $1,000,000
    year four: sell off all u.s. properties then rent them back - $1,000,000

    oh, yeah, i almost forgot - miller sold off our R&D dept to IBM who stripped the best ideas then backed out of the deal when nothing more was left to steal.  

    then he quit when there was nothing left to decimate.  take the money and run!

    bastard!

    little known fact:  the wang towers (three 12 story buildings and two lower ones that formed a "W" when flying over them) were sold for a total of $525,000 when miller was done crippling the company instead of doing his job and bringing it out of bankruptcy.

    yep.

    $525,000.

    originally cost $60,000,000 to build - lost to bankruptcy for $525,000 (yes, you ARE reading those numbers correctly... 5 buildings and the campus for a friggin' $525,000.)

    a bit of incomplete history here - before miller packed his carpetbags and left...

    EdriesShop Is it kind? is it true? is it necessary?

    by edrie on Thu Apr 04, 2013 at 09:37:14 AM PDT

  •  Erskine Bowles' wife, Crandall, is on JPMorgan's (0+ / 0-)

    ...Board, along with a bunch of others despite having sold most of her family's assets to Brazilian interests. The Bowles' family is undoubtedly Democratic Party champs and they're .1%'ers which all together creates a certain perspective that cries out for transparency. Thanks, great value here.

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