Executive Pay limitation!

So I guess the question now is, can you get qualified (and effective) people to run these companies for $500k/year? I don't know the answer to that, but I think it alters the basic business model in a very interesting way.

While i do think executives are paid way too much, this is a purely cosmetic measure, and is not dissimilar to calls for the limiting of or rolling back of wages to union employees. The pay of either union employees or of executive suite employees is a very small fraction of the cost of an automobile, to use a glaring recent example. Calling for limits on the pay of union employees or of executive employees has more to do with ideology than it does with reality.

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Yet the huge salaries are not only a result of executives taking good care of each other. Other countries also have "interlocking directorates" of top executives serving on other companies' boards, yet CEO salaries are not nearly so high as in the United States. Top executives in Canada, Japan, the United Kingdom, and Germany are paid only half as much as their U.S. peers (with pay including salaries, bonuses, perks, and long-term incentives). You can find individual executives in those countries who take home millions, but nowhere do top executives as a group come close to the U.S. corporate elite. So what's the difference? Are U.S. executives more valuable than European or Japanese executives in producing profits? The answer lies not in their productivity, but in their power.

Over many decades, U.S. companies have created a highly unequal corporate structure that relies heavily on management control while limiting workers' authority. Large numbers of bureaucrats work to maintain the U.S. system. While in the United States about 13% of nonfarm employees are managers and administrators, that figure is about 4% in Japan and Germany. So U.S. companies rely on lots of well-paid managers to keep poorly paid workers in line, and the huge salaries of the top executives are simply the tip of an iceberg.

This highly unequal corporate system is buttressed by an unequal political and social structure. Without a powerful union movement, for example, there is little pressure on Washington to adopt a tax code that limits corporate-generated inequality. Several other high-income countries have a wealth tax, but not the United States. In addition, U.S. laws governing the operation of unions and their role in corporate decision making are relatively weak (and often poorly enforced). Without powerful workers' organizations, direct challenges to high CEO pay levels are very limited (as is the power to raise workers' wages). So income distribution in the United States is among the most unequal within the industrialized world, and high executive salaries and low wages can be seen as two sides of the same coin.

Arthur MacEwan teaches economics at UMass-Boston and is a D&S Associate.

http://www.dollarsandsense.org/archives/1998/1198macewan.html

An executive knowledgeable enough to bring such a company back from the brink is going to make sure he/she knows the full story before taking the job.

Do you disagree, that paying people exorbitant amounts, while shielding them from liability for crashing the company into a wall, ...

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Remember, the prospective executive who would accept this deal would be agreeing to do so BEFORE they take the job, see the books and discover what cancer lies within...

I doubt that very much.

SINCE THIS HIT THE NEWS WIRE, THE STOCK MARKET HAS DROPPED 100 POINTS.

Any relation?

... I understand the argument that if they are to get taxpayers' money, they have to meet the requirements of any grants they receive. That problem can be obviated by simply making any payments to corporations loans, as opposed to grants. Am i wrong in thinking that these hand-outs are to be considered loans? If they are not, i don't think the government has any business handing out taxpayer money to any privately held joint stock company.

Yes, whatever the law in any jurisdiction reads, shareholders have the power to control executive boards, if they have the will and the knowledge to do so.

At no time have i predicted doom. Keep your straw man arguments to yourself.

It was aftr the fact that the executives received millions in compensation, supposedly for their "good works" of the previous year.

I neglected to mention that i'm not as naive as you seem pleased to imply. The Chicken Little cries of capitalists about their impending destruction dates back to laws 200 years ago which limited child labor, and have continued right through the history of labor organization, safety and health legislation, workers' compensation legislation, unemployment compensation legislation and environmental protection legislation. In every case, the capitalist rend their garments, gnash their teeth, and then head down to the bank with their profits. I suspect, in fact, that i'm better informed about this aspect of ideological propaganda than you are.