To: opinion@sacbee.com
From: James McRitchie <jm@perswatch.net>
Subject: Tale of Two Greeds
Your guest columnist, Richard Cohen, recently focused on the "severance" pay of William Catacosinos who collected $42 million by losing his job as CEO of Lilco when it merged with KeySpan and he became head of the new company, Marketspan. What Cohen didn't mention was that New York took over the debt for Lilco's never-opened Shreham nuclear plant by issuing $7 billion in municipal bonds (a scheme reportedly proposed by Governor George Pataki), that other executives (most of whom continued their employment) also got "severance" pay of $25 million, and that Catacosinos says he was entitled to $63 million, according to minutes from Lilco's board meetings.
Most KeySpan shareholders support the payoff because Catacosinos was able to snooker Pataki and taxpayers to their benefit. Unfortunately, too many believe its okay to have a greedy CEO if they can profit by the CEO's ability to corrupt others. What can be done about it?
One positive step would be to support the efforts of labor-oriented pension plans. The AFL CIO recently released a study "Too Close for Comfort: How Corporate Boardrooms are Rigged to Overpay CEOs," which exposes widespread personal ties between CEOs and the directors that establish their pay. For example, Georgetown University basketball coach John Thompson was paid $350,000 by Nike in 1997 for an endorsement while serving on the company's compensation committee. Labor backed resolutions calling for higher standards of independence on compensation committees won 36% of the vote at HEALTHSOUTH Corporation and 30% at Advanced Micro Devices.
Another step would be to ensure your own pension fund is not controlled by those with conflicts of interest. The president of CalPERS, for example, also sits on the board of a joint venture company, Pacific Rim Prosperity, and for ten years he's been accepting gifts from those doing business with CalPERS. Although Crist recently claimed "there has been no evidence or even suspicion of corruption by any CalPERS fiduciaries because of political contributions or gifts," board members have been the subject of several articles in the press, an FBI investigation, and Legislative action concerned with deals involving relatives and former board members, gifts, high living, extensive travel, and campaign contributions funded by those doing business with CalPERS.
James McRitchie, Editor
Corporate Governance
http://corpgov.net
Contact: 
jm@perswatch.net