Chemical & Engineering News


August 9, 2004 Volume 82, Number 32 pp. 4-5                                        

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