This was brought on, not even a year after, the firm paid $110 million dollars to settle a suit brought on by shareholders of Sunbeam stock for alleging fraud in the company audit.
Directors who fail to succeed in their requirements and CEO's who act unethically are affecting the viability of capitalism, which fuels the nations economic leadership, as well as scarring the reputation of all executives.
Canada's Center for Corporate & Public Governance Chairman J. Richard Finlay is quoted as saying that "Excessive CEO pay is the mad-cow disease of American boardrooms." He further states, "It moves from company to company rendering directors incapable of applying common sense." This began when the executives realized that maintaining share prices should be of highest value. Executives then concluded that their personal wealth was closely related to company stock prices so they took up stock ownership and accepted further opportunity through option grants. Personally, I feel that this is a huge abuse of power in which the SEC needs to regulate.
Research shows that the salary gap between executives and the entry-level workers could threaten leadership's credibility. Morale amongst low-level workers could also plummet dangerously. An announced plan of attack to combat greed driven executives is to place a wage barrier on them in which they would not be eligible to earn a salary more than X times of the company's lowest paid employee. Regulations on the availability of stock options to executives also need to be imposed. .
Even though the board is appointed to supervise management the shareholders need to keep their eyes focused on the board. This is hard to accomplish since boardrooms are closed to investors. Investors have become too trustworthy and dependent on the board members. My suggestion is for shareholders to lobby to get these boardrooms open. The article also discusses enacting board membership regulations.