Despite economy, executive compensation remains inflated

  • Article by: AMERICO DEL CALZO
  • Updated: June 29, 2012 - 8:14 PM

Are all those executives really worthy of A-level compensation?

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Stephen J. Hemsley, CEO of UnitedHealth Group, is one of America's highest paid executives, according to Forbes Magazine.

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Counterpoint

As one who graduated in the top 95 percent of his 1955 college class, I read with some interest Chuck Chalberg's "'C' is not the first letter in 'fail'" (June 26).

During my college studies I received mostly C's, several B's, fewer A's, and a couple of F's (Calculus II and Differential Equations).

Yet, despite my lowly class standing, I have never felt that my professors' honesty in grading my work and having it appear on my college transcript prevented me from having a successful and satisfying career. Having potential employers know that I was good-to-excellent in some academic areas, yet average-to-passing or even failing in the others, was not an obstacle to finding a job immediately after graduation.

More important, my self-esteem was not damaged knowing that those in the top 5 percent of my graduating class were a whole lot better than I was academically. I accepted it for the reality it was.

As I reflected on the fact that we -- our nation and its students -- are being duped by the grade devaluation described in Chalberg's piece, I came across a June 27 Star Tribune front-page article titled "Best Buy prepares to fight founder." That article cited the large cash and stock awards being made to retain Best Buy executives -- ostensibly to keep the "best and the brightest."

This appears to be another example of the now-universal notion that institutions have to pay extraordinary compensation in order to retain excellent executives. Like its equivalent, grade devaluation, this pattern, I suspect, is another area in which we are being duped.

When all executives are getting A-level compensation, do they all deserve it? I'm guessing not. The reality is that most of them are very likely C-level performers who should be receiving a lower grade of compensation.

But, alas, we seem to have embraced grade devaluation and inflated executive compensation. And although each may be beneficial to the individuals involved, I cannot see how they do the rest of us any real good.

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Americo Del Calzo is retired in Minneapolis.

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