"Golden Coffins" Make CEOs Modern-Day Pharaohs

Thanks to a change in federal rules 18 months ago, it’s now much easier to find out details of so-called “golden coffins,” which are—yes, this is real—posthumous payouts to CEOs that can climb into the hundreds of millions. Brian Roberts of Comcast will receive $298.1 million if he dies in office; Robert Iger of Disney will receive $62.4 million; Ivan Seidenberg of Verizon will receive $43.4 million. Ha ha, life insurance is for paupers!

Companies defend the practice as an appropriate way to take care of an executive’s family after an unexpected death. They also note that the benefits often are negotiated as part of a pay package that has many components. In many cases, compensation attorneys say, death benefits are really a form of deferred compensation, structured partly for estate-planning or tax reasons.

Companies often say one goal of their pay packages is to keep executives from leaving. But “if the executive is dead, you’re certainly not retaining them,” says Steven Hall, an executive-pay consultant in New York.

We’re fine with this, but only on one condition: that the CEO’s family members, pets, and belongings have to be buried with him.

“Companies Promise CEOs Lavish Posthumous Paydays” [Wall Street Journal]
(Photo: t-bet)

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  1. Angryrider says:

    This is bull! They already earn enough money as it is, and they need MORE?! Aren’t the family members old enough to have a job anyways since CEOs tend to be in their 50s or 60s most of the time.

  2. sn1per420 says:

    Wow, I’d like to be related to the CEO of Comcast… would make me even happier when he died, cause I’d be getting a cut of that $300 Million!

  3. Sockatume says:

    I’m all for golden coffins. We can lure CEOs into them with the shininess, slam the lid shut, then push them down a mine.

  4. raisitup says:

    supply and demand forces at work in the ceo-labor market. nothing to see hear, move along, move along.

  5. mac-phisto says:

    preventative measure to keep shareholders from strangling the execs?

  6. mike says:

    @Angryrider: This is a stupid argument. I could say the same about you. Why do you need a raise? Are you getting paid enough?

    People complain that people are making “too much money” when they really mean, “They make much more money than me.”

    People that have money still want more of it, just like you.

  7. MayorBee says:

    But what the article does not reveal is that Chase Carey, CEO of DirecTV will, upon his death, be awarded 10 cases of mustache wax. That’s the real travesty, if you ask me.

  8. b01000100 says:

    @linus: There is a slight difference between getting millions per year and earning enough to get by in life. Perhaps the money should be distributed in a way that shows where the real work in a company is being done. Sure, you could say being CEO is stressful but what about the people that come in every day, bust their asses to do great work, and are always the ones wondering if they will still have a job when things get tough in the economy? Instead of rewarding people for making “tough” decisions, why not reward the people that generate results?

  9. alstein says:

    I can’t believe CEO’s are worth that much to a company, or at least that there aren’t enough people who could get similar results a lot cheaper.

    Then again, this is market forces, so unless you want government intervention, what can you do?

  10. JiminyChristmas says:

    @linus: Generally speaking, insofar as these are publicly held companies, I have a right to complain.

    Brian Roberts’ $298.1 million won’t come straight out of my pocket, but it sure comes out of the return on my 401(k) or brokerage account. $298.1M is a non-trivial amount of money even for a company the size of Comcast; that’s easily 50% of the whole corporation’s quarterly net income.

  11. MayorBee says:

    But “if the executive is dead, you’re certainly not retaining them,” says Steven Hall, an executive-pay consultant in New York.

    But if the executive knows his family will be taken care of, he’s more likely to stay with the company.

    I don’t think there’s much merit to these “Golden Coffin” payouts, but once a few companies start doing them, there’s more rationalization for other companies to do them as well. As the article pointed out, they’re negotiated as a part of the overall compensation package.

    However, this practice is much more ethically sound than its opposite, “Dead Peasant” insurance. This is where your company will take out life insurance on you with themselves as the beneficiary. You don’t know anything about the policy that’s been written on you. Some companies also insure themselves against the death of their executives. The presence of the life insurance is seen as a risk mitigation effort against the death of a successful executive. Here’s some information from [en.wikipedia.org] about COLIs.

  12. chocogray says:

    I know one of you guys has the skill to estimate how much in savings could be passed to the consumer if companies didn’t offer these ridiculous payout packages. That is a post I would really like to see!

  13. iMe2 says:

    @MayorBee: Holy crap. So now there’s a moral hazard for companies to not protect their workers in dangerous environments?

  14. SinisterMatt says:

    “Companies defend the practice as an appropriate way to take care of an executive’s family after an unexpected death.”

    Okay, I agree with that. Nice of the company to care enough to do that. But $290 million?! Give me a break. That is more money than I could spend in a lifetime. Do they do that for all their employees, or just the CEO?

    Yikes, and Yeesh!

    Cheers!

  15. MayorBee says:

    @iMe2: I know they’re not legal in at least some states. Wal-Mart (of course) was involved in a brouhaha when a manager literally worked himself to death and they collected on a “dead peasant” policy they had taken out on him. I guess it makes good business sense in the short run, but it’s not morally or ethically right.

  16. P_Smith says:

    The last people to seek golden coffins for themselves were Nicolae and Elena Ceausescu. Remember what happend to them?

    A popular uprising, bullets in the back of the brain, buried in an unmarked grave and forgotten. And Romania has been better off for it.

  17. coren says:

    @SinisterMatt: Exactly. Now, make the package 10 mil or less and I can at least feel a little less outraged (although it’s still ridiculous)

  18. jimconsumer says:

    @Angryrider: This is bull! They already earn enough money as it is, and they need MORE?!

    Oh, shut up. These are private companies. They can pay their executives whatever they damn well please. If you don’t like it, don’t buy things from them. Or, buy a bunch of shares of their stock and vote against this at the next shareholder meeting. However, bitching and moaning about a private transaction that has nothing to do with you and, quite frankly, isn’t any of your business, anyway, is counter productive.

    I mean, what, you’re mad that people have such lucrative contracts? Are you a filthy socialist or something? You want to take that money away from him? Why? What do you care? You don’t want to see other people succeed? You think it’s not fair that he gets that kind of money and you don’t? What’s the problem, anyway? To any socialist who thinks it’s OK to “put an end to this”, I can’t wait until your fellow socialists decide your income is too high and put an end to it, too. “But I don’t make very much money”, you’ll whine. Yeah, well, I can find hundreds of thousands of minimum wage earners who earn a hell of a lot less than most people here and would love to see your finances redistributed.

  19. Corydon says:

    @JiminyChristmas: $298.1 million is certainly non-trivial to a company the size of Comcast, but it doesn’t rise to the level of 50% of quarterly revenues.

    Last quarter, Comcast had revenues of $8.4 billion. $298.1 million does, however, represent about 20% of quarterly capital expenditures. That’s a lot of fiber that could be laid.

    I also don’t buy the “executive retention” argument when it comes to Comcast—although they’re publicly traded, they’re basically a family run business with the stock set up to keep control in the hands of the Roberts family (via untraded Class B shares with massively disproportionate voting rights). Brian Roberts isn’t going anywhere.

  20. jimconsumer says:

    @JiminyChristmas: Generally speaking, insofar as these are publicly held companies, I have a right to complain. – How much stock do you own in these companies, exactly? Enough to vote? Are you actively voting? If you don’t own voting shares and/or are not voting, then you have no right to complain.

    Brian Roberts’ $298.1 million won’t come straight out of my pocket, but it sure comes out of the return on my 401(k) or brokerage account. – No, it doesn’t. You’re stupid if you think the company is actually going to foot that bill. They have insurance on their executives, if the guy dies the insurance company ponies up. The only thing the company actually pays is the premiums on that insurance and I’ll guarantee you it’s a hell of a lot less than $300M.

    Furthermore, did you ever stop to think that Brian Roberts’ actions may well increase the size of your 401(k) by a sizable amount of money? Before you tar and feather these executives for “taking money out of” your 401(k), consider that your 401(k), and the profits you receive from it, would not exist at all without said executives. These people make decisions that earn companies, and their shareholders, billions of dollars. I think it’s only fair to reward them highly for that.

    You people who think otherwise need to watch yourselves. Go ahead and lobby Congress, get some laws passed that tell corporations what they can and can’t pay their employees, then see how well your investments do when those with the capability to drive profits at large companies throw up their hands, say, “Fuck it”, and go home.

  21. Pennsylvanian123 says:

    When will the shareholders revolt? Another 300 million going into a dead person’s pocket instead of onto the bottom line and into shareholder equity? Yikes. Honestly, it boggles the mind that some of these CEOs are literally getting billions of dollars while the shareholders see the value of the companies they own fall off a cliff.

    I’m all for free market forces, but honestly, who is really worth that much money? Not a single one of these companies would grind to a halt if their CEO dropped dead. That tells you right there that they are replacable and not priceless.

  22. lemur says:

    It’s actually pharaoh, not pharoah.

  23. jimconsumer says:

    @Pennsylvanian123: When will the shareholders revolt? – Never, because most of us are intelligent enough to understand these executives are making us vastly more money than we’re paying them. Why would we throw them out and replace them with someone that costs half as much, but only generates half as much revenue? We’d be losing money. Think about it.

  24. EasttoMidwest says:

    @jimconsumer:

    No, this is NOT an insurance plan, it is a compensation plan. Major difference. And even if it was an insurance program, the premiums would still be a cost.

    Moreover, these guys aren’t being compensated for work done, per se. If they die tomorrow, they get the same compensation (or their heirs do) that they would after performing an additional year of work, or whenever contract ends. Does this matter? A year of labor sure as hell does matter when that year is work hundreds of millions of dollars. If they’re so worth it, then they really ought to be held to deliver, no?

    But this really is an immoral practice. That money comes directly from the pockets of their hardworking employees AND they’re customers. I know you’ll start some crap about leaving employment behind or getting better jobs or using different services, but that’s a willfull disregard of reality and really holds no merit outside of the fevered imaginations of the occasional libretarian.

