Posted on 04/15/2008 5:45:26 PM PDT by Diana in Wisconsin
Los Angeles, CA (AHN) - More U.S. executives are saying that salaries of their chief executive officers are way too high, according to a survey by Korn/Ferry International. On its 2007 survey only 21 percent of the polled executives said their CEO was overcompensated. The figure rose to 34 percent in the 2008 study.
The study also discovered that 80 percent of executives believe stockholders must be consulted on the level of executive pay. This new finding is a result of dipping share prices amid a continued rise in CEO compensation.
Russel Miller, managing director of Korn/Ferry's Executive Compensation Advisors, in a statement, said, "The tumultuous economic environment highlights the challenges with getting pay for performance right... The business community continues to focus on aligning pay and performance, and companies are having mixed success against this objective."
Meanwhile, the AFL-CIO partly blamed the "outrageous pay packages" for bankers for the current credit crisis that had spread to different parts of the globe. The labor group, which owns major shares in public companies, wants a legislation that would mandate shareholders' say on executive compensation.
A bill was approved by the House in 2007, but got stuck in the Senate. Even prior to the legislation of such a law, 100 U.S. companies including General Electric and Wal-Mart Stores are slated to decide on "say on pay" proposals on spring.
Richard Trumka, AFL-CIO secretary-treasurer, in a press briefing, quoted by AP, said, "When CEOs are paid obscene amounts to make bad decisions, it hurts average Americans who hold mortgages, who have bank accounts and who are invested, such as through their pension."
Show of hands: Who thinks their own 'Boss' makes too much money? LOL!
Yep. Let's get GOVERNMENT involved in the salaries of PRIVATE BUSINESS. That'll fix things. Yeesh!
Let’s get the stockholders involved - it’s their capital. They can take those salaries and pay them out in dividends.
If private businesses start thinking that some CEO's make too much, then private business will correct the problem.
As they should.
I have mixed feelings about that. A corporation is a legal construct, defined by the government and given a number of protections and privileges. It’s not a person, endowed by his Creator with certain inalienable rights, etc. Apart from what the government grants it, it has no rights whatsoever. If a group of businessmen want the government to incorporate their business, they should expect government interference.
If we truly had a free market, then the compensation for CEO's would be much lower given the vast pool of candidates from which to select.
Over the past few years there has been an explosion in the number of directors and VPs and CXO's ... replace X with any letter of the alphabet.
One could try and make the case that only a small percentage of these newly minted veeps and directors are qualified to run a company. But I think it would be easier to make the case that either noone is particularly qualified, or that it is difficult ahead of time to pick the winners from the losers.
Until CEO's prove they are winners, they should receive the compensation of a wannabe.
When huge well-respected centuries old corporations bite the dust due to a few bad choices from a "super-achiever" CEO, then the system for picking CEO's is broken.
There is a lot more evidence suggesting that we are currently mired in cronyism rather than steaming ahead into the bracing breezes of a free market.
I agree. CEO compensations are too high.
I am not for Govt. capping it. However, average worker as usual is getting screwed. Small Share holders have to figure out a way to fight back.
when did these guys become such a pitiful band of suck-ups?
The jackasses at the soon to be obsolete AFL-CIO are fine ones to talk! Talk about a bunch of lazy, overpaid “workers.”
Amen.
I was beginning to think I was the only one left around here that still understood this basic quid pro quo.
“Hmmm, I wonder how much compensation AFL-CIO union leaders get.”
My first thought, too!
“If a group of businessmen want the government to incorporate their business, they should expect government interference.”
True. That’s why all of my business ventures are LLCs, and I will NEVER hire anyone but my husband or son to “work” for me. ;)
The government already interferes with business something fierce. Just saying a business isn’t a person so the govt can do what it wants is a cop out. If the government can dictate CEO pay then it can dictate anyones pay.
Let the owners of a company make the decision. After all its their property. Or perhaps you don’t support an individuals property rights?
Unfortunately, the illusion is so ingrained that the people that ought to be the real owners, the shareholders, hardly act like ones or are treated like ones.
“There is a lot more evidence suggesting that we are currently mired in cronyism rather than steaming ahead into the bracing breezes of a free market.”
We’re also, I suspect, mired in a culture of rewards for failure in the form of outrageous golden parachutes, pensions, and stock options.
We’re also, I suspect, mired in a culture of insider trading and stock dumps before the bad news hits the wires - the CEOs get paid, but the pension funds and investors get screwed, and the workers get laid off.
We’ve also just witnessed the most massive transfer of wealth from the middle class to the wealthy (banks) in the housing markets, EVER - and those same bankers are now lined up with their hands out for tax payer dollars.
Let’s face it, Corporate America hasn’t been this outrageously and shamelessy greedy, uncaring, and willing to pillage in the name of their private bank accounts since the robber barons, and the current administration seems loathe to go after them.
