That’s fine, however, it doesn’t address the presence of a structural positive feedback loop, nor does it address the fact difference in risk between a private concern (where a sole owner should rightfully be able to push up salary as much as he likes) and a public one (where consideration as to debt risk insulation SHOULD mitigate some of that).
It seems to me, by the way, that you’re projecting a mishmash of positions onto people in this thread that they haven’t taken. Please stop doing that, it’s making me crazy (for example, I understand fiscal risk, thanks, as differentiated from “losing your job” risk).
Were the Teamsters not a union? Was Presser not their president? Is that not what you were looking for? What does 1987 have to do with anything? Did you think all swans were white because all the swans you’ve seen were white?
It’s an interesting article, rather lengthy but worth the time if you’re going to be the guy that rushes in to defend unions. Now you know that at least one union with a flawed payment structure.
Since the topic of the thread has to do with disparity of wealth distribution in America now, I’m not sure what relevance you think showing that one guy may have been paid a lot of money while President of the Teamsters over 30 years ago has to the discussion.
You certainly knocked down that strawman you set up. I’ll give you that. :rolleyes:
Now you’ve thrown in a new concept “consideration as to debt risk insulation.” I’ll need you to expand on that if you want it addressed. I can’t tell if you mean public as in publicly traded or public as in we all suffer.
As to the first point, it’s not a positive feed back loop. It should be no surprise that the guy that owns the company sets his own salary. If he wants to milk it, that’s up to him, as he faces the losses when it fails.
If ownership is shared, it’s up to the group to decide executive compensation. And again, if they all want to give themselves raises, so be it. If the company fails as a result, they as owners lose their investment.
I don’t know what else to tell you other than, “it’s good to be king.” If executive compensation hurts the company, that’s bad for the CEO (and the execs). That’s your negative feed back loop at play. If another company can gain a competitive edge by rewarding execs differently, you’ll see the market quickly swing that way.
For the record, a lot of American companies are studying Japanese (and German) companies because they are losing market share. One thing they look at is executive compensation and reward structures. The other is the involvement (or lack there) of unions. But the one thing they know they’re losing out to is UHC.
There are a lot of people reading this thread, many of them have in the past confused investment risk with personal risk. And lately it’s been driving me crazy too.
You don’t know the first thing about how business works, do you?
We’re not talking about private companies. We’re not talking about public companies where a few people own the stock. We’re not talking about all CEOs - the vast majority of CEOs are just scraping by and not making a fortune. Got it?
For large, publicly owned corporations, except in the case where the CEO is also the founder, the CEO and the board own a trivial amount of stock. The owners don’t decide compensation, compensation committees made up of directors (appointed by the CEO) do. Many of them are CEOs also, and raises for their CEO will raise the average salaries which means bigger raises for them. Zeriel’s comment about positive feedback is exactly right.
And if the CEO screws up, who gets hurt? The workers and the real owners, the stockholders, that is who. While it would be nice if directors get sued for abdicating their responsibilities, it seldom happens. The CEO, if he gets fired, usually departs with a nice parting gift in the tens of millions of bucks. Sure, he is hurting for wiping out stockholder value.
Who sets policy? The CEOs. Role play as a CEO for a minute. Now, you have a choice - take $10 million in compensation, or maybe put some of the money into improvements. Now, if you are a founder, you might actually care about the company enough to do so, but if you got hired in, and expect to leave - well, you’re worth that $10 million, aren’t you? Hint: CEOs rarely get canonized.
Japanese? I see why you used a 1987 cite. (You can find a recent one just as damning.) You must be in a time warp to 1987. Back then I sat through lots of management meeting about how the Japanese are eating our lunch. Today, not so much.
But I agree about UHC.
