Registered: Sep 2000
Location: Kansas City
Posts: 7504

I'm a fan of the system, that's no secret. Which makes me all the more ashamed when it's abused, or when practices prevail within it which contradict its principles.

Market rigor should apply to everyone within the system. They're not being applied equally to the priviliged class, nor to CEOs in particular. That jeopardizes the entire system, and must change. National Journal has some proposals worth debating.

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Registered: Nov 2004
Location: Detroit
Posts: 680

"[the firms hired to consult the CEO's pay rate] are giving advice on how much to pay the CEO at the same time that [the CEO]is deciding how much other business to send their way. At the moment, companies do not have to disclose these relationships. "

Therein lies the problem. Following the money trail always leads to the source.

I half agree with the article, and half believe that shareholders (many of whom are minor bits and pieces of some average Joe's Freedom55 mutual fund) are too stupid and ignorant for the system to improve. So long as the system punishes the stupidity of such shareholders, there is a great incentive for the rest of us to become financially literate and invest in ourselves (either starting our own businesses or keeping a better eye on our portfolios), rather than blindly giving money to someone else and expecting a good reward for doing nothing. That incentive to be smart will motivate the able to action, and thus keep the economy growing in a healthy fashion. If investing becomes too good and easy, why would smart people work?

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Registered: Jan 2006
Location:
Posts: 352

Smart people dont work they become CEOs

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Registered: Aug 2001
Location: Hilbert Space
Posts: 35656

It is weird, that so much money has to be offered (with accompanying golden parachute) to get people to work as CEOs, in general (with the exception of people like Steve Jobs and the Google founders, who make their money through stock appreciation, I think). Given human nature, it's not surprising that it is attempted, but shareholders and unions have been generally unable to stop it, for sure.

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Registered: Apr 2004
Location: Insatiation
Posts: 9026

The inherent flaw in capitalism has always been and always will be greed.

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Registered: Aug 2001
Location: Hilbert Space
Posts: 35656

Greed is its saviour, too, though. It's what drives people to work; greedy for money and knowing that capitalism rewards endeavour, on average.

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Registered: Aug 2001
Location: Hilbert Space
Posts: 35656

Also, it's not so much your 'average Joe' shareholder that's going to be able to do much, it's funds and the like ('institutional shareholders').

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Registered: Nov 2004
Location: Detroit
Posts: 680

Average Joe can do a lot, if he becomes aware of his portfolio, he can pull his $ out of companies with poor performance and poor practices.

Ignorance should be punished, diligence should be rewarded.

Saying that CEO's shouldn't be able to rape high pay for poor performance is equivalent to saying that Louis Vuton shouldn't be able to sell worthless handbags to stupid women for $1300. It's economic natural selection.

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Registered: Aug 2001
Location: Hilbert Space
Posts: 35656

It's the institutional shareholders that wield the power. But there's no reason why they shouldn't use it; it's not really in their interests for the corporation to reward CEOs in this manner. They also own enough shares, often enough, to affect votes (in the UK, this is the case, anyhow).

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