High Compensation for Poor Performance

British CEO pay rose 287% in the last decade; private sector workers’ pay rose only 47% in the same period.  Workers’ contributions are measured; CEO contributions often are questionable and substantial severance packages are given even when corporate stock prices and earnings have decreased.  Under these circumstances, It’s hard to ask ordinary workers (who generally live paycheck to paycheck) to take cuts in compensation. (See June 30 article in USA Today.)

The U.S. corporate figures are similar, only bigger.

Now look at AmLaw 100. Are the numbers different? Not by much … When partners are earning in excess of $1,000,000, some in excess of $5,000,000, how can you complain about associates seeking $160,000? Because the firm will feel compelled to raise its rates to clients? Because some clients will resist? And the C-Executives complaining are earning how much? How many millions?

Sorry, but in this circle, there is little sympathy for the corporate client with those numbers who complains … This corporate client has options:  Why not engage regional law firms with equal skills and lower rates?  Is it necessary for large firm partners to earn such large sums in order to be at the table with CEOs as a colleague, not as a vendor, or can their expertise be sufficient to earn them the seat at the table?

Interesting difference, though, between law firms and corporate clients.  The corporation pays a high severance package while the law firm does not. Another difference is that the corporate executive is able to negotiate the very attractive severance package before entering his/her employment and the lawyer generally is not.

One day, I’ll create a listing of the differences between the C-executive and the lawyer. I think this would be very enlightening for us. But, that’s for another day.

Categorized in: Cash Flow - Finances, Management