International financier and sometimes Santa Barbara resident
Charles Munger – Warren Buffett’s right-hand man at Berkshire
Hathaway, Inc. – warned corporate leaders against the temptation of
extravagant pay packages for business executives. Speaking at a
program for corporate directors at Stanford University, Munger said
CEO compensation packages spark widespread public animosity, adding
business leaders had a responsibility to “dampen some of this envy
and resentment by behaving way more noble than other people and
more generous.” In 2005, the average American CEO received $11
million in annual compensation, while the average worker took home
$42,000. Munger – whose yearly salary is $100,000 – also took issue
with many of the perks enjoyed by the executive class, such as free
personal use of corporate jets. When companies fare poorly, Munger
said, that should be reflected in executive pay. But even when
companies perform spectacularly, executives should exercise
restraint, he argued, calling the $400 million check ExxonMobil
reportedly wrote off to its outgoing executive Lee Raymond, “damn
stupid.”
