Skip to main content

You know, every year, I get all hot and bothered around this time because there is always a flood of breathless articles about the stupendous rise in CEO pay and benefits. And I know a lot of good people who spend inordinate amounts of time trying to get shareholders to approve resolutions to have some "say on pay" or some other meaningless statement about what the pigs at the trough are pocketing. But, at the end of the day, I think it's time just to say: give the CEO whatever pay he wants IF...and I'll tell you what the "If" is in a sec.

So, first, to wet your appetite:

Some received substantial raises: David N. Farr, the C.E.O. of Emerson Electric, the industrial giant, took home $25.3 million, up 264 percent from 2012. (Mr. Farr got most of his pay, $21.6 million, in stock.) Mark Polzin, an Emerson spokesman, said that if the company is doing well, the structure of the package might cause a spike in Mr. Farr’s pay every few years.

The stocks of many companies posted robust performance in 2013, which could also help drive C.E.O. pay higher.

The pay of John T. Chambers, the long-serving chief executive of Cisco Systems, jumped 80 percent, to $21 million, most of it in stock. The strong returns on Cisco’s shares — up 63 percent during the company’s 2013 fiscal year — played a substantial role in determining his raise.

Rupert Murdoch of 21st Century Fox made $26.1 million for the 2013 fiscal year, during which his company’s stock rose 46 percent. Disney’s shares didn’t fare quite as well, gaining 23 percent, and its chief executive, Robert A. Iger, was given a 7 percent pay cut. Still, he made $34.3 million, the second-highest total in the survey. Zenia Mucha, a Disney spokeswoman, said in an email that 93 percent of Mr. Iger’s compensation was based on performance.

And, from Gretchen Morgenson:
Year after year, as executive pay continues its inexorable climb, it’s amusing to watch corporate directors try to justify the piles of shareholder money they throw at the hired help. Check out any proxy filing for these arguments, which usually center on how closely and carefully the executives’ incentive compensation is tied to the performance of company operations.

But pay for performance is only as good as the metrics used to determine it. And as a recent study shows, some metrics — including the most popular — are downright ineffective at motivating executives to create shareholder value.

But, all this is just a scam. All the metrics and justifications are simply rationalizations for handing people something they don't deserve. It's legalized robbery, with absolutely no economic rationale--NONE--other than the CEOs have the power to manipulate the system.

Most of the hard work people do to have "say on pay" or protests about CEO pay is honestly not worth it. Usually, the resolutions lose. When they somehow win, it's usually advisory.

When I wrote my book “The Audacity of Greed”back in 2009, I had the good fortune to talk with Graef “Bud” Crystal who was once one of the country’s premier compensation consultants—the guy who would be hired by CEOs to come up with compensation packages. He was there in the very first days of what would become a broad scam. He told me back then:


“In 1970, one CEO hired me and said, ‘we don’t have a bonus plan and do we need one?’” recalls Crystal. “I did the study and I went back to the CEO and said ‘yes you do need a bonus plan. But we have a problem area. You are making $150,000-a year and the problem is that the $150,000 is equal to the salary and the bonus to what your competitors are paying so we have to cut your pay to $100,000-a-year and then we can put in a bonus.’” Crystal laughs. “It was like a scene from The Exorcist where ice formed on the windows…he started arguing about the findings and he finally said ‘let me say this to you this way: who do you think is paying your bills anyway?’ I replied, ‘If I recall correctly the checks were drawn on the corporate account, not your personal account so the shareholders are paying me, not you.’ The meeting ended quite quickly.
The point is the whole game is fixed. The CEO stacks his board with cronies, pays them $20,000-per-meeting board fees and, then, makes sure his cronies approve pay packages — the real money is in the pensions and deferred pay. It’s a scam.

So, getting back to the "IF"...

I say pay them whatever they ask for IF:

They get a choice. They can take $250,000-a-year, no questions asked--a figure that still puts them in the elite and, if that isn't enough, trust me, I could put together a list of 1,000 qualified people to run any company for that sum.