    @Corydon:

    He said NET revenue, not gross revenue. Net revenue for Q1 08 was $588 MM. That’s the profit.

  25. jimconsumer says:

    @EasttoMidwest: How, exactly, do you know these companies aren’t insuring against this? Chances are extremely high they are.

    As for the morality of it and the money coming from their employees, you’re simply being ridiculous. The employees are already paid a fair value for the labor they provide. Nobody is “taking” money away from them – the company is giving them money in exchange for their work. Where is the “taking?” You’re assuming that you can slash CEO pay and give the money to the workers. The problem with that logic is the employees don’t automatically have a higher value to the company just because the company has more cash at it’s disposal. The guy who runs the forklift is still worth the same amount he is today.

    The same can be said for the products or services the company provides. They have a fair market value. You can take away the CEO’s pay all you want, that doesn’t suddenly make the products worth less money. The customer is still going to pay fair market value for the product whether the CEO is highly compensated or not.

    It sounds to me like you want to live in some utopian, socialist world where every employee, customer and shareholder of a given company splits the profits equally, regardless of their influence over the company’s profits. That’s a pretty thought, and if you want to see such a company you’re welcome to start one, but you don’t have the right to tell the rest of us how to run our companies. Capitalism works. If socialism was a viable idea, we would have abandoned capitalism a long time ago.

    Paying people what they’re worth in the marketplace is not immoral. The guy flipping burgers does not deserve the same compensation or profit sharing as the guy negotiating billion dollar contracts. Talk all you want about how “the little guy does the real work”, but the fact is, if the executives weren’t around to make things happen on a higher level, there wouldn’t be a corporation and there wouldn’t be any real work for the little guy to do.

  26. jimconsumer says:

    @EasttoMidwest: See, I just re-read the article and you’re flat wrong on this not being a life insurance thing. From the article:

    “As for the large company-funded life-insurance policies, Mr. Cohen said the burden of making the payout would fall on an insurer, not Comcast. He said part of the CEO’s life insurance is term insurance Comcast bought at favorable rates, and that the company discloses this insurance’s annual $415,000 cost to Comcast in yearly pay tables.”

    So, you’re bitching about them paying him an extra $415k a year in life insurance premiums? Comcast had 100,000 employees in 2007. You want to take away the CEO’s life insurance and give them each an extra four bucks a year, and you think that will make a difference in their lives?

    This is why you people are so completely fucking misguided. It has nothing to do with helping the little guy. You can redistribute the CEO’s entire pay and it won’t make a dent in the budgets of the workers (until they all lose their jobs when the company fails for lack of effective leadership). Which means it’s not really about morality or the little guy, it’s just about taking something away from someone who is more successful than you purely because you don’t think it’s fair.

    You know what that is? It’s whiny, crybaby bullshit I’d expect to hear on the playground of a preschool.

  27. econobiker says:

    I think that many times the execs can BORROW either against the these huge policies or against the shares the exec owns and the policies pay back the company if the exec dies prior to paying back the loan.

    Or as a perk it is taking the cost of insuring a high worth individual from his own pocket and putting it onto the companies overhead. Another form of the execs negotiating the company to pay (just like an auto or country club allowance) versus having to pay for it themselves.

  28. econobiker says:

    @jimconsumer:

    “Comcast had 100,000 employees in 2007. You want to take away the CEO’s life insurance and give them each an extra four bucks a year, and you think that will make a difference in their lives?”

    But what about the shareholders whose profit per share is reduced by X¢ per year because of the policy cost? That is unfair if the policy is only going to insure the exec’s life to his family and not some sort of loan he is taking from the company…

  29. Tiber says:

    @jimconsumer:
    @jimconsumer:
    @jimconsumer:
    @jimconsumer:

    Stop trolling already.

    First of all, saying that we can’t be mad about something is like saying we can’t be angry at a dictator that’s committing genocide unless we are related to the victims. Just because we aren’t affected, doesn’t mean nobody is. That’s called empathy.

    Second of all, business is one of the few areas where complaining is a valid form of action. Companies care about PR. If you just stop buying from them, they’d probably just blame the economy. Buying stock just makes them think you support them.

    “They have insurance on their executives, if the guy dies the insurance company ponies up. The only thing the company actually pays is the premiums on that insurance and I’ll guarantee you it’s a hell of a lot less than $300M.”

    You think those policies are cheap? Besides, in the event that the insurance policy pays out, that’s $300 mil out of the insurance company’s bottom line. They then have to raise rates to cover costs.

    Your fallacy is that you assume that execs are worth that much. The problem is, even the unsuccessful ones are making obscene amounts (though companies are wising up and making bonuses based on performance). Even if they are successful, there’s still a matter of if they deserve what they are getting. The system is that the CEO chooses the board, and the board chooses the CEO’s paycheck. That means they can hire people who will give them raises and fire those who won’t. That’s almost like being able to write a blank check from the company to themselves. In that same vein, you assume that the guy who works for $300 million in insurance wouldn’t work for $150 million.

    “Nobody is “taking” money away from them – the company is giving them money in exchange for their work. Where is the “taking?” You’re assuming that you can slash CEO pay and give the money to the workers. The problem with that logic is the employees don’t automatically have a higher value to the company just because the company has more cash at it’s disposal.”

    You’re the one assuming. There’s no such thing as “fair” market value-there’s only the most you can get. The CEO’s are taking money out of the company they shouldn’t be, because the only one who can stop them is themselves. Shareholders have some power, but only in groups, and only if they aware of what’s going on. That’s what this is about. Also, if the company has more cash at its disposal, that means it’s doing well. If workers are responsible for its success (CEO’s aren’t the only one that determine a companies success or failure), then those workers are worth more.

  30. jimconsumer says:

    @econobiker: But what about the shareholders whose profit per share is reduced by X¢ per year because of the policy cost?

    Millions of people own Comcast stock. You want to give them each, what, a fraction of a penny in exchange for this policy? Are you a shareholder? If not, what do you care? If you are, then why aren’t you exercising your voting power to put a stop to this? You want to talk about the shareholders – what about the shareholders whose profit per share is increased by $x because of the direct leadership of said executive?

    @Tiber: Stop trolling already. – You should re-read the definition of trolling. As for your empathy, it’s misplaced; The only people who are truly affected by this are the CEO and his family, and they’re affected in a positive way. You can’t honestly sit here and tell me the tiny, tiny cost of this life insurance policy (compared to the huge size of the company and it’s yearly profits) makes any difference whatsoever in the lives of the workers or shareholders.

    The insurance company will not have to raise rates to cover the cost of this payout. Don’t be ridiculous. Rates are already set at the right amount to cover such a payout. That is how insurance companies work.

    There’s no such thing as “fair” market value-there’s only the most you can get. – What the hell kind of statement is that?! “The most you can get” is the fair market value! As for the CEOs taking money “they shouldn’t be”, who are you to determine what they should and should not take? If they’re paying their employees and they’re returning profit to the shareholders, and they’re taking a tiny percent of profits for themselves, what’s the problem here? You’re just up in arms because a tiny percent of a multi-billion dollar company turns out to be an awful lot of money.

    If I built a successful company and made a million dollars a year in profit, and I took 10% as a paycheck, nobody would say a damn thing. Yet a CEO that takes a fraction of a percent on a multi-billion dollar profit gets lambasted. Why?

    If workers are responsible for its success (CEO’s aren’t the only one that determine a companies success or failure), then those workers are worth more. – The workers are, indeed, worth more (as a whole) and I guarantee you they are paid more (as a whole) than any executive officer. Comcast pays it’s 100k employees an average of $33,000 a year. That’s $3.3 Billion dollars a year. Brian Roberts earled a $2.5 million salary, a $3 million bonus, and a half a million worth of life insurance premiums. Suffice it to say, Tiber, I think Comcast believes it’s employees are worth more than it’s CEO! They pay their employees 55,000% MORE than they pay their CEO!

    You’ll always find CEO salaries higher than individual workers’ salaries because the CEOs are worth more. Period! Whine all you want, it takes a lot of talent, a lot of drive and ambition and, quite frankly, guts of steel, to command a company. There are not a lot of people who are up to the task and that is why those who are, get paid well.

  31. motojen says:

    @jimconsumer: Amen to that! All the sniveling Socialists should pool their earnings,distribute them amongst the poor, and quit expecting the rest of us to finance the “less fortunate”. I work hard for my money and frankly I don’t give a shit if my neighbor doesn’t have the same beneft package as me. I’m not obligated or inclined to give him a share of my income so everything can be equal.

  32. jimconsumer says:

    (In case this is misinterpreted, when I said, “You’ll always find CEO salaries higher than individual workers’ salaries because the CEOs are worth more.” – I meant on an individual basis. As a whole, the workers are always worth more and they always get paid more. On an individual basis, however, no one person is worth more than the guy directing things from the highest echelons of the company. No one person drives the company’s profits as much as this one person does.)

  33. alejo699 says:

    Okay, enough talk about how this is capitalism at work and how we can exercise our opinion of overpaid CEOs by not buying their products. This is NOT a free-market economy, businesses do NOT survive because they produce the best product, and CEOs do NOT work hard enough to earn hundreds of times what their workers do.
    Sure, I’m envious of people who make more money than I’ll ever see — but that doesn’t mean they earned it.

  34. EasttoMidwest says:

    @jimconsumer:

    “A $3 million life insurance policy is just a minor part of the death benefits that XTO energy Inc. provides to its CEO… Had Mr. Simpson died on Dec. 31…XTO would have owed his heirs a $111 million ‘bonus’. Stock options that… were granted but not yet vested, would immediately vest, bringing his heirs an additional $20.5 million.”

    “Comcast…ha[s] renewed a provision that gave the …chairman of its executive committee his $2 million annual salary for five years after his death.”

