Old boys’ club keeps pay high

There is nothing more annoying to me than statements such as “There are only so many qualified CEOs to go around, and they often demand top dollar for their services.” (“Fair is fair -- but exec pensions aren’t,” Consumer Confidential, May 25.)

These people were not chief executives out of the womb. They became CEOs from working hard and gaining experience in their fields. There are thousands of people who fit that description and would jump at the chance to be a CEO -- and probably do a fine job -- for much less.

But the old boys’ club of CEOs, consultants and buddy directors just perpetuate the high salaries. Until shareholders revolt, it will not stop.

Anita Roglich

Santa Monica

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Good management ensures that employees are capable, motivated and afforded job security and adequate compensation. Such an environment should ensure a satisfied customer, afford a reasonable profit and satisfy stockholders.

Beginning in about 1968, the emphasis shifted from providing the best possible service to cutting costs so that more dividends could be paid to the stockholders. Since reducing costs increased profits, and manpower was the largest component of cost, reducing manpower was seen as a sure way to increase the value of the company stock.

The argument was that this resulted in a higher share value and this increased equity represented an increase in the value of the company. It is based on reducing costs by eliminating the real source of profit, so it inevitably leads to failure.

Unfortunately, the ability to satisfy the stockholders and achieve a high stock price is considered much more valuable than the value of the worker who is vital to production. Until this balance is restored, the future of our economy is very bleak.

Thomas W. McCarthy

Chino Hills