Chemical
& Engineering News
Letters
Executive
compensation and transparency
We are relieved that the
ACS Board of Directors has developed another mechanism for allowing the members
of the society to obtain access to the executive compensation program for its
top executives. However, we are writing to express our frustration at how
complicated it is to obtain this information and our concern about the level of
compensation that has apparently been routinely provided at the highest levels
of the ACS organization.
In an ACS
Comment coauthored by ACS President Charles P. Casey and ACS Board Chair James
D. Burke titled "ACS Executive Compensation and Transparency," rather than
simply providing the compensation information, members were asked to jump
through multiple hoops to get information (C&EN,
May 24, page 57). At the end of this path, one still does not find the
information on the Web--members can only enter a request for the information,
and then it is sent to them as a file attached to a subsequent e-mail
message.
Beyond the
difficulty of obtaining the information, our most important concern is the level
of compensation itself. ACS is a professional society, not a for-profit
corporation, and yet the 2002 salary of then-executive director John K Crum was
$586,360. Apparently, this was not enough reward, because in addition to that he
received another $134,375 in "awards and bonuses." Of course, the executive
director also needs an expense account, which adds another $14,478, leading to a
grand total of $767,834. What contributions were made by the executive director
to merit these bonuses and awards?
One can rightly
ask why these compensation levels are so high. It is difficult to believe that
ACS could not find a capable executive director for compensation less than
three-quarters of a million dollars a year. Furthermore, if the compensation
program is so rational, why was it kept secret from the members for so many
years?
In our opinion,
the system used by ACS for determining executive compensation is seriously
flawed. We therefore submit the following recommendations:
(1) The ACS
should make public, in a much more accessible way, the history of total
compensation of all of its employees paid more than $150,000 per
year.
(2) The next
membership survey should ask members simply: "Do you believe that the 2002
compensation of the ACS executive director of $767,834 was appropriate?" This
will allow ACS to obtain reliable information on whether the membership is
concerned about compensation issues.
(3) We believe
in the market forces to which the comment pays such homage. However, if ACS is
serious about meeting the market for its executive compensation, it should offer
what it takes to hire capable executives, without requiring that the executive
director be paid more than anyone else in the organization. If, for example, the
search for the president of the Chemical Abstracts Service is more competitive
than the search for the ACS executive director, then the CAS president should be
paid more than the director.
(4) "Awards and
bonuses" and special retirement enhancements for top executives should be
eliminated. The funds used for these perks should be redirected to reward
specific achievements made directly by any people in the system who have
gone beyond their job descriptions to make things better for the society and its
members.
We trust that
the board of directors will do all they can to make executive compensation
policies at the ACS more open, objective, and responsible.
Robert G. Bergman,
University of California, Berkeley
Gerard Parkin,
Columbia University
John E. Bercaw, California
Institute of Technology
Kenneth N. Raymond, University of California,
Berkeley
Roald Hoffmann, Cornell
University
James M. Mayer, University of Washington
Eric N. Jacobsen,
Harvard University
Christopher A. Reed, University of California,
Riverside
Allen J. Bard, University of Texas, Austin
Robert H. Grubbs,
California Institute of Technology