Executive Pay Too High? Hire Foreign CEOs

After many articles in The Times and elsewhere about excessive executive compensation, corporate reorganizations, defenses against hostile takeovers and other management abuses directed against employees and stockholders, I have concluded that the problem is deeper than greedy executives.

Instead, boards of directors have been so strongly influenced by managers that they have forgotten their primary fiduciary obligation to the stockholders to protect the long-term viability of the owners’ investment.

The solution is not to legislate a ceiling on executive compensation or against “golden parachutes.” Instead, we need to re-establish the role of the board of directors as the representative of the stockholders.

There is a major conflict of interest when directors are also employees of the same company. Such directors tend to make decisions for their own benefit as managers, not for the general benefit of the stockholders.

We need legislation that formally describes this conflict of interest and that prohibits employees (and members of their immediate families) from serving as directors in any corporation where a majority of the stock is owned by non-employees.

Eliminating the conflict of interest inherent in employee directors would eliminate self-serving decisions to protect the jobs and increase the rewards for executives who have managed their companies into stagnation and even bankruptcy.

DAVID ROSS

Agoura