Executive Compensation

[Henry C.K. Liu]

Citigroup sent a letter to shareholder that was reported in the NY Times
that the newly merged company paid its co-chairmen, Sanford Weill and
John Reed, each over $26 million last year while operating earnings fell
27%, and has announced thousands of job cuts and layoffs of lower level
employees.  Reed's retirement package comes to $6.4 million /year
annually for life.  Between 1990 and 1997, cash compensation of chief
executives nationally jumped 82% while total compensation including
stock optionsrose 289%.  During the same period, average factory wages
went uo 22%.
Management isa comparatively later day animal in capitalism.  One of the
claims of modern management science is that management role is to ensure
the overall long term welfare of company, including that of workers.
The distorted incentives in recent compensation structure has tilted
managment behavior toward return on equity at the expense of wages and
benefits for worker.
Funny no one ever suggest that executive compensation should be indexed
to warkers' pay.

Henry C.K. Liu