- The Washington Times - Wednesday, May 21, 2003


Lavish pay packages, stock options and special deals for executives whose companies have failed and laid off employees have further eroded investor confidence shaken by the accounting scandals, experts told Congress yesterday.

Eight chief executives of major corporations whose pay has prompted furor did not attend a hearing by the Senate Commerce, Science and Transportation Committee.

Executive compensation is getting new scrutiny as senators raise the issue of counting stock options for company officials as an expense against earnings. Pension funds are pressing for changes to give shareholders more say in companies’ decisions on executive pay and other matters.

Despite trillions of dollars in stock value lost in recent years, hundreds of corporate bankruptcies, and record unemployment, “We continue to see many examples of enormous pay packages awarded by boards to top executives,” committee Chairman Sen. John McCain, Arizona Republican, said at the start of the hearing.

“These kinds of excesses are making a lot of Americans angry,” he warned after hearing testimony from pension fund officials and other experts.

Mr. McCain and Sen. Carl Levin, Michigan Democrat, have pushed legislation that would require options to be counted as an expense.

Sean Harrigan, president of the administrative board of California’s public-employee pension fund, said extravagant executive pay “continues to have an impact on investor confidence.” Salaries for chief executive officers now average 400 times the pay for production workers, and they continue to rise, he testified.

Mr. Harrigan denounced what he called “an attitude of entitlement in the executive suites of corporate America.”

Sen. John B. Breaux, Louisiana Democrat, while opposing legislative action on stock options, observed that some executive pay packages “have very little to do with performance” by companies.

Despite the public concern over the issue, the eight chief executive officers — including Larry Ellison of Oracle Corp., Michael Eisner of Walt Disney Co., Leo Mullin of Delta Air Lines and former General Electric CEO Jack Welch — declined the committee’s invitation to attend the hearing to testify on the issue.

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