Really? Here is a survey of board compensation for 2008. (Warning, pdf). On page 6 we see that average cash compensation for a director of a public company is $46,252, up 8% from 2007. Nice raise. I fly across the country to do NSF reviews for about $700, after hotel. (Gummint pays airfare.) I don’t think it would be too painful to fly for this kind of money - those that have to go that far, that is. How many days of work does this entail? How many directors have actually caught corporate malfeasance or stopped dumbshit ideas like super leveraging for a takeover?
Board chairs got a 15% raise on the average, even sweeter.
I’m on the Steering Committee for a fairly big conference. No pay, of course, but in the good old days we did go out for nice dinners, and they never sucked. Not as nice as boards get, I’m sure.
Some directors, like former politicians, no doubt get nominated to increase the perceived diversity of the board. But I really wonder about a CEO who would nominate a possible loose cannon.
I wonder why no one complains about the high salaries of actors and sports stars? Sports leagues go broke while athletes are paid multi-hundred million dollar contracts. Poor people pay $12 for a movie ticket, while Brad Pitt gets paid $5 million for a few month’s work. Cable TV bills are a significant part of the budget of poor people, and yet Ryan Seacrest gets $10 million dollars per season for American Idol, and Simon Cowell gets $20 million.
Why are there no marches against excessive entertainer salaries?
And isn’t it grotesque when these entertainers support limiting CEO pay? Michael Moore has a new movie out attacking Capitalism. Why should he be allowed to make any more money than, say, a camera man in one of his movies?
If a CEO is never worth more than 2X the pay of any other employee, should we also pass a law forbidding any actor from being paid more than 2X scale?
If I recall correctly, I think your average board meeting is only one or two days long, but there is one every quarter. So it would be about 4-8 days of work a year.
If you really want to know, I can ask my dad how many ideas got vetoed. I suspect it’s not many, but for much the same reason that very few laws which make it out of congress actually get vetoed. Things which won’t past muster don’t get proposed to the board.
I never said that a nice dinner sucks. I said that they can afford a nice dinner themselves.
I’m not sure that there’s a lot of diversity to be had in business. Nearly all CEOs are middle-aged to older white men, and hence nearly all board members are older white men. And no, I assume that CEOs wouldn’t ask someone on to their board who they thought was an idiot or would just veto anything or whatever, but I fail to see why that’s a bad thing? Though, from what I have heard, in every board there is the one guy who just can’t seem to be made happy. You really can’t tell, when you hire someone, how he’ll actually be once he comes in to work. People who seem nice and reasonable on a conversational basis can suddenly turn into major assholes once you get them in what they perceive to be their bailiwick. So, like I said, it seems to be that in general you get at least one hard case in every board.
Higher marginal tax rates might lower out of control executive compensation, I’m talking top marginal tax rates of 70-80-90%. Eliminate all the deferred compensation loopholes.
Oh, and corporations don’t pollute the air, water and ground either.
How are they responsible for better child mortality rates, especially since in America where ours is so low.?
Have you EVER read any sports discussion forum, anywhere? Particularly while there’s a strike/lockout going on? Or during the off-season when new contracts are being awarded, etc?
Are you aware that government is a service not a business? You don’t shut down a police department or a school or a library because they didn’t make a profit.
Because it’s a completely different issue (which you probably already know).
Nobody is suggesting that there be a limit on how much money a person can receive from other people. If I can convince people to buy a million dollars’ worth of my products or convince someone else to pay me a million dollars for my services, then fine - right or wrong, other people made their own decison of whether I deserved their money.
But what this thread is about is the issue of people having control of somebody else’s money and deciding to give a large amount of that money to themselves.
There’s only two groups that can do something like that: legislatures and corporate boards. If you feel board members are responsible enough to determine their own salaries do you think that congessmen are also? And if you think that there should be an external limit on how much of other people’s money congressmen can give themselves, why don’t you think the same rules should apply to board members?
The board of directors and the stockholders are powerless. Their power is theoretical, but they have not had any power over management in decades. Management has it set up so there are no downward pressure on wages and bonuses. They have set it up that way. It is not an accident. The boards have interlocking members. The compensation committee answers to management. The stockholders have never had real power. There is only one group to blame for runaway salaries and bonuses, the execs themselves.