    In all fairness this was dropped and only the company paid insurance insurance was left as a death benefit. However, …

    “Comcast is committed to paying the payng the salary of …[the] CEO… for five years after his death in office, along with his bonus for five years…heirs would also recieve $233 million from his company funded-life insurance.”

    “A recent study … found that 17% offereed severance-style death benefits to their cheif executives in 2006 while 40% provided corporate-funded life insurance.”

    So, NO, it’s not all insurance. Not sure what article you were reading. But I get the Journal delivered to my office every day because — gasp — I’m a financial researcher who does in depth analysis corporate finance and practice. I know my way around a 10-K, thanks very much. I also know what happens when stock options are vested and how that hits the bottom line of a earnings sheet and how it really hits the actually bottom line of a company. There is a CHART in the paper which breaks down exactly how much of these benefits are insurance.

    How did you miss that?

    And you say I’m talking out of my ass? What exactly do you do sir? What makes you so sure that your market theories are correct? Is it the vast and wide ranging empirical studies you’ve conducted? Or did you hear that from our always proven wrong president?

  35. econobiker says:

    Another function of these huge life insurance policies is inheritance planning (tax avoidance) as the surviving relatives would have to pay taxes on the exec’s huge salary at the inheritance rate versus receiving a tax free life insurance payout. This format particularly makes sense for a sole/small business owner in order to pass on the business at a profit and (I think) is more abusive in these big dollar exec’s cases.

    (rant on….and while not really wanting to tangent on the inheritance tax issue, I will contribute my 2¢ that most of the folks wanting the inheritance tax (on high dollar money) repealled just want it to cut out the planning costs to accountants and involving their heirs before death. These folks want to CONTROL their money/businesses up until the last minute before they croak and then let their heirs get it. With some decent planning and succession techniques, such as this insurance method, they can reduce the inheritance tax liability to almost nil. BUT, they have to plan, involve accountants, and involve their heirs by passing the business on in a sequence while they are alive. Most of these control freaks don’t want to do this work and only want the gov’t to let them off tax free… rant off)

  36. EasttoMidwest says:

    @jimconsumer:

    Comcast’s earnings per share for Q1 were 24 cents, down from 26 cents for the same period a year ago. That’s a net income of $732 MM compared to $837, or a drop of 13%. This is a very bad result, and if you know anything about how the suitability of share prices are usually determined, it’s actually a MULTIPLE of earnings per share (called a price to earnings ratio). So a loss of 13% often indicates a greater devaluation of a share price.

    Why do I mention this? Because if their CEO had died in the previous quarter, Comcast would have lost — out of pocket — an additional $75.1 MM in cash. And this does not include talent search outlays and god knows what else. Losing a top executive is very, very expensive even under the best of circumstances.

    So that would have resulted in a net earning of $657 (this is oversimplified, but you get my drift). That’s an 10% decrease in the earnings per share.

    That’s A LOT.

    Comcast common stock is down over the last year from about $28 to $23 — that’s 28%, or MORE THAN double the 13% loss in earnings per share. So does that 10% count? Do those fractions of pennies per share count? OH YEAH.

  37. Tiber says:

    @jimconsumer: I said you were trolling because this argument has absolutely nothing to do with socialism. Your first comment especially sounded to me at least like nothing but an angry rant designed to start an off topic argument.

    As to the topic at hand, if removing one olive from every salad is a valid way to cut costs, how is a $300 mil insurance policy not on the chopping block? Companies like to squeeze every dollar they can, except when it comes to the people at the top.

    As to the insurance companies, I know that they adjust rates, but still, even if their overall profitability is assured, doesn’t mean they want a quarterly report with $300 mil written in red ink.

    “There’s no such thing as “fair” market value-there’s only the most you can get. – What the hell kind of statement is that?! “The most you can get” is the fair market value!”

    What I meant was, you keep repeating the term “fair market value” as if it were always “fair”. Just because I can get away with charging or paying a certain price does not make it ethically right.

    “As for the CEOs taking money “they shouldn’t be”, who are you to determine what they should and should not take?”

    I’m a person with an opinion. It seems to me many people share my opinion. For that matter, how much oversight is there when it comes to CEO’s opinions on how much they should make? Because they’re the ones writing their own checks.

    “If they’re paying their employees and they’re returning profit to the shareholders, and they’re taking a tiny percent of profits for themselves, what’s the problem here?”

    There are two problems. One involves just how “tiny” their income is. The other is that many CEO’s are making huge salaries even when they are performing poorly.

    “Comcast pays it’s 100k employees an average of $33,000 a year. That’s $3.3 Billion dollars a year. Brian Roberts earled a $2.5 million salary, a $3 million bonus, and a half a million worth of life insurance premiums. Suffice it to say, Tiber, I think Comcast believes it’s employees are worth more than it’s CEO! They pay their employees 55,000% MORE than they pay their CEO!”

    You’re comparing one person’s salary to the salary of 100,000 people! You’re comparing things on completely different scales (in several places) to try and confuse the issue. I’m sure their income is nothing compared to America’s GDP as well, but that doesn’t mean it’s not significant.

    “You’ll always find CEO salaries higher than individual workers’ salaries because the CEOs are worth more. Period!”

    I never disputed that they are worth more. I am disputing how much more they are worth than anybody else.

    “Whine all you want, it takes a lot of talent, a lot of drive and ambition and, quite frankly, guts of steel, to command a company. There are not a lot of people who are up to the task and that is why those who are, get paid well.”

    In many cases, it can also require being born into a rich family, having a lot of luck, knowing the right people (which is part skill, part luck), etc. I’m not saying that all those things you mentioned aren’t important; I’m simply saying that there are more people capable of the job if given the chance than can truly be quantified.

  38. EasttoMidwest says:

    To be fair –

    Much of that $75.1 mm would have been distributed over a period of five years.

    But Econobiker is right — there is a huge value for the recipient of any sort of deferred compensation. It’s usually a pretty cheap way for a company to provide extra value to it’s (highly placed) employee, but it has ramifications on the public interest vis a vis fair taxes.

  39. EasttoMidwest says:

    Also, any analyst worth his or her salt would have added that $75 MM to his or her models, which factors into their price targets and buy recommendations.

  40. JiminyChristmas says:

    The employees are already paid a fair value for the labor they provide.

    But I would argue that there is not a fair market when it comes to the compensation of the CEOs of large publicly traded corporations. I mean, who gets to decide this stuff? So-called “compensation consultants” hired by your buddies on the board? Meanwhile, you sit on your buddy’s board and chime in on his compensation when his turn comes around.

    It’s a system, if you can call it that, rife with conflicts of interest and self-dealing. What do you think would happen if two dozen Comcast installers circled up the vans and and figured out how much they could possibly pay themselves? They would all be paid $100K/yr and driving Escalades instead of Econoline vans until they were reined in by powers greater than themselves.

  41. JiminyChristmas says:

    @EasttoMidwest: Thanks for being down with, you know, facts and stuff.

  42. Greg-USA says:

    I am astounded by reading some of the comments here. Why are some of you so attracted to socialism? Why do you want to punish other people for doing better than you? Why should someone who is doing better than you be forced to capitulate so you feel better about your lack of performance? If you want that kind of money you are not restrained from working for it. Well, you aren’t being restrained as of now. You pass legislation to regulate, which really means putting the government in control, these companies and force their pay to be lower then you are next. After the $3M salary is chopped off then it’s the $2M salary. It will eventually get down to whatever you are making because someone else, like you once did, wanted to punish you for making more than them.

    I wonder, you people that despise these payouts, salaries, and golden parachutes – what do you think about union members leaving a company and keeping their FULL INCOME for life? I guess that’s ok because they aren’t greedy, evil rich people like CEO’s. They are the little guy just trying to squeak by. Do you realize who pays the yearly salary of retired union workers? You and I.

    @econobiker – But what about the shareholders whose profit per share is reduced by X¢ per year because of the policy cost? That is unfair if the policy is only going to insure the exec’s life to his family and not some sort of loan he is taking from the company…

    This is how the market adjusts itself without government intervention. The shareholders are not forced to buy the stock. They can sell it at anytime. The overall goal here is for everyone involved to make money. If the shareholders are unhappy they will sell. If enough people sell, the company will change its structure. Again, this is the market correcting itself. If you get the government involved with caps, that will be predetermining exactly how well someone is allowed to be.

    @EastToMidwest – What makes you so sure that your market theories are correct? Is it the vast and wide ranging empirical studies you’ve conducted? Or did you hear that from our always proven wrong president?

    Yea, and we all know peer-reviewed journals and widely-approved studies are infallible. Large groups of people believing something does not make it true. I am surprised it took this long for someone to blame Bush. Go ahead and vote Obama in if you want pure socialism. Then you will never have to worry about others achieving more than you, or you being able to improve your own life. No one will be allowed to because the government will be in control of these companies.

    @Tiber – I’m a person with an opinion. It seems to me many people share my opinion. For that matter, how much oversight is there when it comes to CEO’s opinions on how much they should make? Because they’re the ones writing their own checks.

    Many people sharing the same opinion does not make that opinion correct. Oversight is just another word for more government control. Where is your oversight when our government officials vote for their own pay raises without it being performance-based? Does that bother you? At least the CEO’s of these large, evil profit-making companies are actually doing something to make people’s lives better rather than trying to take everyone down to the lowest common denominator.

    Greg-USA

  43. jimconsumer says:

    @EasttoMidwest: And you say I’m talking out of my ass? – Where did I say that, exactly? We were talking about Comcast’s executive – or so I thought. What “market theories” of mine are you talking about? I didn’t say a thing about “market theories.” I just asked exactly what you thought you were going to do with the money you want to take away from these CEOs. You seem to want to distribute that to the workers. What, exactly, do you think each worker is going to do with a few extra dollars per year? How is that money in any way going to help their families? The way you’re talking, I get the impression you believe these CEOs are evil and they should be giving that money to others. How do you decide who gets how much? And if you distribute it all equally, everybody gets so little it doesn’t even matter, at which point it becomes an exercise not in helping the little guy, but simply in taking money away from someone that you’ve arbitrarily decided has “too much money.” As I said, it’s all good and well until people who have less money than you get together and decide that you have “too much money.” I’ll bet the homeless would love to split your salary amongst themselves.

