There was a time when those of us who argued against the excess of supersized chief executive pay used the benchmark of how it compared to the median worker’s earnings in that company. Now we apparently have a staggering new benchmark: the median pay of chief executives, who are already compensated well into the millions (“Elon Musk: court ruling queries star chief’s worth”, Lex, February 1).
That was the position taken by Delaware chancery court judge Kathaleen McCormick, who noted that Elon Musk’s remuneration was 250 times the relevant benchmark for chief executives. Her decision to resist Musk’s stargazing pay grab is encouraging. Especially welcome was the short shrift she gave to the trope too often relied upon by acquiescent directors that chief executives who already own millions of shares in a company need to be further incentivised to perform. But what will make a real difference is when Judge McCormick’s mindset permeates the decisions of compensation committees. Since they are often made up of chief executives who are now part of Musk’s elite benchmark class, shareholders should be advised not to expect any sudden boardroom outbreak of common sense.
J Richard Finlay
Founder, The Finlay Centre for Corporate & Public Governance
Toronto, ON, Canada
