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.
The question I have now is: Among the CEOs that would be involved in the bailout, do any claim a strong religious identity? Because although Barney Frank frames the issue as a patriotic one, others might see it as an ethical and therefore perhaps moral or religious issue — particular if that CEO belongs to one faith community or another.
In their 2008 book, Good Intentions, journalist Bob Smietana and Baylor University economics professor Charles North argue that Christians can influence the issue of CEO pay through the clout of faith-oriented institutional investors. Smietana and North write that “the gap between rich and poor should trouble” Christians, and that Christians should “live out biblical concerns” over economic exploitation in general and the executive pay issue in particular “by keeping a watchful eye over companies where their churches have some clout.” The authors borrow Warren Buffett‘s argument that better corporate governance will only come when large institutional investors act like owners and exert pressure over managers and boards. Smietana and North write:
Many Christian organizations are institutional investors — via pension funds and church endowments, for example. GuideStone Financial of the Southern Baptist Convention has over $10 billion in assets. Thrivent Financial for Luterhans manages $70 billion in assets. Other denominations, religious colleges and organizations such as the Knights of Columbus — all of these manage investment funds. Together, these religious organizations could wield the market clout of Buffett’s ‘large institutional investors.’ They could push for reasonable approaches to CEO pay in the large companies whose stock they own.
I hope that other religion journalists will begin to look at how religious groups are — or are not — engaging these economic issues at a moment of crisis.
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Andrea Useem is publisher of ReligionWriter.com (where this article first appeared), a freelance journalist, and editor based in Northern Virginia. She holds a Masters of Theological Studies from Harvard Divinity School and a Bachelors degree in religion from Dartmouth College.
