American Pastime: OverPaying CEOs (Barry Ritholtz, author of 'Bailout Nation')

[swag]

http://www.ritholtz.com/blog/2010/04/american-pastime-overpaying-ceos/

There is a longish Sunday NYT article on CEO pay that I plan on reading. But before I get to it, I wanted to share some longstanding thoughts of my own on exec compensation.

While there was a temporary drop in exec comp caused by the market crash, we still have structural compensation issues that need to be addressed. For too long, we have been vastly overpaying CEOs of public firms for mediocre performance . Even worse, we have institutionalized this trend in recent decades. The result has been a massive transfer of wealth from shareholders to corporate execs.

In Europe, pay scales have been increasing modestly — but nowhere near the level of shameless theft here in the States.

Some 50 years ago, the highest paid executive (usually the CEO) made 30 times what the firm’s lowest paid employee did. This has changed over time, shifting upward in the 1980s. It has radically shifted the hi/lo pay ratio at American companies. Since 1999, as the average US paycheck has remained flat, C-level execs compensation has exploded. Just before the credit crisis crushed stock prices, the highest to lowest ratio was near 400 to 1.

Executives of public companies have been making a killing. Even worse, its for mediocre performance.

. . . more

[Myrina]

1. ... expand that to professional athletes as well ...

n/t