17
   

Executive Pay limitation!

 
 
squinney
 
  1  
Reply Wed 4 Feb, 2009 12:40 pm
@BigTexN,
Actually, in order for your example to be a real comparison it would have to be:

Doctor, I have cancer. I'll pay you $12,000,000, give you a private jet, send you around the world and provide a lush executive apartment if you'll treat me ...and a bonus of $20,000,000 if you cure me.
0 Replies
 
Cycloptichorn
 
  2  
Reply Wed 4 Feb, 2009 12:41 pm
@rosborne979,
Quote:
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.


The answer: yes. There is nothing so special about these executives that makes them able to perform jobs that others cannot.

And recent events have shown that those who are taking home the big bucks are in fact no more competent than anyone else, hell these idiots ran our entire economy into the ground while chasing profits from trading paper around.

I maintain my original position that ever-increasing executive pay - connected to the TARP program or not - is a cancer on our society and deserves to be addressed. The idea that you can't hire people to do jobs for 500k a year is ridiculous.

Cycloptichorn
0 Replies
 
Cycloptichorn
 
  1  
Reply Wed 4 Feb, 2009 12:42 pm
@Setanta,
Setanta wrote:

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.


I don't agree that it is purely cosmetic.

Do you disagree, that paying people exorbitant amounts, while shielding them from liability for crashing the company into a wall, encourages the sort of problems we see today?

Cycloptichorn
JTT
 
  1  
Reply Wed 4 Feb, 2009 12:54 pm
Quote:

...

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


emphasis is mine
0 Replies
 
BigTexN
 
  1  
Reply Wed 4 Feb, 2009 12:56 pm
@DrewDad,
Quote:
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.


A company will NOT open its books to any prospect off the streets without an agreement in hand.

Otherwise, competitors would send their people over there to see whats going on and then report back how to best take advantage of the situation.

Please tell me you don't live in a home with wheels on it in my Great State.
0 Replies
 
JTT
 
  1  
Reply Wed 4 Feb, 2009 01:00 pm
@Cycloptichorn,
Quote:
Do you disagree, that paying people exorbitant amounts, while shielding them from liability for crashing the company into a wall, ...


That ultra-liberal Setanta might but Foxy, Okie, Gob1, Ican and the rest of the crew hate this sort of abuse of conservative ideals and they are probably going to start some new threads soon decrying said abuse.
0 Replies
 
Setanta
 
  1  
Reply Wed 4 Feb, 2009 01:01 pm
@Cycloptichorn,
If i were to agree, i would necessarily accept several propositions which are assumed in your question. Those would include a contention that these people are paid exorbitant amounts, a contention that they have been shielded, and that they have "crashed their companies into a wall". In fact, it is the business of the shareholders to determine if the compensation to executive officers of a corporation are appropriate to the services they render, it is not the business of the executive branch of the government. Far more could be usefully accomplished by activism to organize shareholders to hold their employees responsible for their actions. Shareholders elect the corporate board, either by voting directly, or by signing a proxy for those who will vote. This is an area in which i don't believe government has any business to intervene.

If the President were to ask that executive officers who wish to act responsibly would voluntarily accept a reduction in their compensation, i would be a lot more comfortable with the idea. 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.

In times of war, executives of corporations have voluntarily accepted a token payment of one dollar per year, to show that they are dedicated to the goal. I would far rather see voluntary action than to see it mandated by government, which seems to me to be just another intrusion into the private affairs of private corporations. Before anyone derides the notion, three of the heads of the five major banking corporations in Canada have voluntarily offered to return some of the millions of dollars in compensation which they receive each year. In the case of the Canadian banks, it can't even be reasonably alleged that these men were responsible for the poor performance of the banks they head--they were blind-sided by the economic disaster in the United States.

I simply cannot agree either that money should just be handed over to private corporations, nor that the government has any place in making decisions which are properly the right of the shareholders.
BigTexN
 
  1  
Reply Wed 4 Feb, 2009 01:03 pm
@JTT,
Quote:
Quote:
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.


JTT, what would possess you to believe that any firm would lay open ALL their books, ALL their business plans, ALL their competitive information and potentially the depth of the cancer within their firm, to anyone who ISN'T on the payroll and doesn't have a confidentiality agreement?

What possible reason could you have for doubting that?

Waiting...waiting...nothing.
0 Replies
 
Setanta
 
  1  
Reply Wed 4 Feb, 2009 01:06 pm
@Thomas,
Wonderful idea, Thomas . . . call center management translated to the executive suite.
0 Replies
 
Woiyo9
 
  1  
Reply Wed 4 Feb, 2009 01:11 pm
This looks like a done deal.

Obama caps executive pay tied to bailout money
Obama imposes cap on executive pay for companies getting federal bailout money

* Jim Kuhnhenn, Associated Press Writer
* Wednesday February 4, 2009, 1:10 pm EST

WASHINGTON (AP) -- President Barack Obama on Wednesday imposed $500,000 caps on senior executive pay for the most distressed financial institutions receiving federal bailout money, saying Americans are upset with "executives being rewarded for failure."
<font color='#808080'> AP - President Barack Obama looks on as Treasury Secretary Timothy Geithner speaks about executive compensation, Wednesday, Feb. 4, 2009, ...</font>

AP - President Barack Obama looks on as Treasury Secretary Timothy Geithner speaks about executive compensation, Wednesday, Feb. 4, 2009, ...


