Essays on Leadership Ethics
Edited by Joanne B. Ciulla, Terry L. Price and Susan E. Murphy
Chapter 5: Oh Lord, Won't You Buy Me a Mercedes Benz: how compensation practices are undermining the credibility of executive leaders
5. “Oh Lord, Won’t You Buy Me a Mercedes-Benz”: how compensation practices are undermining the credibility of executive leaders Jay A. Conger The singer Janis Joplin penned a song entitled “Oh Lord, Won’t You Buy Me a Mercedes Benz” in which she playfully implores God to provide her with a number of the extravagant niceties in life. There is a striking parallel between the attitude and desire conveyed in this song and those of executives of America’s publicly traded corporations when it comes to their own compensation. For more than a decade, the news headlines have highlighted the fact that executives have been largely successful in getting most of what they want: “Crony Capitalism,” “A Decade of Executive Excess: The 1990s,” and “CEO Compensation: Time for Reform.” These headlines and their stories chronicle a trend in the business world to reward senior business leaders with excessive levels of compensation. For example, the median CEO compensation of a majority sample of Fortune 500 companies in 2003 was $7.1 million. Those in the Fortune 100 averaged $12.2 million. In 2002, the average US CEO earned 282 times what the average employee did. This compares to a ratio of 42 to one in 1980.1 But these are average figures. At the extreme end of the spectrum, there is Larry Gulp, CEO of Danaher, who received $53 million in 2003 compensation or Steve Jobs, CEO of Apple Computer, who took home $74.8 million.2 In essence, compensation at the top continues to be excessive and...
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