Leaders and compensation

Many of us read with interest the news of Target Corporation’s board decision to find another CEO. Their current CEO, Gregg Steinhafel, is to be shown the door, and he is to depart with an estimated $61 million golden parachute. 

The news of the change in leadership and the severance package sets one to thinking on such things. Last Thanksgiving I published a plea for retailers to help lead us toward respect of the holiday by staying closed and granting employees that day with their family and friends. That call to leadership has not yet been heard – but the Target Corporation’s leadership transition discussion provides another opportunity to consider such things.   

What is it that we need from our various leaders, and what do we hope they accomplish for their pay and other compensation? Do we want the leaders of publicly-traded corporations to lead successful companies? Yes, clearly. But is that enough? I don’t think so. Unstated but included in the current executive compensation arrangement is the understanding that we expect more of our leaders than the production of and love of money.

Would it make sense to empower and pay millions of dollars to business leaders who value money exclusively? Would a megalomaniac or greedy leader be likely to reflect the wisdom and sense of balance that society needs? Would they lead society in a helpful direction?

Our community needs more leaders who understand the role of the family and its breadwinner(s) and their critical role in a healthy Minnesota. Fortunately, many leaders of Minnesota’s companies have shown this understanding. 

While this call to thoughtful leadership and compensation could be seen as a criticism of executive compensation practices – it is not meant to be a criticism so much as an encouragement. We have some excellent, thoughtful CEO’s, and we would do well to have more.  

Some might advise a state legislator to stay clear of discussions of business executive compensation. I think it is instructive to note that the state legislature recently established a new minimum wage. Ideally, businesses and other segments of society should manage themselves without government interference. But, given the willingness of the legislature to establish a minimum wage, is it beyond the scope of imagination that they might someday want to establish a maximum wage? I do not support the idea, but I think it could happen.

I don’t believe CEO compensation should be singled out for scrutiny. Society at large provides a target-rich environment. Should we compensate a coach at a public university with $2 million a year? Given the championship records of our professional sports teams, does it make sense to pay our players millions if they are not willing to be role-models? Given that our players might actually finish last – should they at least not be nice guys? 

I think leaders of all stripes (business, government, entertainment) have to be actively involved in the promotion and sustenance of families and communities. Said differently, they have to earn their keep in more ways than one.