Kevin Costello and Thoughts on Executive Compensation

This morning, I saw this Pittsburgh Tribune-Review article which cites Kevin Costello, an Ariba Executive Vice President who runs the commercial organization, as having made "$4.3 million in total compensation" last year as well as having had "a $213,540 loan the company had made" to him forgiven. Now, I have no idea what contributions Mr. Costello has made at Ariba specifically nor would but I pretend to judge his performance / compensation, but I do know that a few years ago before Ariba, he was a strong performing partner at Andersen Business Consulting (he joined Ariba right as the firm was going down over Enron). At Andersen, top consulting partners made $1-2 million a year tops (and I do not know if Mr. Costello was in that category). Perhaps there is a perfectly good explanation for his compensation package at Ariba (based on his revenue contribution, new client acquisition metrics, contribution to profitability, etc.), but the delta between both packages is what caught my eye. We all leave jobs / industries to make more money, but the question becomes in a publicly traded company whether an executive's compensation package is commensurate with actual contributions benchmarked against industry metrics. At the same time, you'll never get any argument from me that the best sales executive should not be the top paid person inside a software / services company. But it's ironic here that given Ariba is the company in question, that the executive team at FreeMarkets had an issue compensating top sales people at or above market, at least until the later years. Clearly, that earlier policy was not carried over to Ariba.

Jason Busch

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