CEO Pay - Ethics and Practicality

The ethics of CEO Compensation has hit the news again, this time in discussion of Doug Steenland, the man who pulled Northwest Airlines out of bankruptcy. The board rewarded Steenland with $26 million in stock awards (and another $10+ million to each of four other top executives).

There is no doubt that Steenland et al performed a great feat. One could make a good argument that it was well worth the approximately $75 million they were paid. But this whole affair poses both an ethical and a practical issue.

Ethically, is it right to reward top management for bargaining away employees' salary and benefits? Is it right to award the first fruits of what was clearly a team effort to just part of the team?

Practically, what are they thinking? NWA comes out of bankruptcy and immediately ignites a controversy with the very people who they will depend on to keep them out of bankruptcy. I don't know what Steenland and company's regular salary is, but I'll bet it's enough to contribute nicely to their retirement funds.

The board made a mistake in offering the bonuses. Steenland and his cohorts made a mistake in accepting them.

It's a matter of ethics. It's a matter of practicality.