OR, to cash that big lavish paycheck, each one has to go in front of a live arena, Roman-style, in the center of the arena, miked up and projected on a big screen television and live-streamed around the planet, and make the case for their pay. If the audience approves, thumbs up, then, lucky CEO, he gets to go home with his job intact.

If the audience gives "thumbs down", he gets fired on the spot (I'd say burned at the stake or torn apart by lions but I'm slightly non-violent). Immediately, the first person on the list of 1,000 qualified people gets the job for $250,000.

Personally, I think a huge number of those 1,000 qualified people would quickly have a new job.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Well My Choice Would Be 50% Individual Tax (5+ / 0-)

    on income beyond $300k, 75% on income beyond $800k, and 90% on income beyond $2 1/2 million a year.

    Let the boards and the execs negotiate the compensation in that kind of environment, the one roughly as I sketched in today's dollars, in which 3 generations ago we created the wealthiest largest middle class in human history and became the leading space power and the world's richest economy.

    If a CEO wants to give $8 million a year or so to the federal government for the bragging rights of a $10 million compensation package, hey, works for me, we can fund a shitload of anti trust and financial regulation, and food stamps to triple the poverty level if we have enough ceo's who are that greedy for a large theoretical income.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Apr 14, 2014 at 12:28:35 PM PDT

  •  Funny, in a sad way (1+ / 0-)
    Recommended by:

    Love the humor used to highlight the problem.  The thought of these guys trying to plead their case before a thumbs up/down audience is hilarious.

    But then I remember that we're actually stuck in this place with no clear way out.  Not so funny.

    This is really a major question for our society and for the health of our democracy.  If anyone has a good idea on how we start to correct this problem, I'd love to hear it.  I wonder if any of our progressive leaders are trying to figure this one out.  The problem for them would be the political suicide even proposing a solution would bring.

    Understanding is limited by perspective. Perspective is limited by experience. America is a great place to live but it limits our ability to understand.

    by CindyV on Mon Apr 14, 2014 at 12:40:40 PM PDT

  •  Great idea for salary determination. (0+ / 0-)

    It is bizarre the way that "shareholder value," as bullshit as that concept is, is determinative of executive compensation.

    A corporation is a legal fiction that protects shareholders from liability for damages caused by corporate wrongdoing.  It's state-bestowed welfare for Capitalists.  Once upon a time, the granting of a corporate charter supposedly depended upon the created corporation contributing to the public welfare in return for this grant of immunity.  Imagine if that remained the standard for a corporate executive's pay package.

    "How many good paying jobs did you create--net-- this year, Ms. CEO?"

    "How did your corporation contribute to the lowering of carbon emissions, Mr. Big Shot?"

    "How did your company contribute to the welfare of the communities in which it does business?"

    And on the negative side:

    "Did your company do anything to contribute to the corruption of the political and judicial system this year?"

    "Did you reduce any benefits received by your employees?"

    "Did you produce any products that adversely affected public health or safety or the health or safety of your customers or workers?"

    Alas, those considerations are inversely correlated with CEO pay in this country.

  •  First determine what's a resonable job description (0+ / 0-)

    And then see if the guy has been able to meet or exceed most of the goals.  And they shouldn't just be short term goals.  The goals should include serving the customers well, AND compensating the people who actually do the work in the company well.

    What rankles me is high high high pay for CEOs of health insurance companies and Health Care facilities.  Are the CEOs really truly working harder at more important work than the surgeons, and even the women who put the patients into the rooms?  For that matter, the person who cleans the various surgery suites and patient rooms is a very important cog in this machine.

    I look out and all I can see is white.

    by Andy Cook on Mon Apr 14, 2014 at 03:14:05 PM PDT

  •  Their salary borders on a rounding error.... (0+ / 0-)

    ...for most companies involved.  Shareholders largely don't care for that precise reason.  If you stopped paying the CEO of say, McDonalds today, you could probably raise the other worker's wages by... a couple of cents a year.

    It is vaguely amusing that people get wound up about paying for talent among CEOs but apparently not teachers, police officers, etc.

    Do we hate high wages today?  Low wages?  People bargaining for a high wage?

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site