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:scowl:
You guys are ridiculous.
It's their money, they can do with it what they will.
This thread reeks of class envy.
I agree with both of these posts. As someone who researches the investment industry as part of my job, executive compensation is part of a circular system in my view. CEOs are too often treated as rock stars--they're given lavish pay packages that include bonuses for when the company does well on a wide variety of metrics (sometimes these metrics ignore the big picture, as Transocean demonstrates), but also gives them a big financial cushion if they fail. It used to be they'd get their stock options repriced if the stock fell, that way they'd still make money off of them. After a crackdown on that practice, we've moved to the era of golden parachutes, where CEOs who blow up the company still get a big severance package (negotiated as part of their hiring). Sure, there are outstanding CEOs who dramatically turn around companies or spur them to remarkable heights--and these folks arguably earn the big money they make--but they're few and far between.
I agree with both of these posts. As someone who researches the investment industry as part of my job, executive compensation is part of a circular system in my view. CEOs are too often treated as rock stars--they're given lavish pay packages that include bonuses for when the company does well on a wide variety of metrics (sometimes these metrics ignore the big picture, as Transocean demonstrates), but also gives them a big financial cushion if they fail. It used to be they'd get their stock options repriced if the stock fell, that way they'd still make money off of them. After a crackdown on that practice, we've moved to the era of golden parachutes, where CEOs who blow up the company still get a big severance package (negotiated as part of their hiring). Sure, there are outstanding CEOs who dramatically turn around companies or spur them to remarkable heights--and these folks arguably earn the big money they make--but they're few and far between.
Board members generally don't have much incentive to rock the boat and challenge pay packages, unless they're paid through long-term stock-vesting arrangements. (Thus, if the company does well over the long term, as opposed to short-term bursts, they'll do well.) Otherwise, they'll take their six figures (if it's a big company) for attending meetings and keeping up, thanks very much.
And mutual funds, who often collectively own big stakes in public companies, don't always duke it out over the pay packages, either. Often, they want to maintain a good relationship with management so that they can either continue to manage the company's retirement plan assets or be selected to do so in the future.
Now the free-market folks might say you can vote with your feet and sell your shares. But one's options are unfortunately limited because so many public companies are engaging in these practices. (Also, you'll take a tax hit if you have gains.) As much as I admire, say, Warren Buffett and Berkshire (definitely a breed apart from the above), I'm not putting all my money with them. And the stock isn't always cheap.
I think this situation could be improved to some degree, but I don't know where the impetus is going to come from. Regulatory ideas would get into politics, so let's not go there.
All this isn't to say people shouldn't invest, just be selective and aware. And it's a flawed system, but corporate governance is still better in the US than a lot of other places.
You guys are ridiculous.
It's their money, they can do with it what they will.
This thread reeks of class envy.