BTW, the Teamsters are to Unions what Enron is to companies. Does the name Jimmy Hoffa ring a bell? Using them as an example of a typical union is pretty clueless.
emacknight, your behavior in this thread is obnoxious. You’re injecting an unnecessary level of personal hostility into the debate:
Here you’re being rude AND apparently lowering the level of discussion on purpose:
And as far as this goes:
I don’t think you have picked the correct way to deal with this. You’re entitled to make your own judgments about everyone’s integrity, but you appear to be going about it in a way that creates more problems than it solves. There’s no requirement that posters only argue in favor of what they believe instead of doing what you’re doing - arguing against whoever you believe is being dishonest - but it confuses the issue and it’s an annoyance to a number of posters, apparently including yourself.
I could warn you for being a jerk for the posts above and I could arguably call some of this behavior trolling. I will give you one chance to correct this. Stop making personal comments, dial back your rhetoric, and adjust your strategy.
You have cause and effect reversed. The Gawd-Gunz-and-Gheys diversion from lower- and middle-class economic self-interest is ultimately a top-down phenomenon (from the Republican “Southern Strategy” of the Nixon era onward). The specific targets are incidental, and variable as transient fashions change; to mistake race, sexuality, etc for the underlying issues is rather like supposing that shadows generate solid objects.
The proof is the ease with which the diversion du jour shifts from race to sex to street crime to drugs to gun control as rapidly as the identity of the other side of the Eternal War shifts between Eastasia and Eurasia. Actual popular sentiment doesn’t turn on a dime; astroturfed causes do.
I have no idea what the correct way to deal with this is. Even in the post before yours, a personal insult towards me and then use of the term CEO as singular object worthy of scorn.
If I replace *CEO *with *union * and make a similar statement, it becomes obvious to those involved.
CEO == bad
union == good
There can’t be a discussion on executive compensation if the premise starts that way.
See post 85, middle section, in which I expound what I understand the risk differences between publicly traded corporations and private companies. I’m not sure, incidentally, how the law works in the case of “privately traded corporation, with one or a few shareholders”.
See, I think the problem here is that you’re arguing from a market perspective (the market will kill companies who pay their executives too much), but I’m arguing from a structural perspective. Now, granted, if the (probably majority) minor shareholders (i.e., you and I and our group) decided to collectively band together and figure out the system of shareholdership, there wouldn’t be a structural positive feedback loop. But the vast majority investing in mutual funds and 401ks takes out that aspect of it–and heck, I do it too, I only invest in individual stocks that are in my own field of expertise when I KNOW they have something going on.
Look, each company has a pool of resources that they have available to pay their workers from top to bottom. When (due to the way stock trading is structured) most of the people voting their stock are multi-millionaires, those people are naturally going to put into place policies that give as much of that pool as is practical to themselves. Presuming (and this is a very very rough presumption) that “average stock ownership in companies” splits the same way wealth in general does, right now that means that something like 40% of the stock is owned by the top 1% of the population. If the bottom 99% voted as a block they might have a chance of putting in a board that would make a more egalitarian pay structure–but next year, because the CEO still gets paid more, the top 1% will own 40.5%. And so on. I mean, just looking at the last decade, wikipedia asserts that in 2001, the top 1% held 38% of the wealth. Lately I’ve seen reports (for which I’m chasing cites atm) that the top 1% owned 42% of the wealth in 2007. That’s not a slow rate of change.
The worst part from my point of view is that I can’t even fault anyone’s actions. Hell, if I were made king tomorrow, you bet that IT professionals would be getting some bennies out of it–as you say, it’s good to be the king.
Of course, this is all kinda tangential to the initial topic of whether or not wealth disparity is bad, but examining where that disparity comes from is one method of determining whether it’s bad or not. If it IS, as I theorize, somewhat structural, then that component of disparity is at best unfortunate but not indicative of malice.
Oh, no doubt, but I’m not one of 'em. I’m in the “knows enough that I’m seriously considering an MBA” camp.
I guess the answer is that they enter into the contract freely and of their own choice.
The other half of the question is that their governments establish national holidays. The US seems to have a lot of kind-of-holidays like Presidents Day that some take off and others don’t.
I got the sense Canada made the conscious decision to have something in each month, in so far as one Premier established “Family Day” to give people a day off in February.
So I wouldn’t consider it a union issue, but a political one.
