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View Diary: Washington Post Notices Class Divide (296 comments)

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  •  This is the rise of shareholder value capitalism (1+ / 0-)
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    What the research showed is that while executive pay at the largest U.S. companies was relatively flat in the ’50s and ’60s, it began a rapid ascent sometime in the ’70s.

    As it happens, this was about the same time that income inequality began to widen in the United States, according to the Saez figures.

    In the 70's, perversely in response to the widening income gap, there began a movement to tie executive payment directly to company performance by increasing the role of stock in executive compensation.

    See Harvard Business Review

    The problem is that any idiot can pump a company's stock in the short term--you just slash costs.  Off-shore all labor, reduce R&D spending, cut pension and healthcare spending, sound familiar?

    This not only hollows out our companies, it transfers the wealth of a nation from all who created it, to a few elites.

    This practice of stock compensation should either be changed to promote long term interests or abolished entirely.

    If you're looking for a root cause, this is one.

    We kidnap. We torture. It's our policy. Embrace it or end it!

    by Mosquito Pilot on Mon Jun 20, 2011 at 04:33:44 AM PDT

    •  Right.. Enron and all of the others (0+ / 0-)

      are prime examples of this practice.

      near the end, kenny lay was assuring Enron stockholders "everything is fine", at the same time he and Skilling were shoveling out their shares and cashing in.


      "I don't feel the change yet". Velma Hart

      by Superpole on Mon Jun 20, 2011 at 05:49:14 AM PDT

      [ Parent ]

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