Xerox chairman and CEO Anne Mulcahy on CEO pay

If there's one CEO on the planet who earns his or her pay (ahem ... other than the CEOs of Computerworld and IDG, of course), it's Anne Mulcahy, chairman and CEO of Xerox. Mulcahy, a 32-year Xerox veteran who saved the company from collapse when she took the CEO reins in 2001 and engineered a remarkable turnaround, has earned every penny. And there were lots of them.

Mulcahy ranked No. 13 on Fortune's 2007 Highest Paid Women list, and both Fortune and Forbes put her 2007 compensation at roughly $13.5 million. According to Forbes, her salary was a mere $1,320,000, but she received  a bonus to the tune of $12,139,450. And that's not to mention the $25.6 million in stock options.

I interviewed Mulcahy in Boston yesterday, and we discussed CEO pay in light of the fact that both presidential candidates have staked out positions on the matter. Sen. John McCain says, "Under my reforms, all aspects of a CEO's pay, including any severance arrangements, must be approved by shareholders." Sen. Barack Obama, meanwhile, is calling for passage of his legislation to "require corporations to hold a nonbinding shareholders vote on compensation packages offered to executives."

I asked Mulcahy, who identifies herself as a Hillary Democrat who's now for Obama, which position she favors. She responded as follows:

The principles of what this thing on pay are all about are things that I do think are important. I think transparency is important, and companies have to be into the role of clear and full disclosure as it relates to compensation. I think the principle of performance-based [compensation] is hugely important. Pay is not an entitlement - it goes with performance. It should be taken away in light of non-performance or issues companies have. So I definitely believe that we should have a set of principles that companies live by with regards to CEO pay.

I'm not necessarily sure than an advisory vote on pay is the most productive use of our shareholder voices. I do believe that is the job of a compensation committee, and that shareholders now have the ability, with majority voting, to say "yea" or "nay" to the people that they put on boards, and that that's appropriate. Executive pay is a complicated set of decisions and discussions, and suggesting we're going to solve it with advisory votes from shareholders - I don't think that's the way it should be addressed.

My interview with Mulcahy will be posted on our site within the next several days. Keep an eye out for it, because it'll be worth the read. She's one of the most impressive CEOs I've interviewed in a long time.