Section FourCASE 4-2 continued
avoid solutions that are based on legislation because they are
likely to introduce even more problems. Still another is that tax
deductions should be disallowed for companies in which the
CEO’s compensation is 25 times greater than the average for
blue-collar workers.^9
Several other recommendations are directed toward
implementation at the organizational level. One is to link CEO
pay to long-term profitability. A second is to put more
stockholders and workers on boards of directors. A related
recommendation is directed toward members of company
boards of directors. That recommendation maintains that board
members should ignore self-serving surveys that portray CEOs
as underpaid in comparison to other CEOs. They also should be
very skeptical of assessments concluding that CEOs are mobile.
Still another recommendation is to use succession planning to
develop an internal pool of qualified CEO candidates and
thereby avoid seeking expensive replacements from the
external labor market.^10 A final recommendation would attack
the problem in a more indirect manner. In response to the
problems of excessive CEO compensation, as well as other
factors, the Financial Accounting Standards Board (FASB) has
proposed that stock option grants be reflected on financial