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 tomj1225Premium
join:2001-12-17
Allentown, PA | CEO Pay But they are worth that much. Like anything else, it's worth what someone else will pay for it. From Ebay items to Donovan McNabb to the Wii, it's worth what someone else will pay for it and not always the value it brings. There's value in having stability at CEO, even if the company is losing money. It's up to the board to determine what they're paid, and when he gets the boot out. If you don't like it, don't buy the product or the stock. | |
joeMI
join:2006-08-15
Mcmillan, MI | said by tomj1225:... It's up to the board to determine what they're paid, and when he gets the boot out. ... LOL. Most CEO's sit on multiple boards. It is extremely rare for a CEO/President to be booted out unless there is a scandal or the board member(s) need to cash in a favor.
Most executive perks can be followed from company to company. It's the old vote for my pay package and I'll vote for yours.
If you list out the board members of the top 500 companies, you'll see the same names over and over.
It's this circle of people that buy Congress and often access to the White House. Most of the time, they give money to both sides because they don't care who is there as long as they have access and hopefully influence over legislation.
So don't expect any legislation to cap executive pay.
How did we get here? Mutual funds. In the old days, stockholders were directly involved. Today, we have turned it over to fund managers and it is all about short term growth and stock price.
Just my two cents,
Joe | | |
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| said by joeMI:How did we get here? Mutual funds. In the old days, stockholders were directly involved. Brilliant observation. Since the '80s (and especially '90s) the stock market has been awash in liquidity like no other time in history due to the influx of hands-off, set-it-and-forget-it 401k money. This creates greater stability and predictable upward momentum compared to the pre-401k days when investing in the market was less widespread, and normally tied to one company (not a basket of 500 or 2000 stocks).
Not only is there more money injected into the market without any interest in how companies are run, but the stability and upward momentum this regular injection of "disinterested cash" directly benefits officers of corporations whose compensation is usually in the form of stock grants. I.e., without this massive dose of predictable liquidity the value of their compensation would be less predictable.
I think we've all benefited by more money going into the stock market. But, it hasn't been without its downsides, such as (as you noted) more control over corporate governance handed to a few mutual fund managers by the disinterested "investor" (who's really just a "saver").
It always gets back to not whether socialization of the market (by influencing money into stocks, for example, through Public Law creating 401ks) is beneficial, but whether it benefits some more than others, and how to capture that fact when it comes time to pay for the cost of government (which creates these artificial, non-free market opportunities).
A progressive tax always seems to be the easiest way to do it.
Mark | |
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