    So who decides where the “too much money” cutoff is? You? Me? The public at large? Do we let everyone vote on it? How do we figure it out?

    @econobiker: Most of these control freaks don’t want to do this work and only want the gov’t to let them off tax free – Fine by me. Why are we taxing inheritances, anyway? Do you think it’s right to tax your heirs after you die? Taxes have already been paid on that money, when it was first earned. Why does the government get to tax the same money twice? These people pay millions of dollars in taxes every year. I’m perfectly OK if they concoct legal schemes to keep more of their own money.

    @EasttoMidwest: Because if their CEO had died in the previous quarter, Comcast would have lost — out of pocket — an additional $75.1 MM in cash. – They are clearly willing to take that risk on their CEO. Why does it concern you? If you’re a shareholder and you don’t want to take that risk, sell your shares! Nobody is forcing you to keep them.

    @Tiber: I said you were trolling because this argument has absolutely nothing to do with socialism. – I disagree completely. The general idea here, and folks in this thread have said as much, is that the CEO makes too much, so we should take that money away from him and redistribute it to the workers/shareholders/customers/etc. What is that, if not a socialist redistribution of wealth?

    On the insurance companies – if they don’t want to risk a $300M loss on their quarterly report, then they shouldn’t have insured the man for that amount. I consider this a complete non-issue.

    What I meant was, you keep repeating the term “fair market value” as if it were always “fair”. – “Fair market value” is the amount of money you can reasonably expect to get for your skills, in your market, under current conditions. Now, a person may not think his value is fair as compared to someone else’s value, but that’s neither here nor there. Your skills are worth $x based on supply and demand. That’s the fair market value for your job.

    For that matter, how much oversight is there when it comes to CEO’s opinions on how much they should make? – It doesn’t matter. My point is, you don’t get to decide this. You’re just a regular Joe, like me, like virtually everyone else. It’s not your place, nor is it the place of our government, to go crafting laws and demanding oversight on what a private corporation pays it’s executives. Even if it’s a publicly traded company, it’s still “private” in the sense that it’s owned by private citizens of this country. Nobody else has any damn business getting involved in this matter, not you, not I, not government. Now, if the shareholders want to force a vote to drop these salaries and perks, I’m perfectly OK with that. That would be their right as collective owners.

    I am disputing how much more they are worth than anybody else. – Well, again, it’s really not your decision. The guy who runs the company wants to give himself a bunch of money. That’s his prerogative. Not a lot you can do about it, nor should you be able to. Unless, of course, you own enough stock that you get a say (and if you don’t, I ask again, why do you give a shit?).

    @JiminyChristmas: I mean, who gets to decide this stuff? – Well, I guess if you own a controlling share in the company, then you get to decide this stuff. Isn’t that how life works? Don’t people get to do whatever they like with things they own?

    They would all be paid $100K/yr and driving Escalades instead of Econoline vans until they were reined in by powers greater than themselves. – Fine. What’s the problem with that, exactly? If they own controlling shares in the company, isn’t it their own business what they pay themselves?

    You all seem to be very upset over people making “too much” money. I can’t wait until this line of thinking comes back to bite you; I hope each and every one of you becomes a multi-millionaire some day, so that people just like yourselves can come around and say, “Hey, that isn’t fair! Give me some of that!” Perhaps then you will understand what I’ve been trying to tell you here.

  44. EasttoMidwest says:

    @jimconsumer:

    You’re right. I paraphrased. You didn’t say talking out of your ass, you said, “don’t know what you’re talking about.”

    You’ve expressed several market theories here, namely that all free markets balance themselves, the corporate structures are such that those at the top necessarily add more value than they pull, etc.

    Now that we’ve got that out of the way.

    I don’t think anyone else said this, but I know I never said anything about the excess money should be distributed. Nor did I say I was a socialist or any of the odd assumptions and ramblings you put forth about my ideologies and outlooks. I said that this particular practice is immoral.

    See, your logic seems to go like this. Because someone CAN do something they should. I think Al Capone would agree with you. I think every con man agrees with you. I think everyone is prison agrees with you. The fact is that as a society we have set down rules in an effort to improve all of our lots and to improve the wellbeing of the society as a whole. This is why, for example, I’m not supposed to hit you over the head with a baseball bat and take all of your money.

    None of these actions are taken without wider ranging repercussions. You’ve probably heard of something called Game Theory. This is a widely accepted and well proved economic theory. In it’s most basic form, it says this. By working in concert as opposed to each man for himself, each party does better.

    An example of a situation where the each man for himself mode is devastating large swathes of American society — including corporate society and the very wealthy — is the current credit crisis. There were built in incentives (thanks primarily to a reduction in governmental oversight and regulation combined with an intentional obscuration of facts — more on that below)for each cog in the mortgage backed securities industry to feed the chute with intentionally bad products. Now, at every level people knew that what they were doing on their part of the ladder was harmful to the entire system as a whole. The people who knowingly contracted bad mortgages, the people who bought those bad mortgages and then repackaged them for a profitable sale, etc. So it was bad for all of us that they did this. And many of these people knew that. But the fact is that each person — as an individual — would have been foolish NOT to do, rationally speaking. By not participating in the corrupt system they would have lost out on a good deal of money. And those guys at Bear Stearns, Countrywide, etc., etc., are still walking out of their humiliated, perhaps, but still rich with all that money. Did those people make too much money? You betcha.

    Is that okay? Should that scenario have been prevented? If you say no, then you can’t argue for the “rightness” of anything. Because what you’re saying is that any man or woman who can do anything for his or her own enrichment and the unbridled expense of not just a whole lot of people but also at the expense of the economy as a whole. You’re saying that it’s okay for Al Capone to do what he did, for every African dictator who lets his people starve while he fills his Bentley with London whores. You’re saying that there is NO line of decency and community protection. You’re saying open all the prisons.

    So to go back to the issue of the golden coffin and why, in my opinion, it falls short of the line of acceptability. First off, the way these things are handled on the balance sheet have been obscured until very recently. A whole lot of other things have been obscured, and about the only good corporate governance changes to come out of the Bush years is the changes to generally accepted accounting principles (GAAP). Note: these changes have ALL been about how compensation is accounted. First it was the stock options and now it’s this. And FYI, the very REASON that these forms of compensation were chosen were not because they didn’t show-up on the company’s bottom line but because they didn’t show up at fair value on the company’s earning sheets. Econobiker is absolutely correct that these people effectively write their own checks, and then they try their damndest to obscure it from shareholders.

    Which brings me to my next point about obscuration of financials. You’ve missed a VERY IMPORTANT part of the definition of “fair value.” The definition is the amount that a seller and buyer are willing to transact provided they both have enough information to make a rational decision.

    THAT is a basic tenet of free market economy, by the way. Information has to be available to all who need make financial decisions.

    But there is yet ANOTHER aspect to “fair value” and that is the ability to MAKE a decision. If corporate structures are such (and they are) that buyers of high cost labor (i.e., shareholders) are unable to actually affect any sort of change, then there is no “fair value.” And the board system makes sure that that stays the same. People sit on multiple boards, put in very little work, and pay themselves a lot of money. Most often they are there at the bequest the CEO who is often ALSO the chairman of the board. These are essentially economic plums, and it is highly incestuous. If board member A wants to keep his million dollar a year board spot for a couple of hundred hours of work a year (if that), he or she wants to keep the CEO happy. It does happen, but it’s pretty rare that the politics of a board are able to overcome this dynamic.

    That’s why it’s up to people who watch these things to point out what’s happening. THAT’S WHY THE JOURNAL RAN THE STORY ABOVE THE FOLD ON THE FRONT PAGE. To inform their investing readership about this. If it were common knowledge, then the readers of the Journal, who tend to be WAY more informed than anyone else, wouldn’t need to read about it.

    One last thing about death insurance. This can actually be much more pernicious that straight up death bonuses. For one thing, the money is paid out of a series of years, essentially ahead of time. The insurers would not take less than they expect to pay out. By definition the companies are paying more to insurers than then their executives are going to receive, and the value of that money actually decreases over time (very basic principle: a dollar today is worth more than a dollar tomorrow, thus paying an insurer for an event ten years in the future is actually more expensive that keeping and investing that same amount of money over the same period). Moreover, if an executive leaves the company and loses some portion or all of the insurance coverage, his former is just straight up out that amount. If, however, someone with a bonus leaves the company and loses his right to that bonus, the company loses nothing. And finally, another reason that the insurance system is so attractive is that it shows up in dribs and drabs over the course of a policy. What’s $600,000 you say. Well, over ten twenty years at a decreasing rate of value it’s worth a lot.

    Anyway, I think you’re assuming A LOT about the motives of people here, certainly you are of me.

  45. EasttoMidwest says:

    One other thing. To clarify what I mean about the ability of shareholders to make a decision regarding compensation: shareholder power is intensely diluted. Most shareholders simply have to play the hand their dealt by various corporations. Before the securities laws of the 1930s, shareholders didn’t even have a right to standardized financial information about the health of a company. Every once in a while shareholders are, in theory, able to vote for a couple of things IF someone is able to expend the massive amounts of money to organize and coordinate enough people to move the item to an agenda. Most of the time shareholders receive some short bit of information — a pitch really — that asks them to turn their proxy over to one party in a dispute. When there isn’t an organized dispute, such as the election of a board member, they are asked by the top powers at a company to turn over their proxies. It’s much easier to do this, rationally speaking, on the part of an individual investor, than to spend their time (which is worth money) researching the limited information available about any particular question on the books. A true proxy dispute is so rare that when it happened at Exxon last week it made front page news.

