On Saturday, my comments about CEO pay were reported in The Independent, one of Britain’s major national dailies. As Merv Adrian’s article shows, industry analysts also recognise that CEO pay is now of the broad range of reputational issues that tech firms need to pay attention to anticipating.
The Independent’s article was geared around salaries at Apple, certainly that of CEO Tim Cook, but also about others at the firm with more valuable compensation packages.
One concern is that CEO pay has more to do with in-company politics than corporate performance. One of the most-used studies into this issue, written by Stanford’s Charles A. O’Reilly and Brian Main, a professor at the University of Edinburgh Business School, compares economic and psychological perspectives. Professor Main also wrote widely-cited studies on pay in a career perspective and, with O’Reilly, a study of gender and executive pay.
In the wake of Apple’s record results yesterday, it might be that the pressure is reduced on that one firm. However, the reports like the ones we have mentioned show that concern about the uneven and ineffective compensation given to executives reflects wider problems of internal politics, managerial ‘rent seeing’ and gender-based discrimination in companies. This is the real concern for AR professionals: not that high pay does not reflect shareholder interests, but that disparities in pay suggest ineffective decision-making by top managers.
AR professionals should be aware of how top executive pay in their peer group compares with that in their own firm. Spokespeople should be prepared to answer questions about compensation that seems out of line with the peer group.