Obama announced the dramatic new government intervention into corporate America at the White House, with Treasury Secretary Timothy Geithner at his side. The president said the executive-pay limits are a first step, to be followed by the unveiling next week of a sweeping new framework for spending what remains of the $700 billion financial industry bailout that Congress created last year.

The executive-pay move comes amid a national outcry over huge bonuses to executives heading companies seeking taxpayer dollars to remain afloat. The demand for limits was reinforced by revelations that Wall Street firms paid more than $18 billion in bonuses in 2008 even amid the economic downturn and the massive infusion of taxpayer dollars.

"This is America. We don't disparage wealth. We don't begrudge anybody for achieving success," Obama said. "But what gets people upset -- and rightfully so -- are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers."

http://finance.yahoo.com/news/Obama-caps-executive-pay-tied-apf-14250829.html

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

Any relation?
Cycloptichorn
 
  1  
Reply Wed 4 Feb, 2009 01:13 pm
@Setanta,
Do American shareholders have the right to vote on executive pay in most American Corporations? I had been under the understanding that they were not allowed to do so in most situations. IIRC Barney Frank tried to pass some leg. making this the law a while back, and failed.

Tens of millions of dollars in compensation a year is an exorbitant amount, under any measurement. If one can retire for life, and live relatively well, on a year or two's compensation, the amount is exorbitant. I think we have a right as a society to limit the upper end of compensation just as we do the lower end - and it will be the fiscal conservatives who are bitching about both, no doubt. Somehow their protestations of doom have never quite come to pass, even when we add on more regulations and more laws limiting them.

Cycloptichorn
Cycloptichorn
 
  0  
Reply Wed 4 Feb, 2009 01:14 pm
@Woiyo9,
Quote:

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

Any relation?


Probably. So what? I'm sure the fat-cat network of rich kids doesn't like this news. But the minute they screwed up their businesses so bad, we had to step in, what they liked really stopped being a consideration.

Cycloptichorn
0 Replies
 
Setanta
 
  1  
Reply Wed 4 Feb, 2009 01:15 pm
@Cycloptichorn,
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.
squinney
 
  1  
Reply Wed 4 Feb, 2009 01:19 pm
@Setanta,
Setanta wrote:

... 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, you are wrong in thinking these handouts are considered loans.

I don't like handing it out either, but it was presented as dire, total collapse of the entire world financial market, and that pieces of sky would be chopping off our heads if the government didn't step in. It's done.

It was aftr the fact that the executives received millions in compensation, supposedly for their "good works" of the previous year.
Cycloptichorn
 
  1  
Reply Wed 4 Feb, 2009 01:27 pm
@Setanta,
Setanta wrote:

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.


Are you a fiscal conservative?

I merely refer to the never-ending complaints from the fiscal conservative community that every tax raise, every limitation, is a death knell to business innovation and success. So far their complaints have been largely without merit, as our economic growth does not seem to have been impacted much by said limitations.

Cycloptichorn
0 Replies
 
Setanta
 
  2  
Reply Wed 4 Feb, 2009 01:32 pm
You're very snotty today. As a matter of fact, i am a believer in the separation of the government from the private sector. I oppose the notion that government should be able to interfere in decisions which are properly those of a corporate board, which is elected by and responsible to shareholders. I also oppose the notion that businesses should feed at the public trough, as has been done now for generations. There is corporate welfare already in place, and defense contractors have incredible benefits written into their contracts. One of the most incredible, and about which most people don't know, is that if the government brings legal action against a holder of one of these contracts, the government pays their legal costs. If we sue a corporation for cheating the taxpayer, we also pay for them to defend themselves.

I don't think corporations should receive government handouts, and i don't think government has any right to interfere in the internal workings of private joint stock companies.
FreeDuck
 
  1  
Reply Wed 4 Feb, 2009 01:34 pm
@squinney,
squinney wrote:

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

(Pat on the back...) Good job getting us those millions in bailout dough. Here's a little something for your trouble.
0 Replies
 
Setanta
 
  1  
Reply Wed 4 Feb, 2009 01:35 pm
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.
Cycloptichorn
 
  1  
Reply Wed 4 Feb, 2009 01:48 pm
@Setanta,
Setanta wrote:

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.


I'm quite sure you are, as you seem to be well-informed on nearly every subject. Or at least those subjects you choose to discuss, which amounts to the same thing in the end to those engaging in discussion with you.

Who decides which decisions are fall within the purview of a corporate board, and which do not?

Also, I'm having a hard time finding the laws allowing Shareholders to directly vote on compensation; Wikipedia was no help. Can you advise me as to which laws allow a vote on compensation by the shareholders?

http://en.wikipedia.org/wiki/Say_on_pay

Cycloptichorn
0 Replies
 
Setanta
 
  1  
Reply Wed 4 Feb, 2009 01:50 pm
Smart ass . . . i've already replied to that. I have not said that shareholders can vote directly on compensation, and i have pointed out that shareholders elect corporate boards, who do have the power of the purse.
 

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