    So that’s a structural impediment to the way compensation can be debated. In short, the deck really is stacked against the shareholders and stakeholders.

  46. Tiber says:

    @jimconsumer:

    “The general idea here, and folks in this thread have said as much, is that the CEO makes too much, so we should take that money away from him and redistribute it to the workers/shareholders/customers/etc. What is that, if not a socialist redistribution of wealth?”

    The entire Consumerist site is a site about capitalism. So why don’t we just make every article about the merits of capitalism vs. socialism? We can even throw communism in if you want! We can discuss government fiscal policies all day long, but isn’t that getting away from the point of the article? Yes, they are related, but that’s a broad topic. And considering its first mention was being used as an insult, it’s a topic that will degrade into a flame war quickly.

    I don’t speak for anyone else, but I at least don’t care if it goes to workers or not. It’d be nice, but I just think it’s hypocritical how liberally they spend company money on themselves while cutting costs everywhere else.

    “What, exactly, do you think each worker is going to do with a few extra dollars per year?”

    Pay debts? Treat their kids? What will a CEO do with the money? Put it in a bank? Buy stocks? Again, it’s not about the workers to me, but your argument seems to be that it’s better for one person to have a lot of money than for a bunch of people to have a little, simply because it ends up being too little for each person to matter. But who decides what’s too little? It’s all good and well until people who have more money than you decide that it won’t make a difference, so they’ll just keep it for themselves.

    “Your skills are worth $x based on supply and demand. That’s the fair market value for your job.”

    The problem is, CEO’s can decide their own pay. They control both supply and demand, using money that’s not theirs.

    “My point is, you don’t get to decide this. You’re just a regular Joe, like me, like virtually everyone else. It’s not your place, nor is it the place of our government, to go crafting laws and demanding oversight on what a private corporation pays it’s executives. Even if it’s a publicly traded company, it’s still “private” in the sense that it’s owned by private citizens of this country.”

    Newsflash! This is a blog site, where people post opinions knowing that their opinion counts for jack. My opinion means nothing, as does yours for that matter. I know that. However, companies are legally obligated to serve their shareholders, and giving money to themselves may be going against that, so the government has a say. Also, this country is only capitalist because the government says it is. Government > everything. You may not like it, but they are free to interfere as they please. If that’s a problem, you’re free to vote for someone else. As to the shareholders, there are plenty of shareholders who are voting against CEO income. They just have to know about it, which is where articles like this fit in. I’m sure many CEO’s would rather few know about it.

    You seem to think that because they earned that money, they’re free to take as much as they want. If they owned an entrepreneurship or partnership, that might be true. However, in a corporation, aside from their shares, the company’s money is no more theirs than it is the accountants.

    You like to make appeals to people’s greed, about how we wouldn’t like to give up money. Aside from the fact that I’d like to pay off school loans first, I have no problem with that. I plan to donate when I am reasonably able.

    “On the insurance companies – if they don’t want to risk a $300M loss on their quarterly report, then they shouldn’t have insured the man for that amount.”

    I’ll concede this one, though if companies thought far ahead, this mortgage crisis might not be so bad.

    “Do you think it’s right to tax your heirs after you die? Taxes have already been paid on that money, when it was first earned. Why does the government get to tax the same money twice?”

    I agree, but this is government we’re talking about. They tax you when you earn money, spend money, invest money, etc. If you’re only getting taxed twice, consider yourself lucky.

  47. yeahitworks says:

    My opinion is show me a CEO, and I’ll show you 100 guys that will work 10x as hard as him/her for a quarter of his pay.

  48. Greg-USA says:

    EastToMidwest – “You’ve expressed several market theories here, namely that all free markets balance themselves, the corporate structures are such that those at the top necessarily add more value than they pull, etc.”

    The people at the top do add more value. They are the ones taking much more risk and if it fails they are the ones blamed and shoulder the entire burden. They are also usually more educated on how to run a company. I have seen many CEO’s and company leaders put in way more hours on the job than the customer service rep on the phone. There is no such thing as 8-5 for a CEO.

    “See, your logic seems to go like this. Because someone CAN do something they should. I think Al Capone would agree with you. I think every con man agrees with you. I think everyone is prison agrees with you. The fact is that as a society we have set down rules in an effort to improve all of our lots and to improve the wellbeing of the society as a whole. This is why, for example, I’m not supposed to hit you over the head with a baseball bat and take all of your money.”

    Your logic is flawed. What rules are these companies and CEO’s breaking? Just because some people think it’s immoral or unethical doesn’t mean it is, or that it’s against the law. It seems to me you are assuming CEO’s are evil like bank robbers. You are pigeon-holing people. By your logic, just because someone CAN cure cancer doesn’t mean they should.

    “By working in concert as opposed to each man for himself, each party does better.”

    If they are on equal footing then yes. If two people start a company and one is the CEO and the other is the janitor then when the company takes off and makes millions the janitor should not reap the same benefits.

    “There were built in incentives (thanks primarily to a reduction in governmental oversight and regulation combined with an intentional obscuration of facts — more on that below)for each cog in the mortgage backed securities industry to feed the chute with intentionally bad products. Now, at every level people knew that what they were doing on their part of the ladder was harmful to the entire system as a whole. The people who knowingly contracted bad mortgages, the people who bought those bad mortgages and then repackaged them for a profitable sale, etc. So it was bad for all of us that they did this. And many of these people knew that. But the fact is that each person — as an individual — would have been foolish NOT to do, rationally speaking. By not participating in the corrupt system they would have lost out on a good deal of money. And those guys at Bear Stearns, Countrywide, etc., etc., are still walking out of their humiliated, perhaps, but still rich with all that money.”

    This is completely ridiculous. Why is more government control always the reply from you people? The people in lending institutions never intended to cause this “crisis”. Since they are evil money-grubbing greedy people it wouldn’t be in their best interest to do so. The one, singular fault for this “crisis” is the people buying houses they could not afford. That’s all, and nothing more. Would you go out and buy a $250K Lamborghini if I promised you a $250.00 per month payment but in two years it would go up to $2500.00? If you are smart you wouldn’t. It wouldn’t be in my best interest to sell you the car either, knowing you couldn’t afford it. It is up to the buyer to make sure they can afford what they buy. How many buyers lied about what they could afford?

    “Did those people make too much money? You betcha.””

    Well there you go again blaming people for making too much money. I think the money you make is too much. I demand you give some to me.

    “The definition is the amount that a seller and buyer are willing to transact provided they both have enough information to make a rational decision.

    Caveat Emptor. If the buyer didn’t do their homework it’s their own fault. Who is more greedy, the Snake Oil salesman or the buyer thinking they will get a cure-all? Both.

    “THAT is a basic tenet of free market economy, by the way. Information has to be available to all who need make financial decisions”

    Information is now much more available than ever before. There is no excuse to be taken on a deal other than laziness.

    Tiber – “The problem is, CEO’s can decide their own pay. They control both supply and demand, using money that’s not theirs.”

    Read my statement again above about government officals deciding their own pay and then tell me what’s wrong here.

    Greg-USA

  49. RvLeshrac says:

    @raisitup:
    @linus:
    @jimconsumer:

    Oh, look, the BS CEO apologists are here!
    I don’t see you talking about the CEO’s responsibility when the company has to fire 10,000 employees because the company has tanked due to inconceivably stupid management decisions.

    @jimconsumer:

    And they are ALMOST NEVER HELD ACCOUNTABLE WHEN THEIR ACTIONS DESTROY A COMPANY. *THAT* is why the sane among us have such a HUGE problem with BS like this. A CEO can literally destroy a company, reap massive benefits, then be hired THE NEXT DAY to destroy ANOTHER company, with ANOTHER massive benefits package.

    CEOs are paid massive bonuses when they succeed, but they are given the same amount of money, or more, if they are miserable failures.

    If I fail at MY job, I’m fired, and I don’t get some idiotic sum of money for driving the company into the ground. If I succeed, I get nothing more than my paycheck. If the CEOs and other members of management believe that a paycheck is enough for the rest of us, why isn’t it enough for them?

    A few individuals stand out and have DESERVED their huge sums of money – Buffett, Eisner, Gates, Jobs, and Michael Dell, to name some of them – but the majority of CEOs are not in any way responsible for the success of their companies.

    I have absolutely no problem with awarding individuals for outstanding performance, but this is awarding people with vast amounts of money for simply *showing up to work*.

  50. RvLeshrac says:

    @Greg-USA:

    The mortgage crisis was caused by lenders telling people that the $250 Ferrari payment *could* go up to $2500, but probably wouldn’t – and that they wouldn’t need to worry about that anyway because they could always sell the house at a profit.

    The Snake Oil Salesman and the buyer *ARE* both at fault – but the Snake Oil Salesman is selling something that appeals to the most basic human instincts – the Snake Oil Salesman holds *MORE* of the blame because he is *consciously aware* of the fact that he is cheating the other person.

    If we’re following YOUR logic, then we should never pass laws making it illegal to defraud individuals – since the person who was defrauded didn’t “do the research,” they’re to blame. This is the same line of reasoning that leads to “she was raped because she was asking for it.”

    You can’t blame the victim, you know.

  51. TechnoDestructo says:

    @raisitup:

    There are no “supply and demand forces” in senior executive compensation.

    When you are deciding how much your friends are paid, and they are deciding how much you are paid, you will make as much money as they do.

  52. EasttoMidwest says:

    @Greg-USA:

    Wow, you did not understand a thing I said. I thought I was being clear, but perhaps I assumed a basic understanding of economic principles and a knowledge of how things get done in this country.

    I thought everyone knew about how the credit crisis came to be. But apparently not. I PROMISE you that your understanding of how it went down is wrong. There was massive massive massive fraud at the actual mortgage level in addition to “well, we’re going to pass the buck for a profit, so it doesn’t matter” at the higher levels. Traders at the brokerage houses ASKED lenders to create more bad loans so that the brokerage houses could repackage them and sell them to third parties. The previous incentives were… you know what? I’m not going to go into detail here. The information is out there. Go find it.

