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A cap on executive compensation for corporations

M

Mxylplyx

Diamond Member
Anyone think this would be tenable? I think even the most ardent capitalists, like myself, have started taking a hard look at the obscene compensation these execs over failing companies have received, and it frankly pisses me off. What would everyone think of some kind of formula for maximum executive compensation that takes into effect things like average employee compensation, company profitability over so many past years, and company size? It's obvious that these executive teams sitting at the top of these massive companies think of themselves first, and then the company. Hell, that is just human nature. It would be nice if one of the main avenues the executives could use to raise their own salary cap would be to raise the average salary of their employee base. The arguments of this being anti-capitalist no longer have any weight to me. We have seen the results of unbridled capitalism and greed, and it aint so pretty itself.
 
I don't like anything based on the workers salaries as they vary by too many factors... industry, location, time put in, etc...

I believe that performance based pay for workers/management every level is fair. What's not fair is that nobody actually stands by the performance based pay. We have workers sitting by working with no sense of urgency because they are protected by a union and on the other side we have CEO and other officers being paid insane bonuses.

If a worker isn't performing they should loose pay.

If a CEO's company fails then they shouldn't get anything even have stock taken away... in my mind.
 
Something like this should be decided by the shareholders of the individual companies rather than the government.

If the government is the majority shareholder in the company (say after a government bailout), then I say yes.
 
It the stockholders who approve this crap. They approve it because they know the stock will go up. Ben and Jerry's is one company that caps pay at something like 8-10X the lowest paid employee. Not sure how well that worked out.
 
I think that goes against everything America stands for. I know jealousy is an evil emotion but don't let it cloud your thinking. There is no single reason why you would want to limit ANY compensation as it would just limit productivity.

Don't forget that a large percentage of executive compensation is in performance based bonus and stocks so in a way the goal you are wanting is already taking place.
 
Originally posted by: Mxylplyx
Anyone think this would be tenable? I think even the most ardent capitalists, like myself, have started taking a hard look at the obscene compensation these execs over failing companies have received, and it frankly pisses me off. What would everyone think of some kind of formula for maximum executive compensation that takes into effect things like average employee compensation, company profitability over so many past years, and company size? It's obvious that these executive teams sitting at the top of these massive companies think of themselves first, and then the company. Hell, that is just human nature. It would be nice if one of the main avenues the executives could use to raise their own salary cap would be to raise the average salary of their employee base. The arguments of this being anti-capitalist no longer have any weight to me. We have seen the results of unbridled capitalism and greed, and it aint so pretty itself.
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The issue would be that the most qualified executives would then leave the companies that cap the salaries and instead go to companies that choose not to cap the salaries, leaving capped companies at a disadvantage.

Or are you suggesting this be done via legislation so it applies equally to all companies? In that case qualified executives are more likely to go into consulting and speaking positions and make several times the money they would make as an exec, leaving the companies with less-competent leadership.

In theory I'd be all for letting the engineers and non-MBA project managers of the world run the companies. 😀 However, I do believe companies should have the ability to make the judgments they want on how they pay any of their employees within the bounds of existing law - I would just require that they do it in real money (no paying bonuses unless your company is in the black, etc.)

Now if you want to talk about changing investment banking and requiring THEM to use real money, I'm all over it!
 
Even the 'obscene compensation' execs at successful companies get deserves a loot.

There are numerous reasons, from the corruption of our political system, to the societal harms of an excess concentration of wealth, to the simple issue of why workers' salaries should be set in a competitive marketplace whileCEO's make more for the same job depending whether the company sells $10 million or $100 million or $1 billion in light of the corruptions in their compensation that are not based on any market reason that has any societal benefit, but are overpriced simply because of corrupting the compensation process.

I don't know the exact mechanism to use, but something should be done IMO - and oh by the way, yes, they should pay more taxes than they do now, relieving the rest of society.

The right-wingers opposed to this have only two types of arguments. One is wrong, because it's simply demanding thiings that will still happen, based on gross exagerrations, the arguments as if we're talking about paying the execs too little to provide enough inventives for them to contnue working which is not the case (and we have history to prove that, not to mention other nations like those in Europe today); and their invalid, ideological rantings that object not for any rational reason, just "don't mess with them!!!!"

The fact is, if unions had corrupted the process anything like the execs, it'd be a 'national crisis' for government to step in and stop them.

Just as investors used to rape society with unscrupulous techniquest to get rich before the SEC was created that had no legitimate purpose and the government stepped in, today CEO's have a corrupted situation that enriches them and no, the invisible hand of the market hasn't fixed that one, either.

The CEO's should have minimall intrusive corrections to the system made to make it have some market sense again - bak in line with European CEO's today.

I'd lean towards fixing the corruption ijn the rules over putting hard limits in place as a solution.

For example - the CEO's all appointing each other to their boards in a culture of corruption to approve each others' excessive compensation. Make that more independant.
 
Originally posted by: spidey07
Don't forget that a large percentage of executive compensation is in performance based bonus and stocks so in a way the goal you are wanting is already taking place.
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I've had the chance at my former (NOT CURRENT) companies to be part of the performance-pay programs, and I've actually not seen terrible abuses take place. I saw one exec whose department employees were paying out at a higher bonus level than the other departments choose to take a $0 bonus for himself to provide the cash for his employees' bonuses (and he kept it a complete secret from his employees). I saw bonus amounts for execs get cut from 35% to 10% by the CEO in a poor quarter (most employee bonuses paid out between 70-85%). This isn't a small time or non-profit or do-good type business; it's a name you'd all recognize. Overall I thought the leadership was fairly incompetent and the performance-pay methods for the employees were messed up, but I did see them making a genuine effort to link exec pay reasonably to personal and company performance.
 
