Original Post Deleted
"The chairman of the compensation committees typically the chief executive of another company, and his best gauge for what CEO ought to be paid is his own salary"
http://www.gsb.stanford.edu/news/res...tion_ceo.shtml
Original Post Deleted
"The chairman of the compensation committees typically the chief executive of another company, and his best gauge for what CEO ought to be paid is his own salary"
http://www.gsb.stanford.edu/news/res...tion_ceo.shtml
The typo doesn't really add to this source's authority...but I'm curious as to the evidence that the chairman is typically the CEO of another company. The requirement is usually that the members of the committee be non-executive, independent directors, which certainly doesn't rule out CEOs of other companies, but is that really typical? And how relevant is it, given that the other members of the committee also need to approve it, and the range of compensation figures is typically proposed by an independent consultant?
In any event, there are likely various dynamics that work to insulate executive compensation from the most brutal market forces, the "old boys' club" being just one of them. But the most important one (in my view) is probably the relative insignificance of the executive's compensation compared with the revenues of the business he or she runs. To you and me, these are huge numbers, but to the business, it is most likely small potatoes. Accordingly, if the board can pay a little bit more and get the CEO they really want, I'm sure they can justify the added expense.
Board members can always be sued by shareholders if they breach their fiduciary duties to the company, but the evidence of breach has to be significant, and "I think closedcasket would have done the same job for half the salary" is probably not going to be a winner in court.
If MovingIn is that independent consultant, no sum is sufficient for these very hard working people who have to deal with R&D, marketing, raising finance, dealing with stockholders and the Board and have so few competitors because few individuals are either willing or able to do it.
On the other hand, these losers who slot the bits together on the factory floor, should have tried harder in school and gotten better jobs, and can suck it up and pay more taxes. Spongers!
Same in the UK. 30 odd years ago university lecturers were paid the same as MPs, now they get about half. Which group vote for their own pay levels?
As pointed out before the compensation committees are from from independent, it is just an old boys network.
A friend of mine was on the board of a company which was in serious financial trouble. They spent most of the last six months working out the most important thing - how to make sure they got good pay offs. Stuff their workforce.
Mommas, don't let your babies grow up to be cowboys...
What are you going to do about it except whine on the internet? Put up a tent under HSBC in central? That does a lot of good...
Short of a russian/chinese style revolution, things will not change. Tiger Woods will collect millions to put a little ball in a hole, Charlie Sheen will earn his millions to fuel up his drugging/boozing/womanizing lifestyle, politicians will vote themselves raises while asking people to tighten their belts and CEO will continue to rake it in with as much greed as they can.