    Speaking of information, it’s pure absurdity to say that an individual purchaser has the same level of information and expertise as lenders. I don’t even know where to start with this one. Again, it indicates a vast ignorance to even state just a thing. Banks were perfectly capable of offering solid mortgages for generations. Why? Because they KNEW. In the case of the credit crisis, they KNEW and they ignored. To blame a series of individuals ABOVE a a fundamental systemic flaw is beyond absurd and, more important, as a policy outlook it simply doesn’t work. Because policy can control systems but not individuals. THE most basic tenet of economics is that individuals will respond to appropriate incentives. The fact that so many people acted against their own rational interest is, in economic terms, proof that the incentive SYSTEM was by definition corrupt.

    Your logic reminds me of that old auto industry “bean counter” scandals of the eighties. It came out that some car companies knowingly allowed fatal flaws in their cars (e.g., a car flips over while the blinker is on and the car immediately explodes) because they assumed that the financial settlements for the occasional fatality was cheaper than refitting all of their cars. It didn’t matter that actual human beings would die. Now, by your logic, in addition to that being okay, the drivers in such accidents are completely to blame for swerving to avoid a squirrel and rolling over. And that’s true – up to a point. But surely you can see what that point is?

    The reason I said that those involved with the credit crisis got paid too much is because they lost their employers BILLIONS of dollars and yet walked away with hundreds of millions, if not billions. They were paid despite failure on an unimaginable scale. That is one instance where you can say yes — they earned more themselves than they made for the company.

    As for my statement regarding whether those at the top adding more value than they pull, the above example makes my point. Corporations are organizations, and it’s very hard to determine how much value is added by a CEO. A company can lose money under a CEO’s watch and still turn a handsome profit, whereas under another CEO the company could have made additional profit. THE only instance in which it makes sense to pay a CEO, say, $20 MM, is if you can be sure that the actions of that CEO — and that CEO alone — added more than $20 MM in NET PROFIT to the company’s bottom line. Does that make sense?

    And lastly, as far as things being legal yet unethical, everything is legal before someone does it. After things become a problem, and enough people recognize it as such, it THEN becomes illegal.

    As for regulation, it is a very delicate balance. But what is clear is that as true as it is that dictatorial levels of regulations are extremely harmful to the economy, complete lack of regulation is also harmful to the economy — i.e., the population — as a whole. I’m not going to go back into the details of what regulation and oversight was dropped in the case of the credit crisis — again, a google search will probably give you a lot of information on that — but suffice it to say that changes to banking regulation and oversight allowed this to happen (the big brokerage houses are actually banks, and the regulations had a lot to do with how certain fundamental banking practices were allowed to be traded speculatively). Regulating and protecting the economy is as important as regulating and protecting city streets. I’m not sure why so many people think the latter is the job of government but the former isn’t.

  53. Tiber says:

    @Greg-USA: Sorry, I must have missed your earlier post.

    “Oversight is just another word for more government control. Where is your oversight when our government officials vote for their own pay raises without it being performance-based? Does that bother you? At least the CEO’s of these large, evil profit-making companies are actually doing something to make people’s lives better rather than trying to take everyone down to the lowest common denominator.”

    I have a problem when the government does it too. Did you think that I wouldn’t? Do you have a problem when government does it? If so, why is it acceptable when corporations do it?

    Anyway, the big issue, that several have brought up, yet the “anti-socialists” for lack of a better description fail to address, is why are they making so much money when they fail? Your reasoning is that CEO’s deserve the money they earn because they take risks and bring more money to the company. I can agree with you on that (in theory at least, though I might disagree on specific instances), but by that logic, if they make the company lose money and take stupid risks, doesn’t that mean that they don’t deserve the money? Yet they get it anyway.

    It has never been about how much money the CEO’s make. The issue is the fact that the system allows the CEO to have such enormous influence on their own paycheck. If shareholder’s determined CEO pay (and I mean choosing it in the first place, rather than disputing a decision that was made without them) and they agreed to pay a CEO twice as much as they make now, I would have no problem. I would find it ridiculous, but I wouldn’t care. It is not about the numerical figures, it’s about an easily abused system.

  54. alejo699 says:

    I just realized something that never occurred to me before … I think the CEO apologists are actually MORE idealistic than all the people they’re labeling socialists. Why? Well, obviously they’re not making the zillions of dollars the CEOs are — no one posting in a blog is — but they believe that they COULD. If they wanted to. Because this is America, where hard work and dedication is all you need to pull yourself up by your bootstraps and get to wherever you want to go.
    Sorry, no. There might be a CEO or two who can claim that, but for the very large part the heads of corporations come from a relatively small pool of white guys whose families have had mountains of money since the country was founded. They trade positions between each other, scratching each others’ backs and making sure nobody else gets into the club.
    There isn’t much that’s actually “free” about the market, and saying we have power as shareholders to change that is akin to saying that in a Libertarian state consumers should just avoid buying from the companies that pollute. Well, with no government oversight, how will we ever know which companies those are? And what if there is only one company?
    True capitalism is as much of a pipe dream as true communism, and for exactly the same reason: Greed.

  55. Greg-USA says:

    I have to wonder, how many of you people against CEO’s making a lot money – have you ever been in a high-level corporate position? Have you ever started and owned your own business?

    If you haven’t, this may be the disconnect.

    Greg-USA

  56. jimconsumer says:

    @EasttoMidwest: Oh, please. You’re comparing murderous gangsters and con men with CEOs, now? A CEO taking profits out of a company he fully controls and, in many cases, owns a controlling share in, is not immoral. It’s his company! He can pay himself what he pleases; morality isn’t a factor here. This does not mean you can do with your baseball bat what you please, if it means hitting me over the head. Obviously, there’s a line there where my rights trump your own. But if your baseball bat is making you money, legally, you can keep that money and I’m not going to claim you’re immoral for not sharing it with the guy who made the bat.

    On the mortgage crisis: What would you have done to prevent it? Greedy banks and greedy consumers united. I think they all got what they deserved. You couldn’t pay me to take a variable rate mortgage full of fees and anti-consumer contract language. Thing is, these were private transactions. What would you have done, stepped in and told consumers who wanted, in many cases begged, banks to make these bad loans because it was the only way they could buy a house – would you have told them, “You can’t have this mortgage because it’s bad for you?” What happened to personal responsibility? Let people do what they choose and let them face the consequences of their actions.

    You talk as if the big mean banks screwed over the little guy here. That’s not the case at all. The little guys were, by and large, complete idiots for signing those mortgages in the first place. Most of them had no business buying a house, thus the reason they could not get a traditional mortgage. Let them sit in their stew. Now, I realize there were some isolated cases of lenders intentionally pushing people who qualified for traditional mortgages into this mess. If this went on, there should be legal consequences for their actions. I’m thinking make the entire loan null and void and let the consumer who was intentionally cheated by the bank keep his house free and clear. But most of it didn’t work this way. Most of these people wouldn’t have qualified any other way and willingly went into it. Screw them, they made their bed.

    @Tiber: The workers are going to pay debts with an extra $4 per year that you took away from their CEO? Are people in debt to McDonalds for their kids Happy Meal now? You talk as if the company is completely screwing the workers, keeping them in poverty. Reality is the companies are giving a lot of workers a lot of money already. Such additional, tiny amounts will make zero difference in their lives. In the meantime, the company would lose the ability to offer these little perks to attract and keep a competent CEO.

    It’s all good and well until people who have more money than you decide that it won’t make a difference, so they’ll just keep it for themselves. – Well, if they control the company, then they have the right to keep it for themselves. You are not entitled to any sort of profit sharing just because you’re an employee of the company. Generally, the top brass get this. It’s how companies works. Again, I say to you, if you don’t like it, you are welcome to start your own company that shares it’s profits equally with everyone and pays it’s CEO just slightly better than it’s janitor – if you really think you can make that work (I wish you luck). You don’t, however, have the right to tell other people how to run their companies.

    However, companies are legally obligated to serve their shareholders – Care to cite the laws? Companies are only obligated by their shareholders to serve their shareholders. There is no law that I’m aware of that says a company must serve it’s shareholders. The government has nothing to do with this. This country is not capitalist because the government says so, it’s capitalist because the private citizens who founded it said so. It remains capitalist because it’s citizens, by and large, continue to insist on it.

    However, in a corporation, aside from their shares, the company’s money is no more theirs than it is the accountants. – Not true. The company’s money effectively belongs to whomever owns a controlling share of the company. Generally, that’s the CEO and/or another high level official, or group of officials acting together (board of directors).

    @Greg-USA: Well there you go again blaming people for making too much money. I think the money you make is too much. I demand you give some to me. – Hahahahaha! Thank you! That’s exactly what I am talking about.

    @RvLeshrac: And they are ALMOST NEVER HELD ACCOUNTABLE WHEN THEIR ACTIONS DESTROY A COMPANY. – So? In most cases it’s their company to destroy, given they own a majority controlling share. You can be pissed about it, but not much you can do. If I want to run my own company into the ground, that’s my business.

    I have absolutely no problem with awarding individuals for outstanding performance, but this is awarding people with vast amounts of money for simply *showing up to work*. – I know. It’s a sweet gig. Tell me with a straight face you wouldn’t take it if given the opportunity.

    the Snake Oil Salesman holds *MORE* of the blame because he is *consciously aware* of the fact that he is cheating the other person. – How do you know that? The price of houses was on the rise. You don’t think it’s possible some of these lenders truly believed their customers’ homes would continue to increase in value? Sure, they made “promises” they had no control over, but in most cases what they said was generally true. Chances were damn good your house these houses would continue to increase in value.

  57. jimconsumer says:

    @Greg-USA: If you haven’t, this may be the disconnect. – Good call, Greg. I have owned several small companies, that I built from the ground up. None turned into multi-million dollar ventures, but I can only imagine how I’d feel if they had and some little shit came up to me and said, “You’re paying yourself too much money.”

