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How To Fix Corporate Governance

Wednesday, March 18, 2009  
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WIFR.com
Posted March 18, 2009 @ 5:50 p.m.
 
AIG is one of many companies under the microscope when it comes to corporate governance.. a local economics professor says not all bonuses are bad but he can understand why there is so much outrage associated with the compensation.. especially at taxpayer's expense.
 
Rockford College economics professor Bob Evans says the public has a hard time stomaching huge payouts to top level executives at a time when all of us are struggling.
 
Evans says the problem lies in the fact that oftentimes the officers running the company have no one to answer to but themselves . It's this lack of accountability that got us in trouble . Some of the corporations under scrutiny.. Evans says... don't have an answer to where billions of dollars in government money went. Evans says this governance framework has always been somewhat broken.. but times were good so no one really questioned the practice.
 
"The disproportion between the average salary and the CEO salary it's a factor of 100 times to 200 times greater and when you see these people making these salaries and bonuses and the companies aren't doing well... the companies are feathering their own nest and not being reward for performance."
 
Evans says the theory of corporate governance where shareholders choose the directors... And the directors chose the officers that manage the company is skewed . Evans says in reality the officers really have control over what is going on. We'll hear more from Evans tonight on lessons learned from this behavior and what it means for the future of many businesses.
 
This story appeared at http://www.wifr.com/news/headlines/41460702.html on March 18, 2009.

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