HomeLatest ThreadsGreatest ThreadsForums & GroupsMy SubscriptionsMy Posts
DU Home » Latest Threads » Forums & Groups » Main » General Discussion (Forum) » OK, Explain This To me Li... » Reply #5

Response to FreeJoe (Reply #4)

Tue Apr 10, 2012, 02:01 PM

5. Well, a libertarian would be wrong on both counts.

That's not "the CEO's money"; that's compensation that the board sets (usually, other CEOs and execs), which almost always comes at the cost of raising workers wages or hiring new ones, and which he gets no matter how good or bad a job he does. That's part of the package/contract. If the stock price goes down under his tenure, he still gets that money:


There not a lot of evidence that CEOs with pay packages larded with goodies do a better job than those with more modest paychecks. One study found that companies that allow personal use of corporate aircraft, for example, tend to underperform the stock market by about 4 percent a year, over the 10 years covered by the study. (Considering that the total return of the S&P 500 index averaged about 10 percent a year over the past eight decades, that's not small change.)

So how do these packages get approved? Corporate boards usually include a subset of the board called the compensation committee. The problem is that many corporate directors (so-called “inside” directors) report to the CEO. So their judgment is not exactly impartial. (“Hey, boss: remember that raise I asked you for? One reason I need it is because I’m staying late working on your generous pay package for next year.”)

When it comes to “outside” directors (people who work for other companies), some CEOs pack their boards with friends and cronies. So the board’s final decision is not always, well – above board. The Sarbannes-Oxley law took some steps to set rules on this, requiring certain new reporting procedures and holding directors personally liable if shareholders squawk.


Unfortunately, there is little in the proposed rules that would empower shareholders to do anything when they believe a CEO is overpaid. When it comes time to vote for new corporate directors, the candidates almost always run unopposed. Challenging those incumbents is expensive, and your average outraged shareholder doesn’t have the time or money to take on the company’s hand-picked candidates. Rare examples of challenges are usually funded by large shareholders like disgruntled money managers or well-funded corporate “raiders.” So disclosure of outsized pay, by itself, will do little to strengthen the link between CEO pay and performance.

It's not so much "earned" money, it's negotiated money. I pretty much consider it legal robbery and Freepers defend this crap.

Secondly, some experts have estimated the cost of the Bewsh Tax Cuts for the rich to be @ $2 trillion dollars. If the wealthy are undertaxed (which they very much are) and are leaving billions on the table every year, who makes up that difference? You guessed it: Joe and Jane Q Sixpack's kids AND the social programs that help them.

Reply to this post

Back to OP Alert abuse Link to post in-thread

Always highlight: 10 newest replies | Replies posted after I mark a forum
Replies to this discussion thread
Arrow 13 replies Author Time Post
HughBeaumont Apr 2012 OP
Ohio Joe Apr 2012 #1
EC Apr 2012 #2
HughBeaumont Apr 2012 #3
FreeJoe Apr 2012 #4
LineLineNew Reply Well, a libertarian would be wrong on both counts.
HughBeaumont Apr 2012 #5
bongbong Apr 2012 #7
bongbong Apr 2012 #6
HughBeaumont Apr 2012 #8
Motown_Johnny Apr 2012 #9
Typical NYC Lib Apr 2012 #13
SmileyRose Apr 2012 #10
Zax2me Apr 2012 #11
guitar man Apr 2012 #12
Please login to view edit histories.