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Opinion: France may feel vindicated. But it's more like America than many French would care to admit.
American companies still lead the world in chief executive compensation, which has reached 300 times the level of the lowest paid person in the firm. Overseas the difference may be 30, 40 or 50 times from the lowest paid to the highest paid employee.
A congressional committee examined the reason for high CEO pay and cited conflict of interest by the very multinational companies — such as Mercer, Wyatt Watson, Towers Perrin, and Hewitt — that are hired by a company to determine chief executive pay in the first place.
“In 2006, the median CEO salary of the 'Fortune 250' companies that hired compensation consultants with the largest conflicts of interest was 67 pecent higher than the median CEO salary of the companies that did not use conflicted consultants,” according to the report. The conflict of interest occurred when the companies were also retained to handle employee pay and human resource services. The committee found that nearly half of the companies studied did not report this conflict of interest to the Securities Exchange Commission (SEC) as required.
More extensive rules restricting executive pay are likely be discussed today at the G20 summit. Instead of blaming the meltdown on the U.S., President Sarkozy should direct his passion against greed toward forging a new set of worldwide rules regarding executive pay that would trigger a full reexamination of compensation practices at financial firms.
Susan E. Reed has reported on business and international affairs for CBS News, The New York Times, The New Republic and other publications.