I was commenting on your evident lack of understanding of CEO pay. You are free to give evidence to prove me wrong. But please do some research first.
As for CEOs, you might have missed this sentence:
[QUOTE=me]
We’re not talking about all CEOs - the vast majority of CEOs are just scraping by and not making a fortune.
[/QUOTE]
You appear to believe that most CEOs of the publicly owned companies being discussed won significant amounts of stock (on a percentage basis.) You seem to believe that CEO compensation is an issue voted on by stockholders. Neither of these things is even close to being true. I think it is hard to have a serious discussion when you are laboring under such misconceptions.
Glad to see personal insults are alive and well in GD.
So yes, I did see this, and it made me wonder what the fucking point of the rest of your post is.
Now we’ve moved from the general “CEO” to just a subset, because as you’ve now asserted, “the vast majority of CEOs are just scraping by.”
Would you care to back up that statement with any relevant facts? If what you said is true, it makes me wonder why people are freaking out about executive compensation and the apparent disparity between CEO pay and either their counter parts in Japan or their employees at home.
So all this discussion about CEO pay and the vicious positive feed back cycle really only pertains to a small subset of all CEOs, is that correct? Then who cares?
Okay, then so what? The vast majority of CEOs are just scraping by, and a few are able to make more.
You’re half right: How is it the workers get hurt? Stockholders (the owners) will certainly get hurt. So why would they invest in a company with a low-quality but over-paid CEO? Who backed that horse?
Seldom? How often is seldom? Are you going to bother backing that up with a cite? How often would you like them to get sued?
Again, are we talking about all CEOs or just that small subset? Do they all get nice parting gifts in the “tens of millions of bucks” or are you just talking out your ass?
I’d also like to know why shareholders invested in a company with such a shitty CEO that had such a nice contract.
Rarely? Is that like seldom? Which CEOs are you talking about?
The way you describe it I have to wonder why there are any companies left. It seems all (or that tiny subset) of CEOs have the choice of a nice fat short term payout, or the long term rewards from a well run company.
It’s almost as if you’re using Enron as an example for all (or the tiny subset) of CEOs.
A lot of cases? How many cases? How much stock? Were these the vast majority of CEOs that are just scraping by, or the other kind?
Who decides the decent multiple? The lowest paid worker is probably making the same any any company since there is a minimum wage, and bound to be at least one person making it.
No, not capitalist at all, or even logical. How much money are you even talking about?
Care to back this up with anything more than your assertion?
Nope
A lot of cases? How many? And how much is a load of money? Is that like a load of horse shit?
Think of a CEO hired from outside. Do you think he gets a significant amount of stock (percentatewise) when he gets hired? Enough to be of any voting influence?
That would be an interesting debate. We could look at the numbers for overseas companies which do not have bloated CEO wages, or even for US companies in the '50s where they were pretty reasonable. You might look at median salaries. Not mean ones, though, since bloated CEO pay packages move the average up.
Tens of millions of dollars in many cases, including the top paid officers, whose salaries rise with the CEO salary. Sometimes these are not that huge in relation to revenue, but quite large in relation to profitability. Especially in bad times.
Here is an article about Carly leaving HP. Despite the fact that the stock price went down after she bought Compaq, despite the fact that everyone in the place hated her guts, she got $21 million for leaving. Her great skill is shown by the fact that she hasn’t had a real job since. Sure, she has been on a few boards, and she was a spokeswoman for the McCain campaign (until she was silenced for putting her foot in once too often) and she ran for Senator for California - badly, I’m happy to say.
Gee, I wish I could screw up badly enough to pull $21 million for leaving.
CEO pay started rising when we changed the tax code to stop allowing the deduction of salary at $1 million. This helped trigger a rise in bonus plans. Then the stock market started rising, and the grant of options became popular, especially since if they were granted with only time-based vesting there was no tax impact on the firm (if you tried to use performance based vesting, the company had a tax hit).
So we created a world of exec comp where variable pay was more important, and were options were the most popular, and then we added a wonderful rising stock market so that almost everyone who got options in the 80s and 90s could make money on them.
