CEOs Are Ridiculed for Huge Salaries: Why Aren't Athletes and Entertainers? (page 4 of 4)

Former Citigroup vice-chairman John Reed has come in to reform the entire operating structure of the exchange amid concern whether it can survive in its current form.

"Sandy Weill has his faults, but there's never been any question that creating shareholder value was and is his lifelong quest," says Monica Langley, a Wall Street Journal reporter who recently published a biography of Weill's rollicking career called, Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World .... and Then nearly Lost It All. "Anyone who has been with him since the early days or invested in his companies from the start is very wealthy. He's been very well paid, but mostly in line with Citigroup's shareholders."

Grasso, in contrast, created no easily discernable value in his career and took few risks. "Sure, the New York Stock Exchange is a critical part of the economy, but what has this guy done to increase the value of it?" asks Larcker. "It's hard to imagine that Grasso, who is fundamentally a regulator, would be paid as much as investment bankers who have billions of dollars at risk around the world."

Much of Grasso's compensation was deferred and that's another area that is stirring ire among shareholders, employees and other important corporate constituencies. Jack Welch retired from GE among accolades and was widely regarded as one of the greatest CEOs of all time. But then, as part of an acrimonious divorce battle, his lavish retirement compensation and benefits were disclosed and suddenly he was tumbling off his high pedestal. The problem, Larcker says, is that while direct annual compensation is pretty well disclosed, deferred compensation often is murky and only rarely comes to light.

"My view is that if you have done well, you deserve to make the big bucks," he says. "But when you're gone, you're gone. The thing that angers people is the kind of stealth compensation we're seeing. I don't think people begrudge Welch all the money he made as CEO. But here's a guy who amassed unbelievable sums of money and shareholders find they are still ... paying for his apartment, his travel and even his tickets to Knicks games."

Because of accounting scandals like Enron, WorldCom and Tyco, the audit committees of many boards of directors are under pressure to do a better job. Larcker thinks executive pay issues are going to focus similar attention soon on compensation committees.

"People have been hammering away on audit committees, but the next one on the chopping block will be compensation committees," he says. "Too often they get their consultant to do a survey of pay levels at other companies so they will be somewhere in the ballpark. That's a pretty feeble justification. It's time for compensation committees to justify more rigorously why they pay executives what they do."