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Where Do Evangelicals Stand on CEO Compensation?

Some evangelical CEOs defend their large salaries while others opt out.

In the spirit of this week's question on how different religious groups relate to the massive financial troubles on Wall Street, I spent time this morning digging through resources on how evangelicals view the issue of CEO compensation. With the federal bailout package currently stalled in Congress in part because of a debate over whether or not taxpayers should allow CEOs of firms offloading toxic debt to eject with a "golden parachute," the issue is suddenly timely.

In a crisis filled with inscrutable insider language and concepts, like short-selling or credit default swaps, CEO pay is an issue the average person can understand. Barney Frank, the House Financial Services Committee chairman, told CNBC yesterday that CEOs who refuse to take a pay cut in these circumstances would be "selfish and unpatriotic." Editorial writers at the Philadelphia Inquirer asked yesterday, "Why should taxpayers, who are dutifully paying off credit-card debt and car loans, shell out seven-figure bonuses to Wall Street financiers whose irresponsible decisions precipitated this mess?"

Those are strong images, and whatever happens to the legislation in Congress, it seems that CEO compensation — long a simmering issue — may now come to the forefront of national debate. So where do religious groups weigh in?

The research of Rice University sociologist Michael Lindsay immediately came to mind. With help from the index, I flipped through my well-underlined copy of Lindsay's excellent 2007 book, Faith in the Halls of Power: How Evangelicals Joined the American Elite and found that Lindsay describes the issue of executive compensation as "one of the most troubling areas for evangelical business leaders."

In his many interviews with evangelical executives, Lindsay writes, he expected this issue would come up frequently, since "executive compensation seems like an area where evangelical executives could distinguish themselves from their secular peers." He points out that many evangelical faith leaders, such as Billy Graham and Rick Warren, have often refused luxuries or high salaries. When evangelical Max De Pree was CEO of Herman Miller, Lindsay writes, he capped the ratio between highest- and lowest-paid employees at 20:1. De Pree told Lindsay it was a decision that "could and should be informed by my faith."

Yet Lindsay writes that other evangelical CEOs he interviewed justified their high earnings and deflected critiques. One CEO told Lindsay his high compensation package was decided by the board, not him — a position that Lindsay greeted coldly. "Excessive compensation erodes social trust; more pernicious for evangelicals, it undermines their ability to frame business as a moral activity, which is critical to expanding evangelical influence in the business sector," he writes.

When I interviewed Lindsay for the Wharton Leadership Digest on the subject of evangelical leadership in the business world, he put the issue in bolder terms:

I do take these evangelical CEOs to task [over executive compensation.] If they are really interested in working for the common good, they ought to figure out ways where they can be a little less self serving. That's really strong language, I realize, but it seems to me this is one area where they can really stand apart from their secular peers and, on the whole, they don't. I did come across evangelicals who presented attractive examples of trying to live out their faith [amidst great wealth,] but these were notable for being rare.

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Comments

Displaying 1–3 of 14 comments

Margaret Nahmias

October 05, 2008  2:46pm

Why do you mean by large Does this include stock options and other non- cash compensation because that inflates the majority of executive salaries. Non-cash compensation is eaiser to regulate. For example the government could caps the amount of options that a executive receives yearly. As long as they earn their keep I have no problem with them making a lot of money, but the Christian executives should be allowed to exercise their conscience. if they feel they are being paid too much. However keep in mind that is a matter of perception.

Bob Mason

October 03, 2008  12:24am

I don't believe it is immoral for a Christian executive to accept what the board offers. It is quite another matter for one to demand an ultra-high financial package. If the compensation is market-appropriate and the executive powers are exercised for justice for the company and justice within the company for its other employees, then I don't see a problem Where I think a Christian executive can shine is in what he/she does with that compensation. I believe that any of us who make more than we need, need to prayerfully evaluate how much we need to to provide for ourselves and our families and use the rest of our income for further expressing our love for God and for our neighbors as ourselves. What a testimony a $20 million dollar executive would have if (after taxes of $7million) at least $12 million went to mission and charitable causes, leaving $1 mil for living, retirement planning, etc.

Tom C

October 02, 2008  6:17pm

who cares what anybody makes! All of earth's rewards are meaningless at the end of our life where permanent reward based on our obedience is the real measure. Christ has freed us from even caring about this stuff, and jealously towards those with their temporary reward

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