Sunday, April 10, 2011

A Say On Pay

The New York Times notes:

Executive Pay: A Special Report The Drought Is Over (at Least for C.E.O.’s)

... Rarely has the view from the corner office seemed so at odds with the view from the street corner. At a time when millions of Americans are trying to hang on to homes and millions more are trying to hang on to jobs, the chief executives of major corporations like 3M, General Electric and Cisco Systems are making as much today as they were before the recession hit. Indeed, some are making even more. ...

In just nine months, Philippe Dauman of Viacom was paid $84.5 million, more than any other C.E.O. made all year

I'm not going to launch into a unionist rant here about coddled, overpaid oligarchs. Maybe all these fine folks deserve every penny they earn, I donno. What I want to talk about is share holder input as regards executive pay packets. I'm an owner of a bunch of stock shares, thereby making me a part owner of a number of large companies. So shouldn't I have, under logical rules of corporate democracy, some kind of vote regarding which exec gets paid what?

... Under new rules included in the Dodd-Frank financial regulations, nearly all public companies must now give shareholders a say on executive pay. Analysts and corporate governance experts are wondering how these votes will play out, even though companies are under no obligation to heed their shareholders’ advice. ...

Of course, I think maybe the new rules have already had some impact. When the top dogs' pay and accompanying perks get a little too ludicrous ... and maybe get a little too much publicity ... corporate compensation committees back off.

Our fine, multi-national conglomerates often defend executive pay policies by pointing out that their boards of directors are the ones who set the top wage levels, and the directors are voted on by stockholders, blah blah blah. But let's be clear on how directors get to be directors in the first place. The CEO and/or Chairman of the Board selects them, then the stockholders (mostly) rubber-stamp the selection. And what director, happy with his or her stipend of 100 grand a year to attend a few meetings and look over some documents, is going to vote contrary to the Top Officer's express wishes?

Not many, I'd think. And based on the evidence, not many do.

I don't really anticipate that the new Dodd-Frank rules are going to be any kind of panacea to counter the pay levels our American CEOs have come to expect. Forget that in most other places in the world, corporate chieftans don't make anywhere near the wages that execs in the United States do. Here in E. Pluribus Unum, it's become the norm that the Alpha Employees get top dollar, and to suggest it should be otherwise makes you a commie.

I take the long view of these things. Sure, today's chief execs enjoy the largesse that happened for Captains of Industry back in the 1890s, but nothing is forever. At some point, when the top 1% is living the high life in this or that gated community, and the rest of us are down in the flatlands fighting for table scraps, the dynamics might change a bit.

Anyway, it's pretty to think so.


Floyd Norman said...

They live behind those gates for reason. Commie, I'm not, but I know enough about history to know that the poor unwashed masses can only take so much. One day, they'll reach their limit.

Anonymous said...

Communism was a threat trumped up by big business as a label on those who demanded a say in how they were treated and paid. Not that communism didn't exist (it really scared "free marketers," if not capitalists). Like the fake "communist threat" in Central America in the '80's.

There is NOTHING to fear in demanding the leaders of these companies keep sight of those who work for them, consume their products, and live in the environment in which these products are made and abandoned. That's not "communism," it's just good stewardship, and is the America Way.

Ayn Rand was a promiscuous liar--and her "theories" have been well disproven time and again.

Anonymous said...

There is NOTHING to fear in demanding the leaders of these companies keep sight of those who work for them, consume their products, and live in the environment in which these products are made and abandoned. That's not "communism,"

No its not.
Communism is a massive failing because often the worst aspects of human nature are the most prevailing. Throughout its history communism has been a ruse for angry people to think that this "won't be the case" for their new economic paradigm and in every case its been a boot on the face of humanity worse than any free market system.

People who defend communism derail what could be a fruitful and intelligent debate about functioning economies. They should be ignored.

Anonymous said...

"worst aspects of human nature are the most prevailing"

Just like Wall Street as it kicked off the bush economic debacle.

Anonymous said...

...and yet there weren't millions of dead bodies in ditches.

So, now you can continue on about communism. Everyone is so interested.

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