Comments on: Leave pay to companies, shareholders

By: B.Free

B.Free — Thu, 11 Jun 2009 20:16:04 +0000

The US needs to stop supporting a corporate aristocracy. The gross and outrageous compensations for some of these Top Managers is nothing more than the US paying to support these individuals in a lifestyle they have become accustom to. By no means are these individuals worth this much to the corporation. No one could be worth these kinds of compensations. Some are over 400 times the average compensation of their employees. No corporate board could begin to justify that one person is worth that kind of compensation. Yet, that kind of compensation exists today in publicly traded corporations. What else would you call it but the support for a corporate aristocracy?

Publicly traded companies fall under federal laws. The Government does not have to “own” a piece of them to set rules upon them in order to protect the public.

The compensation of top management should be tied to the compensation of the average employee. Let’s face it they all had a part of the success or failure of the business. Some countries have put limits on publicly traded company’s top management at 10 times the average employee compensation. Compensation would include salary, stock options, and bonuses. To compute this they take middle management, front line managers and their employees including all secretarial and office administrative staff and average their total compensation. No one in upper management can make more compensation than 10 times this amount. This value is recalculated each year to set limits on the next year. Within this limit salary, stock options and bonuses are paid. If upper management wants a raise, they need to raise the compensation of their employees.

This type of pay limitations provides incentive for profits and efficiency while ensuring the benefits of a job well done are given to those that do a good job. These benefits will flow up a year later. And I am all for upper management being given incentives to think in terms of the long haul by withholding some pay in the form of stock purchases.

I for one am against maintaining a corporate aristocracy. We need fiscal responsibility forced back upon the corporate industry.

By: Peter H

Peter H — Thu, 11 Jun 2009 16:40:21 +0000

I’d prefer to see the legislators look harder at tax, and tax minimization by top earners (I’m not against paying the market rate for top workers).
The government should ensure they are taxing all earnings fairly across the board (no higher rates of tax are needed, just make sure all earnings are taxed), and that includes all benefits accrued in the remuneration package. Sure there will be some difficulty on quantifying the shifting nature of shares and similar bonus schemes but that risk should be born by the recipient, not the tax department. It would in the long-run bring in more money than salary caps that’ll disappear as soon as the next hot topic hits the front pages.

By: Michael Holland

Michael Holland — Thu, 11 Jun 2009 15:27:50 +0000

James Pethokoukis wrote:

> Ultimately, it is shareholders and management who
> should decide what executives make.

Yes, and with the taxpayer money bailout, the taxpayer has effectively become a shareholder/investor, so if they want a bailout (*our* investment into *them*) to survive, they have to play by our rules. Otherwise, if they are not ok with their new investors’ tune, they are of course always free to tank in the sh*t storm out there. Be my guest.

By: First

First — Thu, 11 Jun 2009 15:00:03 +0000

Salary caps are needed to reel in and control the excessive and corrupting greed that plagues Capitalism. $1 million absolute maximum yearly income ($500 per hour based on a 50 week/40 hour work with 2 weeks unpaid vacation).
As we’ve seen in the Wall Street Journal, massive abuse and corruption is aided and abetted by high salaries. Two of the top earning hedge fund managers netted over $2 billion personal profits even as shareholder values plummetted.
Looking at another CEO Dr. William McGuire of United Health Group netted $1.6 billion in salary, stock options and benefits in 2006 ($800,000 hourly salary based on above 50/40 formula) to aid and abet his naked greed as medical premiums skyrocketed and continue to gouge American families.
Even GM’s former CEO Rick Waggoner who mismanaged GM into bankruptcy and was finally fired for his incompetence was awarded a $20 million golden parachute to reward his parasitic service.
When left to their own devices we see that CEO’s routinely use corporations as their personal cash machines, and have no loyalty to the long term viability of the corporation or shareholders.
The only practical solution to stop the excessive abuse in salary compensation is to mandate salary caps to encourage fair play and honesty in the business world.

By: Brian Foulkrod

Brian Foulkrod — Thu, 11 Jun 2009 13:52:06 +0000

Forget populist dribble. If the directors of these banks and other corporations were in any other field, misleading (or outright lying) to investors and profiting from selling (inflated) shares with insider knowledge that the bubble was about to bust would constitute fraud, and they wold fall under the RICO act.

When is the government going to actually do the ethical thing, and prosecute and financially punish white collar criminal activity with the same vigor as other areas of society?

Take their homes, yachts, cars and assets, and trade it for prison jumpers and put them on road gangs.

That will finally end the outright theft of the American dream and economy at large.