Did Richard Grasso Deserve What He Got?

Steven Martinovich recently had an op-ed piece in the Philadelphia Inquirer claiming that Richard Grasso, recently resigned-in-disgrace CEO of the New York Stock Exchange, fully deserved his $97 million dollars in pay and his $148 million dollars in "deferred compensation" plus the $48 million additional dollars in "deferred compensation" that he said he wouldn't take in a last-ditch effort to fend off his critics and save his job. You can read his op-ed here.

Obviously, I don't agree with him. You can read my previous entry on Grasso HERE. And here is the text of an email I sent to Mr. Martinovich. If I get a response, I'll post it as well.

"Read your op-ed piece defending Richard Grasso's compensation package in the Philadelphia Inquirer. Sorry, but I think you are missing the point completely.

The question is not whether or not Grasso's work was or was not deserving of being well compensated. The issue is that he was over-compensated no matter how well he did his job.

This system in which, as you so aptly put it, "people at the top receive magnificent salaries topped off by generous bonuses" is creating a groundswell of anger throughout society. It was not so long ago where people at the top of a company earned only up to around 40 times what their lowest-paid employees earned, and indeed this is still not uncommon in many industrialized companies. Now it is becoming common for top executives to make hundreds of times more than their rank and file workers.

One usual apologia for these exorbitant compensation packages is that companies have to pay this much in order to attract top talent. Most people are unconvinced of that salaries have to be so astronomical.

Grasso's compensation struck a nerve because it appeared to be a case of what the average person suspects to be the real game: people at the top scratching each other's backs, colluding to inflate executive salaries.

You bring up the example of Jack Welch. OK, perhaps General Electric stockholder value did increase by $400 billion during his tenure as CEO. So what? He did not singlehandedly create all that wealth. He got one hell of a lot of assistance from middle management, from secretarial help, from factory laborers. I'm sorry, but I do not believe--nor do most fair-minded people believe--that Jack Welch worked a million times harder, or did work that was a million times more valuable, than other GE employees. His compensation is way out out of whack with his contribution, compared to his support team all the way down the line.

No single person--not corporate executives, not actors, not athletes--deserves these outrageous pay packages that are declared to be fair and necessary. To value oneself so above the people who work for and with you is unethical and unhealthy for a cohesive, workable society.

And hey, if corporate America keeps insisting on these inflated compensation packages, then I say let's bring back the 90% income tax bracket for the highest wages."