Board members are not random people off the street. Board members own significant portions of stock (ownership) and have a genuine vested interested in the company.
The phrase “board members controlling somebody else’s money” makes no sense.
If I buy Microsoft or McDonald’s stock, I buy it knowing that the board members are making big management decisions on my behalf. If I buy enough stock of a company, say 51%+ , I might even demand a board seat and be part of the decision process for all things including determining CEO pay.
Yep, the “powerless” board directors fired Carly Fiorina as CEO of Hewlett-Packard. Another “powerless” board of directors fired Gil Amelio as CEO of Apple. And Michael Eisner former CEO actually left Disney totally on his own. He just made it appear as if the Disney board fired him because being fired is more newsworthy than just resigning quietly.
Yep, board of directors powers are all an illusion. :dubious:
Yeah, but I think it’s different for other reasons. I could make all kinds of populist cases against high salaries for sports figures and entertainers. For one thing, sports leagues often receive large government subsidies in the form of tax-free land, free stadiums, road construction, or outright subsidies in cash form. They are increasingly freezing out poorer people and catering more and more to the wealthy by converting their arenas to remove cheap seats in favor of expensive sky boxes and the like. So you have a situation where people are taxed to provide entertainment to rich guys and to pay sports stars outrageous salaries - in many cases, bigger salaries that any CEOs make.
Why isn’t this a burning leftist cause? Especially since pro sports is one of the main entertainment sources for the poor?
The same can be said for TV and movie stars. Ticket prices are skyrocketing, because the cost of making movies is skyrocketing, and a large part of that has to do with salaries at the top. And even worse from a left-wing standpoint, the average wage of actors is about $6.00 per hour. Roughly minimum wage. Why not tax all those rich actors and TV people, and use the money to pay social benefits to the poorer actors? Someone in this thread said that the range between the top and bottom salaries in a company should be no more than 2X the lowest salary. Shouldn’t that apply to entertainer salaries as well?
Really? Then why was the left up in arms about the bonus money that was supposed to be paid to the sales force at AIG? This money was earned exactly in the way you just described.
Except that the other people always have the ability to fire them, and if they pay themselves too much, they will go broke or they will price their products out of the market. So there are checks and balances in place.
Compare this to the NHL player’s association going on strike and shutting down an entire league and taking away the entertainment of millions of people and damaging local businesses in every city because they don’t want a salary cap imposed on them by management - a league where even first-year rookies are making over a million dollars a year. Why doesn’t that get your egalitarian ire fired up?
Congressmen are using taxpayer money. They have the power to raise more money by force if they need to. The same is not true of a corporate board. They live and die by the decisions they make, and are ultimately responsible to the shareholders and the market in general. The shareholders don’t even have to vote to get rid of them - they can simply sell off their shares if they believe the company is being mismanaged. The falling share price acts as a signal to the people the company deals with that there is something wrong, and the company loses customers, sees its debt costs go up, etc.
Companies always need somebody acting as the lead manager the company. It doesn’t matter if you call them “CEO”, “interim-CEO”, or “General Executive Secretary”, “President”, or “Senior Principle” – these are all just labels.
It’s like you’re saying the cure to prevent auto repair scams is to eliminate car mechanics. Yes, banning car mechanics from society would stop auto repair scams but gee whiz, you overlook one minor issue: car owners still want SOMEBODY to fix the cars!
But banning them from the Board of Directors would not prevent high salaries.
The star quarterback of an NFL team is not on a BoD of the franchise owners and the top-billing movie star is also not on the BoD of a film studio. And yet they still command astronomical salaries, and it’s often more than what Fortune 500 CEOs earn.
The issue of the CEO holding a seat on the Board of Directors is a red herring. Also in many cases, the CEO holds significant stock so denying him a board seat which would help him steer the company and protect his stock investment would be illogical. Therefore, Bosda Di’Chi of Tricor’s suggestion doesn’t solve anything.
The reason the horrible left was up in arms when the financial pros got huge bonuses and salaries was because the company was losing billions of dollars. Then when we bailed them out they took the bonuses from tax payer money. How wrong can they get before a right winger will say thats enough. When you are in charge of a profitable company and it loses a ton of money, you should have a drastic pay cut or get your ass fired. The fact that they still got bonuses and kept their salaries, is telling about how much they have set up the system for their benefit. The employees and stockholders get hosed. The execs win.