Then we the people wanted to REALLY keep an eye on exec comp, so in the early 90s we required that 3 years of exec pay be reported in an easy-to-read table in the def-14A proxy statement. THAT triggered even more exec comp consulting (which I did for many years). CEOs or the Compensation Committee of the BOD would hire me to analyze their exec pay vs peers, and would pay me to further write comp plans for these CEOs and top execs so that their base pay was at median, but their variable would pay them highly for high performance.
The CEOs would hire their OWN consultants to make sure that they were making as much as their peers too. It was so easy to gather information, everyone knew what each other was making thanks to public SEC documents. Once Edgar hit the net, we could even dial in and get the latest data instead of purchasing copies from Disclosure.
Now, if you knew what all of your peers at your firm, and what all of your peers at other firms were making - you might start asking for more pay as well. CEOs have almost perfect market information - the rest of us do not. Tower Perrin, Watson Wyatt and Hewitt don’t give away their data on employee pay. Exec Pay, however, is legally public information (for public companies).
Last point - you can’t complain about Union payouts (or defend) while also complaining out CEO payouts (or defend). In both cases, both sides negotiated an agreement. Blame the idiots who signed off. The Unions and the CEOs simply took as much as they could get, including a nice golden parachute.
Report me then. I’m just commenting on your posts and your lack of responsiveness to others.
I’m not the only one in this thread distinguishing privately held companies from large public ones. No movement involved.
The small subset consists of the CEOs of companies with hundreds of thousands of workers and tens or hundreds of billions of market value. That’s why.
Really? How do workers get hurt? By not getting raises, by losing benefits, but getting furloughed, by getting laid off. Duh. Meanwhile, as in the case of Gannett, the CEO gets a nice raise for cutting costs. It doesn’t take an industry titan to fire someone. And I’m not saying that layoffs aren’t necessary - sometimes they are. But common decency says you don’t give yourself more money and thus cut profitability when you cut jobs to increase profitability.
Execs always say things will be great until they release the numbers. And it is a rare analyst indeed who downgrades a company because of CEO pay.
Here is an article on board liability and executive compensation from Business Week. Though it is designed to alarm, and is target to board members, it gives no data. I haven’t found a lot either. When reading, remember this was written in 2009, when there was some chance that boards and execs would be held accountable. Not any more.
We have the example of the banks, who lost tons of money and stockholder value through excessive risk. Heard of any suits against the directors who let it happen?
Example given in the other post.
You ever actually buy any stock? Analysts try to figure out what a company’s plans are, and, as we saw in the bubble, they are often wrong. Plus they get sweet talked by the company investor relations department. Plus they make lots of money too, so they aren’t exactly representatives of the downtrodden masses.
Power. man, power. Even better than money, I expect. People running around telling you you are wonderful, limos, jets, being in the papers. Who’d give that up? If you screw up so badly you get fired (like that clown at BP) you still get a bundle.
That’s why CEOs suck as politicians. They are used to telling their boards and their staffs what to do. When they become a governor, the legislature tells them to drop dead - and they can’t be fired.
The difference is that negotiations between a union and an employer are, by and large, adversarial in nature while negotiations between a corporate board and a potential CEO are not. In fact, sometimes the members of a given board may be CEOs of other companies where the potential new CEO is a board member. It’s a bunch friends hiring their friends.
Feel free to provide actual information. For example, how often is “sometimes?”
Are negotiations between the board and the CEO ever adversarial, or is it always a bunch of friends? Are you referring to the CEOs that are just scarping by, or the bloated ones?
Is it *ever *possible for union leadership and management to be “friends?” Could a positive feedback loop exists there or is that impossible?
That is called an interlocking directorate, and does not have the same impact as you think it does. When you add in the impact of the Clayton act where you can’t serve on the BOD of a company that is in your field if the combination of your firms would cause issues for the Trust Busters - you don’t get this big “hey Jim, I will vote for your pay if you will vote for mine.”
More realistically, you get, “Dammit, Fred makes X and me and this company are worth twice that and you better match it.”
I have heard the latter, never experienced the former.
