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How Much Should Corporate Executives Be Paid?

January 24, 1992



In the editorial "Executive Pay and Civic Culture," Jan. 14, a justification is made for multimillion-dollar salaries and bonuses for CEOs by comparing them with those of some NBA basketball team members. While I would not try to justify the ballplayers' pay, I wonder how long they'd receive it after a few years of losing performance?

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Our Big Three auto executives get raises after 10 years of failure to anticipate the requirements for competing with the Japanese - but does saving last year's disaster from being worse justify a raise? I wonder if there aren't actually a number of much lower-paid managers out there who could have done a much better job. Paul March, Seattle

Salaries of entertainers and outstanding athletes are paid voluntarily by those who wish to see them at work. Executives, like members of Congress, seem to be paid whatever they demand. Jenny Root, Eden Prairie, Minn.

This editorial offers the admonition "Don't underestimate the difficulty of managing multibillion-dollar enterprises." Such a statement breathtakingly begs the question. Rather than "voluntarily moderating" their own incomes, CEOs should tie their incomes to performance - in good years, lots of money; in bad years, they pay the company back. T. Widdicombe, Seaford, N.Y. Alternative housing Regarding the article "Banks Try to Salvage Empty Office Buildings," Jan. 7: I have no sympathy for developers who continue to build industrial space in the face of years of glut, nor for banks that continue to finance them.

My sympathy goes to the general public, who will wind up footing the bill one way or the other. We should get something out of it. Why not convert unneeded office space to much-needed moderate-cost housing? William H. Venable, Falls Church, Va. Politicians and the economy

The article, "Quick Fix Lure Tempts Candidates," Jan. 15, was right on the money. Politicians perceive that Americans want instant action, and under present circumstances, they may be right.

However, if our government provided the country with rules and regulations that are designed for our long-term financial health, rather than immediate gratification, we would not need the quick fix, just regular fine tuning as circumstances change. Donald Bradley, Plainfield, N.H. Defending stock trading

I strongly disagree with the author's assertion about traders and capital gains in the Opinion page article "Truth About Tax Cuts," Dec. 30. I am a stockbroker; I also trade my personal portfolio.

The author states that "Capital gains on trading income contribute nothing to economic growth." On the contrary, traders provide liquidity to markets, which is the lubrication of the capitalist system. Even long-term investors sell, and it is the trader that facilitates those moves. (Try to sell and close on a house with a telephone call.)

Valuation is another function traders provide. To know what a company is worth is extremely important to bankers who may be lending money, to the tax-man assessing an estate, to workers who may be evaluating an employer, or to investors looking to see if a company is under- or overpriced.

Finally, traders contribute their fair share to the security industry's $24 billion in revenue, which is taxed as commissions to salespeople, salaries to clerks and executives, rents to landlords, and profits to brokerage firms. David P. Tomell, Geneva, Ill.