A warm personal gesture from the individual to himself

Q: How has executive pay ratcheted up to such a level?
 

A: In part, the answer is that the last time the government tried to fix [outsized executive compensation], there was no limit on stock options. At the time you didn't have to expense stock options, and they just mushroomed. So we want to have some humility going forward about efforts to correct this problem we helped to create the last time we tried to correct it. And there was a cultural element that led to this as well. I always say that investment bankers are the geishas of the financial world because they sit next to the CEO and laugh at his jokes and talk about what a big strong man he is and wouldn't it be fun to buy something together. And so CEOs looked at the investment bankers and said to themselves, "This guy's making more than I am. I am a titan. I'm the CEO of a great big company. I'm responsible for all these employees and customers, and all this guy does is move numbers around. I should be paid as much as he is." And then we have what we call the virus directors—directors who move from company to company and bring bad pay plans with them. So you have people like [Home Depot (HD) founder] Ken Langone, and you find him on the compensation committees of GE (GE), approving Jack Welch's retirement plan, Dick Grasso's at the NYSE (NYX), and [Bob] Nardelli's at Home Depot (HD). He personally was involved in three of these outrageous plans. 

Nell Minow, interviewed in BusinessWeek