Why Obama is failing
US companies face a “logistical nightmare” from a new rule forcing them to disclose the ratio between their chief executive’s pay package and that of the typical employee, lawyers have warned.
The mandatory disclosure will provide ammunition for activists seeking to target perceived examples of excessive pay and perks.
The Obama is more worried about class warfare than actually understanding the economy and why his Keynesian policies have failed.
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written by Don Roscoe , August 31, 2010
US companies already have to report the compensation of their key employees in their annual report. The data to calculate the ratio is easily obtained.
From a shareholder perspective, the transparency is necessary. Most CEOs are not worth anywhere near what they're paid and large institutional investors are exerting pressure to bring that pay into line.
A wise man said that companies get the unions they deserve. I think in the next decade you will see unions start to make a comeback. And once the job market improves, companies that don't take care of their employees are going to suffer the consequences of mass detections.
written by Badda , August 31, 2010
Rahelio,
By what measurement are CEOs not worth the money paid to them? Who says this... and about whom?
Could we have examples?
written by Barthélemy Barbancourt , August 31, 2010
That is the hard part. Unions are on their way out. Local governments are going brkoe because of union demands and they will start to break the unions or go bankrupt.
CEO pay is set by the market. In a free economy, if a company overpays, they go under. Only in Obama's crony capitalism is this an issue.
written by kow , August 31, 2010
Ya, unions are so popular. That's why they're trying to force themselves into companies. Toyota, even with their unfair publicity, is building new plants without unions and compensating their employees well above local alternatives. Don't seem to see that happening in Detroit.
Of course tranparency is important for shareholders and investors. It is also desired by employees, the current government for their socialistic values and the public overall for curiosity. 'Desired' being the key word there. It's this kind of intrusive behavior that will steer companies and their investors clear of this country, and along with it their jobs.
written by Nobody , August 31, 2010
A CEOs sre a rare breed. Especialy at the Fortune 100 level. Recall when Ben and Jerrys tried to hire a CEO at 35X a floor worker pay? No takers.
Don if you treat your workers like crap, they will go away. It's all that funky market stuff.
written by Don Roscoe , August 31, 2010
"CEO pay is set by the market. In a free economy, if a company overpays, they go under." Its set by the board of directors. If it overpays, it either makes cuts elsewhere or dumps the CEO with a huge severance package and it starts all over again.
A couple of 2009 examples -- Abercrombie and fitch -- stock price dropped 71% while CEO pay was about 72 million. He's still there.
International paper -- stock price dropped 63% and CEO got almost 40 million. He's also still there.
Carly Fiorina almost tanked HP, got fired with about a $40 million severance package and has served as business and economic advisor to McCain. Now she wants to take her skills to the Senate.
written by kow , August 31, 2010
What? You're not going to include NBC in your little list?
Your point being what? That shareholders were too stupid to insure their profit?
written by Jim W , August 31, 2010
Editor's note-
3 comments removed because they aren't helping anything. keep it on point. Thanks.
written by Don Roscoe , August 31, 2010
"Your point being what? That shareholders were too stupid to insure their profit? " Tell me you're not blaming shareholders for this.
As for NBC -- we get criticized for not providing facts 100% of the time but when we do, we get criticized for not including enough? Do your own homework
I have no problem letting them fail. But, the CEO is ultimately responsible for the performance of the company but does little if any of the actual work. If the company were to fail, you would have employees out of work and creditors and bond holders holding the bag.
Here's an idea -- boards limit executive pay to a reasonable multiplier of average employee pay. Tie the bulk of their compensation to the stock price -- it goes up by some amount, they benefit. It goes down, their salary is reduced by some percentage. No options -- just a value against the actual stock price.
written by Barthélemy Barbancourt , August 31, 2010
Yeah, corporations tried this and they got CEO's that manipulated the stock price for short term gains to make themselves money.
Plus, given that every industry is different, pay packages have to vary across industries. The best plan is to let corporations do what they think is best. If they are wrong, someone elese will take their market share.
In short, the government has no business in this area. The whole issue blew up when Clinton removed the tax deductions for corporate pay over $1 million. The government distorted the market and now they want to "fix" the mess that they created.
written by Nobody , August 31, 2010
Don do you hear yourself? Whats a "reasonable" multiplier? With the Clinton cap of $1m on CEO salary so options, and perks rule the day. Wage controls? What part of 'totalitarian' do you not understand?
written by kow , September 01, 2010
And who's to say what job salaries can't be controlled by the government? Is a broom pusher for a NBA franchise going to be paid in relation to the team's take? What about the broom pusher next door at the bus stop? Why should he be paid less (in your government's eye) than the other guy? Tell me, at what level do you stop this control, or do you???
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