And every day, more workers are laid off, stock prices decline, wages are stagnant, and inflation is taking firm control.
Mired in cronyism? We’ve sunk to the bottom of the swamp, and rotting.
I work for a company where CEO compensation is fair, but not outrageous, and they earn the money they make. We’re doing well, but even our wages are frozen, new hires are rare, and we’re bracing for the next couple of years. We are in a VERY small minority, as far as any of that goes.
The key? We’re privately owned. No stock pumps and dumps and shenanigans over stock prices, and no revolving door on the executive suite - our CEOs stay put.
If corporate executives truly believed in property rights then they wouldn't create corporations in the first place. They would design, manufacture, market, distribute, and sell products as individuals with all of the exposure to law suits, etc. that that would entail.
Fortunately for corporate execs they don't have to believe in property rights. They can hide behind their incorporation papers and do whatever they will with little or no threat of liability or prosecution.
Oh, and over time they can send locust swarms of lobbyists to Washington such that corporations now have more rights than individual citizens. Can you say Kelo?
How long has it been since consrvatives have been trying to get Washington to recognize fetuses as legal persons? Yet a stack of papers sitting in a vault somewhere now has more rights than the fetus ... or you or I ... or even dare I say an illegal alien!
“If corporate executives truly believed in property rights then they wouldn’t create corporations in the first place. They would design, manufacture, market, distribute, and sell products as individuals with all of the exposure to law suits, etc. that that would entail.”
If company owners wanted to run a company themselves they would. instead they hire someone else and determine what to pay that person.
So much Barbara Streisand "reporting" of "people believe ........." as "news."
I agree that the owners should make the decision, not the government. I regard the shareholders as the owners, though. The way things are set up now, small shareholders can be and often are effectively screwed out of rights of ownership (through dilution, reorganization, lack of transparency, windfalls for loser executives, etc.) This happens because the government makes it legal to do so, and investors are usually too lazy to figure out what it is they’ve bought. If they weren’t so lazy, though, the stock market would surely collapse. Better they stay lazy and ignorant.
I said that I had mixed feelings about the matter because the government invariably screws up everything it touches. That doesn’t mean that corporate boards can’t screw things up, too, though. In principle, laws to make them accountable for their screw-ups could be a good thing.
1) Every able-body citizen would be a private contractor
2) Some private contractors would be skilled at gathering together groups of contractors to accomplish major tasks such as launching a new product from scratch
3) All of the arrangements would be managed through individual contracts that could be severed at any time by mutual agreement or if either side was found in violation
4) Some contractors would be good at rating other contractors so that the amalgamaters would be able to quickly identify the contractors they want to help launch their new products.
There is no need for corporations. No need for special protections. No need for tax breaks or freedom from lawsuits.
Everyone would be required by the marketplace to keep their skills honed and their ears perked for the next great business opportunity.
The amalgamaters at the top would stand to gain or lose the most.
This is what I imagine a true free market system would tend towards.
Our current system is headed in the exact opposite direction.
Read some Schumpeter: In a democratic system, over time, corporations and governments become indistinguishable from one another.
“If the government can dictate CEO pay then it can dictate anyones pay.”
By Golly, YOU get it! This ties in directly with the “Mandatory Minimum Wage” local Governments want in Liberal-run cities across the land.
I hate Liberals. Truly. I do.
“I regard the shareholders as the owners, though.”
Thats nice, because they are.
” The way things are set up now, small shareholders can be and often are effectively screwed out of rights of ownership (through dilution, reorganization, lack of transparency, windfalls for loser executives, etc.)”
Then the small shareholders should exercise the option of either NOT buying into the company or they should SELL their ownership interest.
“In principle, laws to make them accountable for their screw-ups could be a good thing.”
There are laws making them accountable. The laws aren’t enforced. Its already illegal to misstate income but they do it. Its already illegal to lie on loan paperwork, but its done. And everyone knows it.
More laws are not the answer and more government oversight isn’t either. Exercising ethics and enforcing current laws would go a long way.
“There is no need for corporations. No need for special protections. No need for tax breaks or freedom from lawsuits.”
Until you get rid of lawyers there is a need. Corporations make the large entities we have today possible. Without them we wouldn’t have a company like Northrup, GE, General Dynamics, or Enron. And yes I threw Enron in on purpose.
http://www.unionfacts.com/unions/unionProfile.cfm?id=106
Leadership
Top 10 International AFLCIO Leaders & Staff (by Salary)
Name Title Total Compensation
John Sweeney President $ 291,718
Linda Chavez-thompson Executive Vice President $ 241,307
Richard Trumka Secretary-treasurer $ 233,260
Robert Welsh Ex Assistant To Pres $ 184,642
Jonathan Hiatt General Counsel $ 179,472
Bradley Burton Executive Asst To S/t $ 174,505
Jerald Zellhoefer European Representative $ 169,846
Phillip Fishman Assistant Director $ 165,680
Jose Alvarez Regional Director-ne $ 164,081
David Watson National Field Rep $ 159,626
[show all officers & salaries]
Source: Department of Labor, Office of Labor Management Standards LM filings
UnionFacts.com is committed to 100% accuracy. Please contact us with factual corrections & comments.
