A Good Story About Executive Compensation
Posted on Thursday, February 14, 2008 by Frank RocheI wonder about the ratio of “executive greed” to “executives do the right thing” stories in mainstream media. It’s gotta be 100:1. Or 1000:1.
This is a story about executives doing the right thing. The Philadelphia Inquirer ran a story today titled “Comcast Founder Slashes His Pay.” The story talks about the decision Ralph Roberts made to work for $1 a year and how Comcast execs chose to cut their earned bonus payments. They didn’t have to. They made principled decisions. That’s a heckuva HR message.
And what message is your exec comp sending to employees?
Melina
Feb 14th, 2008
Your post this morning made me think back to a positive experience years ago when I worked for a very small startup that was running out of money.
In order to ensure the employees were paid in full, the execs took a pay cut to the minimum wage. They truly cared about the company and employees- and showed their commitment through their actions.
So- yes, it is rare, but it does happen. And when it does, the experience leaves a lasting impression- of commitment and respect.
While being short on cash is not the ideal situation for any company, if/when it happens, the actions (real and perceived) of the executive team can “make or break” company morale and productivity.
-Melina
JT
Feb 14th, 2008
Agree that this is all good but just to be clear Comcast is NOT short on cash. Even in missing the street’s expecations the company still produced Free Cash Flow (not made up earning numbers – real cash) of $2.3 Billion!
This is a story of the right people doing the right things even if they didn’t have to!
rick
Feb 14th, 2008
JT, I applaud the execs that took a reduced bonus. Such actions are few and far between. This demonstrates leadership.
However, I caution the writer of this post to be careful on what he describes as a good exec comp story. Ralph Roberts,a founder who is no longer the CEO, earned a base salary of $1.8 million plus other millions in bonuses and stock grants plus had the right to 5 years of pay after his death for his roles as chairmen of the executive and finance committees. I am sure the 88 year old contributes value in excess of the $1 he will now be getting annually, however as a subscriber I must wonder aloud if the value added was equal to what he received in pay over the past two years. The pay after death seemed a bit much.
I have worked with several founders who continued to be paid handsomely after they moved out of the CEO role so I know that getting this done was no simple feat. Just a bit overdue.
Frank Roche
Feb 14th, 2008
JT, clearly the street thinks Comcast is doing something right today…stock surged 8+ percent during the day. Results show. The exec decision is a big communication to the company…I admire that.
Rick, I’d say that Ralph Roberts earns every penny. That man is still at the office every day, walking around spiffed up in a bow tie and offering great advice. He makes videos and knows people. Plus, I see him at my breakfast place…the same place the mayor goes…the one where a cup of coffee and a bowl of oatmeal costs $1.60. I didn’t make a typo there. Buck-sixty.
ubermench
Feb 14th, 2008
I think founders can add alot but I do not put as high a value as you on showing up and wearing a bow tie.
I would do the same for a fraction of what he was taking.
Frank Roche
Feb 15th, 2008
LOL…I want to be cool enough to wear a bow tie. As it is, I look like a clown when I wear one…so I don’t, except for black tie, when I look pretty good if I do say so myself.
Robyn
Feb 16th, 2008
Frank, the news focuses so much more on negatives. I wonder if they actually printed more positive stories like this one, how it might affect the statistical outcomes!
Thanks.