I don't see anything so special about their "base salary" that would make it off-limits. So, if compensation cuts are being considered, it seems wholly arbitrary to single out executive salaries as being untouchable.


Executive compensation has reached an average of 400 times what the production-level workers are paid ... and this far exceeds the disparity in other advanced nations.
[see http://www.pbs.org/now/politics/politics_pop/5.html ]

As for the little people being paid "too little" .... between the production workers and the CEOs, one of them is far-and-away more likely to have an income controlled by people that owe him favors or have some other reciprocity-type of motivation


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Source(s):
http://www.svsu.edu/emplibrary/Whelton%20article.pdf
The average compensation for CEOs at firms where inside and outside directors were linked in any way was greater by $612,422” (Six, 2005).

http://www.usatoday.com/money/companies/management/2007-06-09-ceopay_N.htm?...
.... J. Richard Finlay, founder of The Centre for Corporate & Public Governance in Toronto, which bills itself as North America's first independent think tank for corporate ethics.
CEO pay isn't set by markets, Finlay said in an e-mail interview. Instead, it is "determined by a small clique of like-minded directors, most of whom are themselves past and current CEOs with a vested interest in perpetuating a failed, but to them, remarkably generous, system."

http://query.nytimes.com/gst/fullpage.html?res=9504E1DB1E3FF935A35750C0A962...
The problem with ''the great C.E.O. pay heist,'' as Fortune magazine once called it, is that the free market is not at work here. The average C.E.O. of a major corporation now gets $10.8 million a year, almost 20 times as much as in 1981, as the result of a classic market failure.
''The salary of the chief executive of the large corporation is not a market award for achievement,'' John Kenneth Galbraith noted back in 1980. ''It is frequently in the nature of a warm personal gesture by the individual to himself.''
Pay is decided by a few board members, often the C.E.O.'s friends, who are perhaps themselves C.E.O.'s sympathetic to the argument that $200 million is about right for such hard work. Compensation experts are hired for advice, but they know that the way to drum up business is not to save shareholders money.
Look, avarice is human. If secretaries had a similar role in determining their own pay, they'd come up with PowerPoint presentations looking at how their peers were compensated (e.g., the secretary of the Microsoft Corporation, the general secretary of the Chinese Communist Party, winnings of Secretariat) and conclude that $200 million is about right.
Apologists for this market failure offer several defenses....

http://www.pbs.org/newshour/bb/business/july-dec02/ceo2_12-03.html
Laissez-faire-- let the market be free, and those who deserve to, will get their just rewards. That's become the standard explanation for why CEO pay has shot up in their lifetimes, from 40 times the average worker's pay in 1970 to more than 100 times in 1990 to some 500 times today.
PAUL SOLMAN: But is the market for CEOs as free as the market for athletes? We put the question to the pioneer of free market bargaining in sports, former baseball union lawyer Marvin Miller.
MARVIN MILLER, Retired Baseball Union Lawyer: .....You have to consider how salaries are set and by whom in each case.
PAUL SOLMAN: In baseball, salaries are set by owners spending their own money. And even the richest of them, like the guy who owns the Yankees, have an interest in keeping salaries down.
PAUL SOLMAN: But who pays the CEO? A board of directors, usually hand-picked by the CEO.
PAUL SOLMAN: .....and hundreds of studies show little if any correlation between CEO pay and company performance, as measured by profits or stock price. ......critics like Robert Kuttner charge that it shows one thing: the forces necessary to make free markets fair have lost their grip.
PAUL SOLMAN: In other words, says Akerlof, CEOs can manipulate financial information to boost the stock price, so they can cash in their options. We've seen illegal examples of this at Enron, for example, known as the crooked "E." But George Akerlof won his Nobel Prize for pointing out, in his paper on lemons in the used car business, that unequal information can give anyone the incentive to trade on it, which in turn can corrupt a market, like that for used cars, or CEO's.

http://www.svsu.edu/emplibrary/Whelton%20article.pdf
Bebucuk and Ginstein found that “pay for the top five company executives rose from 4.8 percent of aggregate net company income during 1993-1995 to 10.3 percent of aggregate net income during 2001-2003” (as cited in Sklar, 2005). This means that executives are now taking a larger percentage of the overall corporate income.
...Examples of CEOs making huge profits during years of massive corporate loss are recorded weekly in The Wall Street Journal. For example, in 2004 Merck had to pull Vioxx off the market due to concern linking Vioxx to increased risk of heart attack or stroke. This quickly led Merck stock to decrease by 28 percent. That same year the CEO of Merck, Ray Gilmartin, received not only his base salary but performance-based bonuses worth over $37.8 million (Sklar, 2005).

.....CEOs can use people, company activities, and deception as a means to an end in obtaining higher short term stock market value. There is a big incentive for CEOs to “cook the books” to report false business levels and hide low corporate growth. Stock options often reward short term decision making, which can be detrimental to a company’s long term success (A Decade of Executive Excess, 1999). points to "insider information and the subsequent disparity between public confidence and fair market value.
.....only does this cause U.S. corporations to be at a competitive disadvantage with
foreign companies, but mergers and takeovers involving U.S. and international firms become more complicated.
....Research supports the assertion that excessive CEO compensation has a negative influence on society.

Research has concluded that high CEO pay contributes to higher subordinate turnover, lower job satisfaction, and lower quality products. A 1992 study conducted by David Levine, a business professor at the University of California at Berkeley, found that bigger pay gaps between CEOs and workers had a measurable adverse effect on product quality (as cited in Boisseau, 1996).
.....Alan Greenspan, past Chairman of the Board of Governors of the Federal Reserve from 1987 to 2006, has expressed concern over excessive payouts to CEOs contributing to inflation and reducing the corporate focus on long term profitability (Winnick, 2002).

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