So now we have corporations that all started out with a well-defined raison d'etre. In this sense IPO's are very much like those voyages to America.
But why should corporations exist long term? If they are forever splitting and recombining in all sorts of interesting ways. If they sometimes split when they should be combining, and combine when they should be splitting. If they change their names, their philosophies, their ownership, etc. such that they cease to resemble the original corporation in any way, shape, or form.
All along they get special tax, regulation, and legal protections.
If unions are wrong to fight against right-to-work laws, and if farmers are wrong to ask for subsidies to not grow crops, then why is it OK for corporations to ask for tax breaks?
The answer: because they can.
http://www.unionfacts.com/unions/unionProfile.cfm?id=106
Leadership
Top 10 International AFLCIO Leaders & Staff (by Salary)
Name Title Total Compensation
Richard Trumka Secretary-treasurer $ 233,260
Poor guy, he hauls-in less than Obama’s missus.
“If unions are wrong to fight against right-to-work laws, and if farmers are wrong to ask for subsidies to not grow crops, then why is it OK for corporations to ask for tax breaks?”
IMO your comparison falls flat. Unions have become legal entities similar to corporations. Lately they have little to do with representing the ‘worker’ and more about political power.
Farming subsidies are paying them NOT to do something. The sole purpose is to artificially support prices and provide artificial income (ie welfare).
Tax breaks for corporations are paying them to DO something. That something most often results in additional jobs, income and more taxes for the local they are done in.
Corporations are not evil. Nor are CEOs who take outrageous pay. If someone is stupid enough to offer a stupid amount of compensation then the CEO would be stupid to refuse. Of course the stupid people usually make these offers because they are greedy and want outrageous return on their measly investment this quarter.
this is about hurting the competition.
Remember folks, if you can cap sallaries then the exec you pay for is less likely to leave.
I’ll take your word for it that there are already laws to make them accountable. But then, as you say, they’re not enforced, so they’re pointless. I guess we have to wait until things get desperate enough that people who will enforce them are put into office, or as you suggest, market forces come into play and the system fixes itself. I’m not holding my breath on the latter.
Right now we have an ill-informed electorate and, as I said, an ill-informed shareholder base. The current sick state of affairs depends on both, and it’s in the selfish interest of corporate boards to keep things that way. Corporations exist for our benefit; fixing this mess would be to our benefit as well.
“Corporations exist for our benefit; fixing this mess would be to our benefit as well.”
Corporations exist for the benefit of their owners not for the general public. The general public benefits in many cases because they have better products to choose from.
The only mess that needs to be fixed is the lack of enforcement. The internet boom was ripe with corruption. The housing boon was ripe with corruption. Everyone looked the other way so money could be made. Greed and lack of ethics. CEOs who allowed this to happen should be prosecuted just as those of Enron and Worldcom.
What I am saying is that the fact that CEOs make as much as they do for being as randomly successful/unsuccessful as they are suggests that we don't have a truly free market.
Any time the government interferes in the market place it becomes less free. Sometimes it is a sacrifice worth making, such as laws to prevent people from dumping nuclear waste wherever they might want to.
However, it is still OK for me to design, manufacture and sell stuff without first incorporating myself. Most people would say I would be stupid, but I can still do it.
The advantages of incorporation are twofold: there are certain advantages to formalizing the relationships among all the participants, and over time the government has decreed that certain benefits are granted to corporations.
There is no God given right for corporations to specific tax breaks. Why should someone willing to risk law suits, etc. have to also pay higher taxes just because he doesn't incorporate?
You may be right that on-balance if we are going to give breaks to some entities it makes more sense to give them to corporations than to farmers or unions, but then you are arguing tax policy, and others could come up with myriad arguments why the farmers or unions are getting their fair share of breaks.
What I am arguing is that there is something wrong with the system such that over time CEOs are being paid as much as they are given the supply/demand of potential CEOs and the lack of any relationship between compensation and performance.
Rather than enacting more laws to try and limit what CEOs can make, it might make more sense to simplify the laws that apply to corporations. It could be the case that the tax laws and regulatory scheme are so complicated that CEOs can make more money for their shareholders through financial finagling that through creating better products and services.
Maybe the vast majority of laws and tax incentives that are being sold to us as pro-business are in fact pro-lazy-don't-make-me-have-to-actually-create-new-risky-products-and-services-business.
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