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MODEST PROPOSAL: Make CEO pay like pension based on long term performance

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yurbud Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Sep-17-09 02:03 PM
Original message
MODEST PROPOSAL: Make CEO pay like pension based on long term performance
I've expressed variations of this idea before, but instead of short term bonuses, CEO's should be paid bonuses over ten or twenty years, or even over the rest of their lives with the amount varying according to the current performance of the company, and of course ending if the company goes bankrupt.

One way to do this is to give them stock with no-options: no option to sell, especially to pump and dump with insider trading.

This would encourage them to build the company for long term success and even to withstand incompetent management after they leave.

Whatever the problems are with this, it would be far superior to the current system where bonuses are given out regardless of performance, with execs acting more like parasites draining blood from their host until it's dead instead of nurturing it's real (not paper) growth and stability.

Someone will say that you can't force them to keep stock, but that is essentially what they do to employees with pensions. Then when they fuck up by giving too much money to their cronies or not hiding their bookkeeping sleight of hand well enough, their employees are left eating dog food when they retire.

The only real problem I see with this is there aren't enough MBA's who don't actually know how to make things and provide services.

These sociopathic trust fund babies didn't rake leaves and flip burgers as kids like the rest of us, but instead stole money from their mummy's purse to spend on coke and whores. Now they just steal from their shareholders and employees.

It could be that in the long run, this would restore something like a meritocracy to our financial elite that would replace the current clusterfuck of country club Caligulas.
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DJ13 Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Sep-17-09 02:18 PM
Response to Original message
1. Executive pay needs to be completely divorced from stock gains
Even a longer term bonus based on stock performance wont eliminate the shortsighted way US companies are being run, as the executives will just rush to make deals in the last few quarters before the clock runs out to show they deserve their bonuses.

I dont know what the answer is, outside of eliminating stock exchanges, which wont fly in this capitalist worshiping country.
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yurbud Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Sep-17-09 02:46 PM
Response to Reply #1
4. with my system, you would set that long term compensation ahead of time so
any last minute manipulations wouldn't matter, only the long term performance would.

Hell, you could even make it renewable every ten years. The current board could decide if the past CEO's decisions still deserve ongoing compensation.
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guitar man Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Sep-17-09 02:23 PM
Response to Original message
2. How about this?
CEOs get minimum wage with the opportunity to make a crapload of money in incentives and bonuses IF the company performs. And by performing, I don't mean slash and burn jobs and outsourcing to other countries, that's the easy lazy way to riches for one person. No, by performance I mean that the company makes a profit while doing the best it possibly can for the people that produce that profit, the workers.

It can be done, it just takes a leader that is actually willing to work at the job.
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yurbud Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Sep-17-09 02:43 PM
Response to Reply #2
3. that's what I was getting at with my idea--the trick is tying pay to LONG TERM performance
which tends to weed out their usual scams and sleight of hand.
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FiveGoodMen Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Sep-17-09 03:21 PM
Response to Reply #3
7. The trouble is that the CEOs are working for the stockholders
who mostly seem to care about the short term.

Investment is at the heart of this. The idea that "Your money should be working for you."
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MercutioATC Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Sep-17-09 02:53 PM
Response to Original message
5. Here's an idea:
Treat CEO pay as the domain of private enterprise and let the shareholders change things if they don't like them.

:eyes:


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Selatius Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Sep-17-09 03:08 PM
Response to Original message
6. In Germany, they have two safety mechanisms that I really think we ought to examine.
The first mechanism is Germany's rather significant co-management law.

That is, the law requires that half of members of the board of directors be elected by the employees of the company, and the board head generally represents the shareholders, so worst case, just under half the board is represented by the workers. This has gone a long way towards curbing management abuse of labor because now labor has major influence over the decision-making process. If there is a dead-lock, the chairman of the board casts the tie-breaker, typically in favor of the shareholders' interests. This is lacking in the US for the most part.

The second mechanism is that in Germany, it is prohibited to be a member of the Board of Directors or even Chairman of the Board and also be CEO of the company. This is considered a conflict of interest. If you are Chairman of the Board, and the Board also sets compensation packages for its CEOs and lower executive-class management, then it is clear as day to anyone that the person could then try and simply give himself a bigger paycheck.
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yurbud Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Sep-18-09 02:17 AM
Response to Reply #6
8. that almost sounds like a co-op. I would go further and say exec at one company
can't be board member of another to avoid reciprocal favors.
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