Our "public duty"

Today's WSJ summarizes the history of executive compensation through stock options. The story is partially disturbing because it highlights what my Humanities teacher taught: "power corrupts, and absolute power corrupts absolutely." But it's even more disturbing because it points to our own lack of responsibility.

These CEOs were absolutely corrupt, in the sense of lacking a fiduciary responsibility to their public shareholders. In a wide range of companies from UnitedHealth Group to Citigroup to Disney, the behaviors of the CEOs have been unwarranted. As fiduciaries, these CEOs should be held to a "prudent man" level of compensation.

Yet, my high school lessons indicate that the real responsibilities lie more fully with the board of directors and major shareholders. The board is responsible for the oversight of the CEO and the shareholders for the board. All too often, though, shareholders, and thus boards, are more focused on simply getting the price of the stock to go up. When shareholders, such as myself, invest more time and energy on good governance then we are less likely to see such egregious behaviors. Analogous to voting, it's our "public duty."