Reform Needed in the Game of Executive Compensation
says Frank Glassner in Thestreet.Com Interview

NEW YORK, NY - February 13, 2002 - Frank Glassner, CEO of the Compensation Design Group, was recently interviewed by TheStreet.com reporter Eric Gillian for his "Personal Finance: Meet the Street" section. In the interview, which can be viewed at http://www.thestreet.com/pf/funds/meetthestreet/10008775.html , Glassner suggests that the current state of executive compensation leaves much to be desired.

"We have witnessed so many abuses of executive compensation recently," said Glassner, a 26-year veteran of executive compensation. "We've heard about Enron's executives cashing in on bonuses while company employees were left holding the empty bag. Then we read about Tyco's CEO Dennis Kozlowski's beefed up pay package as Tyco's stock plummeted nearly 50% to date. And now, we learn about Gary Winnick, founder of Global Crossing, who sold his shares of $734 million before the company collapsed, leaving stock that closed at 7 cents as of last Friday."

"If you thought that the pay packages of executives in the last recession were beyond belief, take a closer look at what's happening today," said Glassner. "Many top executives in poor performing companies are getting away with simply being paid to show up for work, performance not required.

In the middle of what could be the worst recession in American history, some poorly performing CEOs are trying to guarantee their bonuses or renegotiate their contracts, which is akin to Rams quarterback Kurt Warner stopping the Super Bowl in the second quarter to renegotiate his contract when the Rams trailed 3-14, according to Glassner. "If you're losing the game at half-time, you go out with your team members and try harder in the third quarter," said Glassner, a 26-year veteran of executive compensation. "You don't just give up and say, 'wait, let's change the rules of the game so that they're in our team's favor.' But that's exactly what CEOs would be doing if they renegotiated their contracts to take home a fat pay package while the company stock is heading south."

Glassner, a long-time critic of skyrocketing executive pay and advocate of true pay-for-performance compensation programs, said that fat rewards for poor performance has to stop.

"America's CEOs have become high paid celebrities like rock stars and world- class athletes," said Glassner. "Which would be fine if they consistently delivered outstanding performances, but rather than being paid for performance, they're often paid simply for attendance."

Glassner firmly believes that executive pay should be linked to company performance and limited if the company performance levels are not met. He said that the executives are the top half of the equation and the rank and file employees are the bottom half. "We need to drive the top and raise the bottom," Glassner said. "Outstanding performance at the top will raise the earnings of rank and file because as company performance increases, so will the earnings of the employees.

Glassner said that many companies touted pay-for-performance in the last recession, but have lost focus over the years. "Boards of directors became complacent in an upturned market and didn't stick to their guns when performance was not met," he said. "We need to see executive compensation reform. Company boards of directors must stand up to the challenge and provide rewards only when performance merits it." Glassner believes that much of the blame for out-of-control executive pay could easily be spread among a number of parties. He said that corporate directors are supposed to be watching out for the shareholders, but too often, board advisors such as accountants, lawyers and consultants, tell the board members only what they want to hear and not what they need to hear. "Ultimately, you have to wonder about shareholders since they are the ones who vote on these compensation packages," said Glassner. "Where were they when they were supposed to be looking at the bottom line of company performance?"

Headquartered in New York, with offices in Chicago and San Francisco, the Compensation Design Group is an internationally recognized firm that focuses on delivering cost effective and customized compensation, benefits and human resources programs. The company's team of experts is among the nation's top professionals in the field and is dedicated to ensuring that the client experience with the Compensation Design Group is both rewarding and profitable.