Horrible idea.

The only thing I could think of that is "fair" and reasonable is legislation or self-imposed practices where bonuses above $X must be placed in an escrow account for 5 years to ensure integrity of financial statements.
 
Originally posted by: rudder
It the stockholders who approve this crap. They approve it because they know the stock will go up. Ben and Jerry's is one company that caps pay at something like 8-10X the lowest paid employee. Not sure how well that worked out.
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Then you have the issue that most shareholders are institutions, filled with people who will one day sit on the boards who decide on the compensation, only to have a bulk of it voted on by the instutions they came from.

Originally posted by: badnewcastle
I don't like anything based on the workers salaries as they vary by too many factors... industry, location, time put in, etc...

I believe that performance based pay for workers/management every level is fair. What's not fair is that nobody actually stands by the performance based pay. We have workers sitting by working with no sense of urgency because they are protected by a union and on the other side we have CEO and other officers being paid insane bonuses.

If a worker isn't performing they should loose pay.

If a CEO's company fails then they shouldn't get anything even have stock taken away... in my mind.
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Most people in this country aren't union. Unless you want to make this about the US auto industry or just another anti-union thread.
 
Originally posted by: compuwiz1
Never happen as long as we are a free country.
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:thumbsup:

However, since we are moving in the direction of becoming a Socialist State, maybe in the very near future.
 
Originally posted by: Strk


Originally posted by: badnewcastle
I don't like anything based on the workers salaries as they vary by too many factors... industry, location, time put in, etc...

I believe that performance based pay for workers/management every level is fair. What's not fair is that nobody actually stands by the performance based pay. We have workers sitting by working with no sense of urgency because they are protected by a union and on the other side we have CEO and other officers being paid insane bonuses.

If a worker isn't performing they should loose pay.

If a CEO's company fails then they shouldn't get anything even have stock taken away... in my mind.
Click to expand...

Most people in this country aren't union. Unless you want to make this about the US auto industry or just another anti-union thread.
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Agreed but most aren't ceo's either, I was simply thinking of an example. And no I don't want this to be anther anti-union thread.
 
Intellectual discrimination is a justification for renumeration scales.
- what is the greatest surgeon in the world, without a hygienic theatre to operate in ?
That surgeon is only as good as the guy whom mops the floor or the patient dies of a secondary infection, but wait we can pay managers to kick his ass into line!
The scale is natural, it's been perverted by self-interest and childish greed- On all levels!
 
I agree with the others that it should be left up the the shareholders ultimately... I don't think the government should be involved at all, however I do think shareholders should take more action and/or quit crying.
 
The ideas in this thread are laughable. Spidey, are you really that dense?

I say, don't cap it. Tax the flying fuck out of it. 80% tax rate for anything over 10MM of executive compensation.

That, or have a minimum of 10-year vesting periods.
 
Originally posted by: HardcoreRobot
thoughts: let the company owners aka shareholders vote and govt should myob
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Do you even read (see Strk's post)? Do you even know how corporations work?

Hint: There is no such thing as a shareholder vote regarding executive compensation.
 
Originally posted by: LegendKiller
The ideas in this thread are laughable. Spidey, are you really that dense?

I say, don't cap it. Tax the flying fuck out of it. 80% tax rate for anything over 10MM of executive compensation.

That, or have a minimum of 10-year vesting periods.
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Pretty much this. The concern is the extreme concentration of wealth. According to the academic papers I've read comparing the United States to the rest of the world, the best way to prevent the concentration of wealth is to impose very high tax rates on the extreme earners. At one time, the United States had much higher taxes for the highest tax brackets. In 1956, any income earned over 200k (or about 1.56M in 2008 dollars) was taxed at 91%.
 
Eh, OK, so you capped the managers salaries. What would happen?

1. Managers becoming consultants - still doing the managerial job, but from their own company, invoicing the public company. Obviously, their company is private and only employees them, so there can't be any cap there;

2. More good managers will go to international companies;

3. American companies will have an incentive to locate their headquarter somewhere else, as this is a managerial decision ultimately. In the age of globalization, the prospect of moving your headquarters to Asia or somewhere else is appealing enough as it is;

4. More money will go to the tycoons who have a large share of these companies instead of going to the hired managers.

So basically that's absurd: you won't fix anything, you'll hurt the shareholders and the only guys you're going to get are middle-top management anyway.
Leave it to the shareholders to decide. If they think such a cap is right, let them install it, but forcing it across the board by legalization? That would never work, and it's naive to think it would.
 
No, stupid. Coincidentally, this is one of the big ideas that the American Socialist party wants to implement via government regulation.
 
Teach the children (future executives and shareholders) do unto others as you would have them do unto you.
 
Originally posted by: SamurAchzar
Eh, OK, so you capped the managers salaries. What would happen?

1. Managers becoming consultants - still doing the managerial job, but from their own company, invoicing the public company. Obviously, their company is private and only employees them, so there can't be any cap there;

2. More good managers will go to international companies;

3. American companies will have an incentive to locate their headquarter somewhere else, as this is a managerial decision ultimately. In the age of globalization, the prospect of moving your headquarters to Asia or somewhere else is appealing enough as it is;

4. More money will go to the tycoons who have a large share of these companies instead of going to the hired managers.

So basically that's absurd: you won't fix anything, you'll hurt the shareholders and the only guys you're going to get are middle-top management anyway.
Leave it to the shareholders to decide. If they think such a cap is right, let them install it, but forcing it across the board by legalization? That would never work, and it's naive to think it would.
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Yup, it would be like taking money our of medicine. The only people who would become doctors are people who want to cure the sick. It would be a fucking disaster. The beautiful thing about being an idiot is that you never see how stupid you are.
 
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