EXECUTIVE PAY: THE DEBATE AIN'T OVER
Last night, as I was trying to catch up on my reading, the first two items I pulled from my never-ending stack were our local newspaper and the Apr. 26 edition of BUSINESS WEEK. In the paper was a story about the volunteer program at our city hospital, a Hospital Corporation of America facility. The article was soliciting hospital volunteers. Along with this health-care news, I'd remembered a conversation I had over the weekend with a neighbor who's a nurse at the hospital. She was talking about the understaffing and overworked atmosphere in the facility that, to her, were jeopardizing health-care delivery and compromising patient safety. It was easy to draw the conclusion that our local hospital was expecting some challenging financial realities.
I put the newspaper down and then picked up BUSINESS WEEK with the headline "Executive pay: The party ain't over yet" (Cover Story, Apr. 26). Right there on your outside cover was Thomas F. Frist Jr., chief executive of Hospital Corporation of America, the parent company of our financially challenged local hospital. I'm quite sure that Frist's $127 million compensation package appears to be fairly high on the unjust-enrichment continuum. More than that, however, there is a contradiction between his renumeration and the professed business realities at the bottom of his organizational pyramid.
Frist and the HCA board have allowed a gross impropriety to occur and negative perceptions to be developed. Today's business leaders have an obligation to not only manage their businesses but also the marketplace perceptions they develop. Because Frist does not appear to "walk the talk," he deserves all the bad press he can get.
Eric L. Harvey
As an executive recruiter, we will analyze our logjammed files of competent, out-of-work CEOs in the $1 million range to replace Thomas Frist. For a minimum fee, we can find someone who would be happy to just have a job.
John B. Norris IV
It was interesting to note that three of the top seven executives were in the health-care field! Is President Clinton a genius or just lucky? Do you think he knew that by proposing a tax increase at the end of last year, he would be able to trigger a landslide of stock options that would put the best possible argument for health-care cost controls on the cover of BUSINESS WEEK?
Your cover removed all doubt about the need for major health-care reform. A health-care system in which the chief executive of a for-profit hospital chain earned $127 million in 1992 while there are 37 million uninsured Americans and 50 million under-insured Americans is a national disgrace that requires major surgery.
Dr. Leon Reinstein
Your article has a highly objectionable and faulty premise in it. When raising the issue of "excessive" executive pay, you include the aspect of stock options in total compensation. While it is true that stock options can be abused, such as issuing them at a striking price that is below the current market price, in general they are not abused.
There is no doubt a number of chief executives who are greedy and overpaid. To say that their compensation, as a result of exercising stock options that cost the company nothing, is excessive while at the same the stockholders have profited handsomely is ridiculous. This thinking smacks of socialistic philosophy that says that excessive producers and achievers should not make more than some arbitrary amount that is decided by someone else. Let us remove the class envy from your magazine and articles.
Mark B. Brimley
Your article appears to be scripted more by some liberal Washington staffer than by the professional business journalist one would expect to author this article.
Most of our country's top entertainers and rock stars would not work for what they would consider such "paltry" sums on an annual basis. Would the shareholders rather have Madonna running Coca-Cola Co.?
K.F. Yontz, Chairman
Reportedly, to the horror of other manufacturers, Henry Ford paid his early assembly-line workers $5 a day with the intent of creating a market for his Model Ts. How different from today's CEOs, who do their best to lower the take-home pay of workers.
There's no question that a good chief executive contributes and deserves much more than the rank and file. However, the current discrepancy is obscene. Let's get more money in the hands of the rank and file and see how our economy takes off.
Robert E. Heisserman
Taxing salaries in excess of $1 million per year is one thing, but limiting the tax to business salaries is discriminating in the wrong way. Executives create jobs and value. Sports and entertainment salaries in excess of $1 million create comparatively fewer jobs. Targeting executives sounds like business bashing from the Billary White House.
I'm a stockholder of Primerica Corp. and was proud of it until I read of Sanford I. Weill's 1992 total compensation of $67,635,000. This is irresponsibility at its zenith.
Also as a stockholder, I'm quite proud that Colgate-Palmolive Co. is currently undertaking new studies to correct the problem of excessive pay for executives.
As a laid-off employee of Digital Equipment Corp., I have to take you to task in your lambasting of Ken Olsen ("A double gold star--and two booby prizes," Cover Story, Apr. 26).
For more than 30 years, Olsen successfully guided the company through many twists and turns in the computer industry. From scratch, he built and managed a $13 billion-plus corporation. Speaking for myself, and probably a couple of hundred thousand other current and former Digital employees, all I can say is enjoy the dough, Ken, you earned it. And we had a good time, too.
What I would really like to see is a report on "Executive income tax payments."
San Luis Obispo
Iwas struck by the juxtaposition of your latest cover story on low-performing U.S. executives enjoying multimillion-dollar packages and your previous story "The Mexican worker" (Cover Story, Apr. 19) on high-performing Mexican workers subsisting on $2.50 an hour (U.S.).
How many of the 10 U.S. executives adorning your cover, who obviously believe they are worth every penny of their million-dollar weekly compensation packages, believe that U.S. workers are overpaid and uncompetitive at $24,411 a year, and how many are enthusiastic supporters of the North American Free Trade Agreement and the Mexican government policy of holding down the wages of Mexican workers?
It's little wonder that the only remaining U.S. support of the proposed trade agreement, with the pact's downward pressure on U.S. wages and environmental standards, comes from business and academic free traders such as Rudi Dornbusch ("Why the U.S. needs to nail down NAFTA," Economic Viewpoint, Apr. 26).
We can have neither a strong economy nor a strong society with a business philosophy that no worker can be paid too little, nor any manager too much.
David C. Korten
AIR FORCE BASE CONVERSIONS
AREN'T BUILT IN A DAY
I read with disappointment your article "Lessons from the first big base to go dark" (Top of the News, Apr. 5) on the closing of Pease Air Force Base.
Conversion is a complex undertaking. The tasks and time needed to redevelop a 4,000-acre military base such as Pease take decades, as with any major community-redevelopment project. The Tradeport has had more than modest success. In the two years since closure, more than 1,000 jobs have been created.
Some of these are federal jobs. Federal agencies have first claim to any property no longer needed by the Pentagon. These jobs must go somewhere in the country. Those located at Pease helped to launch the redevelopment.
All communities are amateurs when facing a base closure. They must learn, make mistakes, and proceed. It is foolish to suggest otherwise. Your article undermines four years of hard work. Millions of business people who read your article will get a distorted view of the Tradeport. This can only hurt redevelopment.
David A. MacKinnon
Senior Project Manager
Office of Economic Adjustment