    I ask again, who defines how much is “too much”? Those of you who say CEOs make “too much”, can you answer this question? How do we choose the amount? Who gets to pick? I make good money, so my number is bound to be much higher than, say, the guy flipping burgers at McDonalds. My opinion isn’t necessarily more important than his, though, so which of us gets to choose?

    My cousin is an ardent socialist. She thinks the line is $40k a year. As in, anyone making more than that should be taxed at 100% for “the better good of the rest of us.” Hillary Clinton likes to take money away from those who make “too much”, too. She thinks the line is closer to $10M. Conveniently, everyone who has ever tried to set the “too much” bar always sets it just above their own salary. I find that intriguing.

  58. Drowner says:

    @Greg-USA: Indeed.

    Calling them “golden coffins” is completely misleading and apparently pissing off a large contingent of Consumerists readers. That money is used to pay off CEOs estates, which include ALL money practices they are involved in. Own a huge chunk of stock? Directer of a mutual fund? A couple of trusts in your name? OTHER FAMILY MEMBERS trusts in your name?

    Uh Oh. That’ll be $20 Million in fees please. You say you have a family and a mortgage? Too bad.

  59. EasttoMidwest says:

    @jimconsumer:

    I don’t know why I’m bothering to make this last point because it’s clear to me that, in addition to being a fringe lunatic, you have poor reading comprehension skills, but I’d hate to have another reader think that you are correct about anything.

    You’ve morphed your argument into something about how executives control the companies because they have a controlling interest in the country. What on earth makes you think this? I mean, really, do you have any idea how many shares are outstanding in any of the companies we’ve been discussing (Comcast is an exception in that it really is a family business. It’s also piss poorly run — in no small part because they won’t spend the money to hire skilled and happy employees (because investing in employees is actually a corporate investment with predictable returns), but that’s another conversation for another day). Oh wait — sorry about that. I used several clauses in the course of one sentence to express the interrelationship of several ideas.

    Okay, back to the main point. It is a completely fallacy that most corporations (at least those of any size and influence) employ CEOs who have controlling interests. God, you really don’t know much about this, do you?

    Now if someone alrady is a controlling shareholder and he or she decides that he or she wants to personally run the company, that’s one thing. But most top executives are given additional shares — by themselves — after they’ve attained a certain amount of power. Get it?

    Now, I would like you and this greg fellow to find ONE place in the comments posted by those to whom you replied where anyone makes a statement about salary caps for CEOs.

    See that’s exactly what I’m talking about in terms of poor reading comprehension skills. Instead of listening and making an effort to understand what was being said, you opted to hear a few words which triggered some sort of association and inferred meaning which was never stated. I’m sorry you’re neice is a moron (if she really is). Doesn’t mean I am. In fact, we might not share any characteristics whatsoever.

    And lastly, I and some other posters are not “disconnected” because we aren’t CEOs. Although, if we were disconnected for that reason, then it would follow that CEOs are disconnected from the effects of their actions on everyday people.

    No the real disconnect from reality is that YOU actually think you can be one of these guys. You can’t. You won’t. And they will fuck you over any way they can and you’ll take it with a smile. And that’s sad.

    I know I’ve been harsh with you, but I harbor no ill will toward you and wish you the best of luck.

  60. jimconsumer says:

    @EasttoMidwest: I’d hate to have another reader think that you are correct about anything. – Too late, Scooter. That train has already left the station. The fun thing about people like you is, when the conversation doesn’t go your way, you react by calling names, resorting to personal attacks and twisting words. I didn’t say “most corporations” employ CEOs who have controlling interests. I said “in many cases.” Many does not equal most. Further, if the CEO’s buddies hold controlling shares, sit on the board of directors and do his bidding, as has been stated several times in this thread, then the CEO has full legal control and authority over the company. He effectively owns the controlling shares himself.

    Now, I would like you and this greg fellow to find ONE place in the comments posted by those to whom you replied where anyone makes a statement about salary caps for CEOs. – You have got to be fucking kidding me. All of this talk about CEOs making too much money, how they don’t need more, how that money should be redistributed to others, and you’re telling me that’s not the same as calling for a salary cap? You’re calling for taking money away from the CEOs. It’s the same damn thing. Besides, I didn’t use the words “salary cap”, you did. All I asked was, “How much is too much?”, and, “Who gets to decide?”

    I’m sorry you’re neice is a moron – You’re hilarious. You accuse me of having poor reading comprehension skills, yet you misquote me constantly. I clearly said my cousin, not my niece. Is it relevent to the discussion? Not really, but it is ironic given I’m supposed to be the one with the poor skills.

    No the real disconnect from reality is that YOU actually think you can be one of these guys. – Right, because you know a damn thing about me. Oh, that’s right, we’re completely anonymous and don’t know shit about one another. So why do you assume you have any idea who I am?

    It’s telling that you don’t believe any of us can attain this level of success. If you really think there is a coordinated effort to keep everyone down, no wonder you are so sour on CEOs. I’m an optimist and I don’t believe in conspiracy theories. I know I’m capable of attaining that level of success; I’m already most of the way there. It’s too bad you don’t believe in yourself more.

  61. Tiber says:

    @jimconsumer:

    “The workers are going to pay debts with an extra $4 per year that you took away from their CEO? Are people in debt to McDonalds for their kids Happy Meal now? You talk as if the company is completely screwing the workers, keeping them in poverty. Reality is the companies are giving a lot of workers a lot of money already. Such additional, tiny amounts will make zero difference in their lives. In the meantime, the company would lose the ability to offer these little perks to attract and keep a competent CEO.”

    When did I ever say companies are screwing workers? You’re putting words in my mouth based on your perceptions of people you disagree with. My point is that you assume that workers have no use for the money, and that that extra money is necessary to keep a CEO. Also, that money is being used to keep CEO’s who are less than competent as well.

    “It’s all good and well until people who have more money than you decide that it won’t make a difference, so they’ll just keep it for themselves. – Well, if they control the company, then they have the right to keep it for themselves. You are not entitled to any sort of profit sharing just because you’re an employee of the company.”

    See my second to last sentence in the paragraph above. Also, I never said I or anyone else was entitled to it. Once again, the issue is the fact that the system allows the CEO to have such enormous influence on their own paycheck.

    “You don’t, however, have the right to tell other people how to run their companies.”

    I am not giving anyone orders. I am stating an opinion.

    “This country is not capitalist because the government says so, it’s capitalist because the private citizens who founded it said so. It remains capitalist because it’s citizens, by and large, continue to insist on it.”

    Minor quibble: this country was founded by traitors to another country. A government can not be founded by citizens, because by definition a citizen is a member of a state or nation. That’s like saying someone “wanted to be raped.” Anyway, it’s the current government’s decision to remain capitalist. If the majority of the government wanted America to become communist, it would be. There’d probably be a revolt, but they could.

    “However, in a corporation, aside from their shares, the company’s money is no more theirs than it is the accountants. – Not true. The company’s money effectively belongs to whomever owns a controlling share of the company. “

    That’s why I said “aside from their shares”. I’m well aware that the top brass has a lot of shares, I’m simply saying that if some hypothetical CEO had no shares, then the company’s money would be belong to him no more than a child belongs to its babysitter. A CEO in principle does not “own” a company, he merely manages it. Also, if you own 51% of a company, 51% of the money belongs to you. 49% belongs to others. You may be able to make any decision go your way, but if you abuse that power it may come back to haunt you.

    “You talk as if the big mean banks screwed over the little guy here. That’s not the case at all. The little guys were, by and large, complete idiots for signing those mortgages in the first place.”

    I won’t disagree with you on the idiocy part, though you act as if not knowing something and making a mistake was a sin. However, there are plenty of cases where lenders gave out loans that violate the law, because they figured that customers wouldn’t figure that out.

    “A CEO taking profits out of a company he fully controls and, in many cases, owns a controlling share in, is not immoral. It’s his company! He can pay himself what he pleases; morality isn’t a factor here.”

    I consider it immoral if the CEO owns less than 100% control of the company, unless the other shareholders see their share of the money. If morality isn’t a factor, then why hide their salary? The way I see it, a CEO is not an owner because you can’t fire an owner, but you can definitely fire a CEO. Put it up to a shareholder vote; even if the CEO has a controlling share, at least then the other shareholders will know what kind of company they’re dealing with. On a related note, you suggest that a CEO might move on to another company if not for their lavish salary; yet, if they own a controlling salary, how is this a concern?

    “I have owned several small companies, that I built from the ground up. None turned into multi-million dollar ventures, but I can only imagine how I’d feel if they had and some little shit came up to me and said, “You’re paying yourself too much money.” “

    Ah, so the self interest shows itself. The disconnect is, you keep imagining us as some impudent little shits who want to steal your money and laugh about it. Sorry, I don’t know who you are and I don’t care. I don’t know how much money you make and I don’t care. You keep misinterpreting our point, even though it has been stated several times. Your own biases are making you completely overlook what we are trying to say.

    So I’ll say it again.

    It is not about the numerical figures, it’s about an easily abused system.

  62. jimconsumer says:

    @Tiber: You’re putting words in my mouth based on your perceptions of people you disagree with. – No, I’m not. I absolutely did not say you made that statement. I said, “You talk AS IF…”. I don’t assume that workers have no use for the money. I’m sure they could find a way to spend it. However, the simple fact is the kind of money we’re talking about is irrelevant in their lives. If you’re making $33k a year, an extra four dollars means nothing to you. Honestly, it doesn’t. If your boss called you into his office to say you were getting a raise, and you found out it was four bucks a year, would you give a shit either way? If you’re anything like me, you would wonder why he went to the trouble. I mean, really, what’s the point?

    the issue is the fact that the system allows the CEO to have such enormous influence on their own paycheck. – I get that. What I don’t get is why it’s an issue to you? Really, why do you care that some people get to choose how much they get paid? I’ve run several small businesses. Some profits are retained by the business for savings or investment; other profits are taken by me as a paycheck; still other profits are used to give employees raises, or hire more employees, etc. As the person running the business, I’ve always decided how much to put toward each of these; thus, I’ve decided my own salary.

