James Glassman takes critics of CEO compensation to task:
Our new global high-tech economy, companies are less likely to promote insiders who may be chummy with the board and instead pick CEOs outside not just the firm but even the sector - take Alan Mulally, who came to Ford from Boeing.
These talented generalists are scarce and can have a huge effect on profits. Sure, they command high pay. Too high? The Yankees' Alex Rodriguez earned $29 million from June 2005 to this summer. Jeff Immelt of General Electric makes less than Dr. Phil does. If a good CEO can boost profits by $200 million, he's easily worth $10 million, or more.
Certainly, some CEOs, like some ballplayers, make more than they deserve. Angry shareholders have a remedy - dump the stock. The bigger problem, as we show in The American, the magazine I edit, is that publicly traded companies - because of pressure from politicians, the media and unions - could be underpaying CEOs. The best and brightest managers are migrating to private-equity firms, hedge funds and privately owned businesses out of the spotlight.
