Expect a lot more of this in the coming year as more and more ordinary Americans are "left behind". And the Heads We Win, Tails We Still Win continues at the top of corporate America. Again, let me throw out the hairbrained idea of if like Germany we limit executive compensation to say 50x the median worker. (they limit it to 7x) "Free market" capitalists will say, then the "best and brightest" will leave. I ask - to where? The only exclusions would be people who founded their own company and thus can enjoy the fruits of their labor as they take their company public - the shares they get at IPO should more than make for enough wealth for 50-100 people. Then if they are unhappy with the 50 to 1 ratio for CEO pay they can leave and start a new company - which would be good for US innovation. Most of the rest of the CEOs are highly paid babysitters. Is Coke really going to go out of business if some guy in middle management ran it? I know it won't change - and after a year or two of anger things will continue on their old path, but just asking the questions - i.e. how can German companies stay in business of they are led by such incompetents who somehow only made 7x the average wage? And ... do you think the median wage in America would go up if the CEOs own wage was tied to the median in their company? I think that answer is very easy to figure out....Let the shareholders decide? We've tried that system for a long while and it hasn't done a thing. Other than Carl Icahn and a few others who actually try to buck the system, it's broken. Most shareholders with scale are institutions who don't want to get involved in this, their job is to make money - not be corporate activists.
- Arizona design teacher Marsha Minniss believes the culture of paying sky-high salaries to U.S. executives is "insane." Public health director Paul Pisinski from Massachusetts thinks multi-million dollar payouts for CEOs are "unfair" and "unwarranted" as a global financial crisis deepens. Minniss, who was out shopping in upscale Scottsdale, Arizona, agreed. "The whole thing's insane and I think the average American feels that way." (note to Ms Minniss - the average American however does not pay for the political parties or lobbyists)
- Texan market stall holder Alan Smythe just wishes someone would pay him a million dollars to run a Wall Street financial firm into the ground. "They gave the guy from (American International Group) $40 million. Give me a million and I'll run it into the ground faster than that, I'll run it into the ground in six months," he said.
- The United States places a high value on the pursuit of wealth and many speak of the American Dream in which anyone can achieve riches and success through hard work—and resentment toward the rich is comparatively rare. But as U.S. lawmakers consider a $700 billion bailout for Wall Street using public money, many on Main Street are turning against the culture of lavish executive pay, analysts say.
- Last year CEOs of companies in the Standard & Poor's 500 index on average took in $10.5 million in pay, 344 times that of the typical U.S. worker, according to the Institute for Policy Studies and United for a Fair Economy
- "It's an issue that people are outraged about across the political spectrum," said Sarah Anderson, an IPS analyst specializing in executive pay. "The public feel outraged, but they feel disempowered. They don't know what they can do about it," she said.
- Up until now, the justification for golden CEO payouts has been that they recognize performance in a competitive international market. But as firms buckle under in the present crisis, and taxpayers are being asked to pick up the tab for some of their worst errors, many Americans are questioning that long held belief.
- "I do not think it holds up," Pisinski told Reuters. "I don't think it's fair, I don't think it's warranted for anybody to be paid the bonuses and benefits that they have received, especially in light of the fact that they seem to be rewarded for failure."
- "I don't see that leaving it to shareholders has led us anywhere. Shareholders, all they care about are their profits," she said.
- "People that work hard and start their own companies, if they make a lot of money, great. But if they're not doing a good job, then no," she said, although she drew the line at laws to curb executive pay. I just wish (executives would) have a conscience and take care of the people who work for them."
2 comments:
Good commentary. I think the issue is much bigger than just CEO pay. There is a growing divide in the US between the have's and have nots. Pretty much anyone reading this blog is a have. We may not all have CEO type money, but most of us aren't living paycheck to paycheck and have all of the 'things' we want. I think we got to see the other side when Katrina hit. We saw 3rd world conditions in a city within our borders. Now, it took a natural disaster to showcase those conditions, but those people weren't haves prior to that storm. Another symptom of this divide is the countries push towards socialism. I think this occurs when you remove the middle class stepping stone for the have nots to become haves.
The kicker is that I can't think of a solution. You can't just redistribute wealth, because it is not effective. The real solutions lie in education and the removal of ignorance. The issue there is that the government doesn't generally want *real* education because too many 'leaders' rely on the ignorance of the populace they lead.
What a great Saturday!
The issue is that many CEOs **seem** to be paid big bucks for doing little, except attending golf games and shoveling their problems onto the next administration. Sounds like our own political process, doesn't it.
On the face of it, limiting CEO pay, as Trader Mark points out will not drive CEOs elsewhere. However, it does fly in the face of our capitalist system.
I'd like to see a performance based pay system. But, not like the 'good old boy system" we have in place right now. Just as employees have to rate themselves and meet guidelines, I;d like to see CEOS have **real** goals outlined for them. These goals should include a healthy deferred pay, which is based on not just this year, but future value of the changes put in place today. A possibly easier system might be to pay them with a large percentage of stock ownership and the caveat that they can only sell in increments... Or after a specified period of time.
jegan
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