It certainly doesn’t seem to be very Christian. That said, I guess, our economy is a lot bigger than 1965.
Time to bring back the 90% tax rate on these CEOs.
Salary should be based on performance.
In 1965, fringe benefits made up a much more significant part of CEO compensation because confiscatory tax rates made a high salary far less desirable.
Perhaps you can link us to some data supporting that idea.
Corporate pay is ridiculous. The corporation needs to be seriously reigned in.
A lot of these highly paid people don’t last any longer than highly paid athletes, and for the same reason. At a point, their uniqueness is no longer unique.
The problem is that these people are also in control of the purse strings. That is, they are in control of other people’s wealth which mirrors the problem of government.
I had a friend who worked in Human services and it was his job to independently assess CEO and other very senior management salaries. He knew if he decided that they were worth large amounts of money he too would be remunerated well and he would gain a reputation where other big corporations would headhunt him so that he could independently assess they should have a large salary also.
He moved from large company to large company making huge amounts of money just be giving each high flyer incredible salary increases.
Not sure what the answer is but it isn’t for government to take money off CEO’s in tax. The money belongs to the company. A way has to be found where high management and executives can’t virtually write their own rules on compensation.
Why not? Are you not aware of the principal agent problem?
It’s called a worker cooperative.
Absolutely. Corporations are creations of the state. They are given limited liability. The executives aren’t (generally) personally or financially liable for what they do. They make ridiculous salaries even when they do a terrible job. The power of corporations needs to lessened. Why is it so many corporations incorporate in Delaware?
Shareholders are the owners of the company. They should be empowered to have more control. Worker co-operatives would be a small sub section of that where the workers were the shareholders.
They have done a lot over the years to take control away from shareholders. I saw how two banks were able to do it in my state. The shareholders didn’t want them to merge so the state changed the law so the shareholders couldn’t stop it. That is why I say we have a fascist state. The corporation and state work together against us.
I think our societies are actually more fascist than many people realise. It is just that Fascism is associated with National Socialists and nobody wants to be associated with the National Socialists.
Technically, for a CEO, it is the Board who decides compensation. In an ideal world, the Board represents shareholders, but in the real world, most corporations are dominated by institutional shareholders that own the largest blocs of voting shares. There’s been some ideas floated around about altering the way voting shares work, but it’s a tricky balancing act, because disrupting the traditional ways Boards of Directors are selected could lead to instability and ultimately to lowering investment by those with the most capacity to invest, who might choose alternative investment instruments to buying common shares.
Yes and the board often ‘outsources’ such decisions to independent consultants who are not really independent. I agree that most of the big companies are owned by share funds and it is tricky because it is sometimes those share fund managers that have leverage.
In Australia some companies started asking shareholders to approve suggested salary increases and the voting shareholders often said no and so they were not asked the next time.
I think in the Australian experience fund managers often said yes and the these were the ones who often had the controlling say. Also really big companies will often have shares in each others companies and so this gives them the incentive to agree to big pay increases as it becomes reciprical. In this way the board’s are having the say with their shareholders wealth because technically the shares in the second company are controlled by the first company and he board has the right to vote these shares.
You also have the issue where the board members are from other big corporations. For instance CEO of Apple Tim Cook is on Nike’s board. It is all very incestuous.