Up until now, critics of excessive executive compensation have been content targeting overpaid CEOs. But now many of those same critics are turning their sights on the usually more low profile CFO. Testifying before the Senate Finance Committee, Internal Revenue Service Commissioner Mark Everson floated the proposal that finance chiefs, corporate general counsels and non-executive board chairs be paid a fixed compensation for a specified contract, rather than be paid with open-ended options.
Everson's testimony came as the committee looks into the practice of backdating options grants. The IRS chief first floated his idea back in March, long before the scandal broke.
Everson should have lots of supporting evidence, thanks to a new survey on CFO compensation by Graef Crystal, a former exec compensation adviser and corporate gadfly. The average CFO got $2.7 million in compensation in 2005, up 10% from the year before. The survey covered 599 CFOs at companies with market values above $3 billion. Topping the list: Goldman Sachs' David Viniar, who pulled down $26.2 million.
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For those keeping score, the following CFOs round out the top 10: Occidental Petroleum's Stephen Chazen, with $23.9 million; Yahoo's Susan Decker, $22.8 million; Bear Stearns' Samuel Molinaro, $17.5 million; Celgene's Robert Hugin, $14.8 million; EMC's William Teuber, $11.8 million; eBay's Rajiv Dutta, $11.2 million; Juniper Networks' Robert Dykes, $10.9 million; Qualcomm's William Keitel, $10.1 million; and Citigroup's Sallie Krawcheck, $10.1 million.
Should Congress get in on the act? Some blame the current mess on the body's last attempt to rein in pay. In 1993, federal tax code Section 162(m) limited the deductibility of pay to top executives to $1 million, but allowed companies to deduct any compensation that was performance-based. "The real answer must lie with shareholders, particularly institutional shareholders," Crystal says. "They are going to have to become much more confrontational–even to the point of dumping that company's stock out of their portfolios."
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