    This is apparently something that bothers you and I can’t, for the life of me, understand why you should give a shit one way or another. Furthermore I vehemently disagree with the idea that any of you get even an ounce of influence over what I do with the profits of the businesses I control. Granted, my small businesses were not large, publicly traded companies, but still, if you don’t like how the CEO is running things, don’t invest your money in that company. It seems simple enough to me. For people to get all pissy about how things are run is ridiculous.

    If the majority of the government wanted America to become communist, it would be. – For a few days, perhaps, until We, The People took our country back by force.

    You may be able to make any decision go your way, but if you abuse that power it may come back to haunt you. – Certainly. I won’t argue with that.

    However, there are plenty of cases where lenders gave out loans that violate the law, because they figured that customers wouldn’t figure that out. – Understood and agreed. Those lenders should be tarred and feathered and forced to pay due recompense to those they screwed.

    If morality isn’t a factor, then why hide their salary? – Privacy. I don’t want everyone to know how much money I make. Do you?

    It is not about the numerical figures, it’s about an easily abused system. – The system will always be easily abused. It’s the nature of the beast at the top tiers of any system of power. Sure, you could put in oversight committees, etc, but then you tie everyone’s hands and embroil the company in bickering and negotiations that prevent it from reacting quickly. Besides, I’ll again reiterate that it is not OK for outside groups, including the government, to step in and say, “Hey, your corporate structure is easily abused by your CEO. You need to fix it.” If a majority of a company’s shareholders want to do it, then they need to do it. Everyone else can go fly a kite because it’s really none of their damn business.

    And yes, the self interest does show. I’ve never tried to hide it. If I control something, I’ll do with it as I please. I’m not going to let anyone else tell me how to run things. If I’m not the owner and the actual owners don’t like it, they can revoke my control, but the government and all of the rest of the people who think they ought to have a hand in things can all go fuck themselves. The only people who get a say are the majority owners. If that also happens to be me, well, then I’m top dog and nobody else gets a say. You can ask, beg, attempt to coerce and convince, but at the end of the day it’s my damn decision whether everyone else likes it or not.

  63. EasttoMidwest says:

    @jimconsumer:

    you react by calling names, resorting to personal attacks and twisting words.

    You’re not wrong. I don’t think I called you names but I did get carried away and shouldn’t have spoken to you that way.

    On the other hand…

    Are you a filthy socialist or something? You want to take that money away from him? Why? What do you care? You don’t want to see other people succeed? You think it’s not fair that he gets that kind of money and you don’t? What’s the problem, anyway? To any socialist who thinks it’s OK to “put an end to this”, I can’t wait until your fellow socialists decide your income is too high and put an end to it, too. “But I don’t make very much money”, you’ll whine.

    In my elementary school we used to call that dishing it without taking it.

    I didn’t say “most corporations” employ CEOs who have controlling interests. I said “in many cases.” Many does not equal most.

    Then why did you bring it up? If it’s a small part of the whole than it can’t be used to make a point about the whole. You’ve just dismissed your own (falacious argument). That’s like saying that soem Americans live in Tulsa, therefore we should draw our conlusions and base our policies on the conditions in Tulsa.

    I clearly said my cousin, not my niece.

    You’re right. I was mistaken. What I did there was a admit to a mistake. I’m pleased to have been able to provide you with a toehold into the sheer face of my argument. KIDDING. Sort of. This however, has no bearing on the content of my argument.

    Right, because you know a damn thing about me. Oh, that’s right, we’re completely anonymous and don’t know shit about one another. So why do you assume you have any idea who I am?

    I refer you to the second block of quoted text. I don’t know much about you, it’s true. But I do know, thanks to ample evidence, that you are a hypocrite. That is about the only thing I can say with certainty about you.

    It’s telling that you don’t believe any of us can attain this level of success.

    So now you know all about me? Hypocrite.

    If you really think there is a coordinated effort to keep everyone down, no wonder you are so sour on CEOs.
    I’m an optimist and I don’t believe in conspiracy theories. I know I’m capable of attaining that level of success; I’m already most of the way there.

    This is what I mean about poor reading comprehension skills. I never said anything remotely like this. The only thing that could even be remotely construed that way is the assertion that the many boards are stacked for the CEO. And apparently, you agree with me. The post where you said it seems to have disappeared, but you did say something about boards conspiring to put their ownership shares behind a CEO.

    And I highly doubt you’re almost there. While there are lots of ways for people like you to make a lot of money, you lack the abstract, critical and empirical reasoning skills necessary for a high level leadership position in a functional organization. That’s not to say you aren’t able in other areas, but based on your writings here, I doubt you could make it through a second or third tier MBA program.

    Obviously, there’s a chance that I’m wrong, but that is the impression you’re giving here. That’s not meant as an attack, just an educated opinion. You wouldn’t make it at my frim.

    It’s too bad you don’t believe in yourself more.

    Hypocrite.

  64. EasttoMidwest says:

    @jimconsumer:

    Except for the $4.00 to someone making $33,000 statement, this is the most cogent thing you’ve written. I don’t agree, but it makes sense.

  65. JiminyChristmas says:

    What I think is especially ridiculous is to throw around socialism like it’s an epithet, and at the same time saying that corporate executives of publicly held companies are entitled to extract as much personal wealth out of a business as they can get away with. After all, what is a corporation if not a collective enterprise? Where would these CEOs be without other peoples’ money (shareholders) and labor (employees)? Nowhere! No one “earns” $300million running a one man show. There comes a point when the richest of the rich aren’t just enjoying the fruits of their labors, they’re extracting the wealth from other peoples’ labors.

    Meanwhile, the argument that Joe Blow CEO’s $100million pay package doesn’t matter because it’s only a miniscule fraction of a company’s revenues or market cap is a joke. Why not just let thieves get away with robbing banks, as long as they only take a few grand? After all, it would only equal a couple pennies out of my own deposit.

  66. jimconsumer says:

    @EasttoMidwest: I don’t give a fuck whether you believe me or not. I do think it’s hilarious that the exact skills you claim I lack are those I use, successfully I might add, on a daily basis.

    @JiminyChristmas: Right, because legally paying yourself a large salary is the same as stealing. Why would you even make such an asinine comparison?

  67. Tiber says:

    @EasttoMidwest:

    “No, I’m not. I absolutely did not say you made that statement. I said, “You talk AS IF…”. I don’t assume that workers have no use for the money. I’m sure they could find a way to spend it. However, the simple fact is the kind of money we’re talking about is irrelevant in their lives. If you’re making $33k a year, an extra four dollars means nothing to you.”

    Sorry, poor choice of words. I did not mean you literally claimed I said something which I did not. What I meant was, I have no idea how you got any indication that I thought companies were screwing over workers. I’ve even said that I don’t care that whether the money goes to the workers, I only care that it’s being taken out of the company in the first place. You are imagining things about my beliefs that are not true. As to the $4, I was simply stating the flaw in the argument that it’s better to give one person a lot of money than to give many a little. I might wonder why my boss brought me in over $4, but I’d take it.

    “Really, why do you care that some people get to choose how much they get paid? I’ve run several small businesses. Some profits are retained by the business for savings or investment; other profits are taken by me as a paycheck”

    In your case, I mostly don’t. In the case of large, publicly traded companies, the money they take can add up quickly. To me, it’s largely an ethical matter, because I see it as taking money that doesn’t belong to them. I don’t have to be personally affected for it to matter. I’ve already said that I wouldn’t have a problem with it if the execs didn’t try to hide it, and I would prefer that exec pay be determined by a shareholder vote.

    “If the majority of the government wanted America to become communist, it would be. – For a few days, perhaps, until We, The People took our country back by force.”

    I did say people would most likely revolt.

    “If morality isn’t a factor, then why hide their salary? – Privacy. I don’t want everyone to know how much money I make. Do you?”

    $39,500/yr. Whoop-de-freaking-do. It’s just a number. I can respect the right to privacy, but the way I see it, company money is shareholder money, so shareholders should know how it’s spent.

    “”Hey, your corporate structure is easily abused by your CEO. You need to fix it.” If a majority of a company’s shareholders want to do it, then they need to do it.”

    I agree, but they can’t fix a problem they don’t know about. That’s why these articles exist. Didn’t you just say their salary should be private just a minute ago? Shareholders are supposed to correct excessive pay if they think its a problem, but they also have no right to know what executives are making? See any contradictions there?

    @EasttoMidwest: I was going to call him on the “filthy socialist” thing, but I figured you would, so there was no need to double post.

  68. EasttoMidwest says:

    @Tiber:

    Yeah, I think I’m done with this one. I love a good scrape, but this is just stupid.

    In the immortal words of Hawkeye Pierce, “My mom always told me two things. Always wear clean underwear and never argue with crazy people.”

    Be well.

  69. Greg-USA says:

    I am continually amazed at these pro-socialist comments. If you feel the word “socialist” is over used then you have probably heard it plenty of times in response to the control you want to dictate over others. I will bet my entire worth against yours that if someone else tried to control you the way you want others to be controlled you would fight it. Well, at least I hope you would. I can argue that controlling you is for the betterment of everyone.

    I have yet to receive a reply from any of you people against CEO’s whether or not you have ever been in any upper management capacity or owned your own business. I can guarantee you that if you did, your entire view of the world around you would change completely. Businesses, especially small ones, are already punished enough yet they are the back bone of America.

    I recently sold stock in a company that I didn’t agree with their business practices. The stock had also dropped significantly, which I am sure is an indicator of their performance and other people thinking the same way. As a minor stock holder I have no way to change their actions so I sold it. That’s the only thing a minority stock holder can do. Should the majority stock holders listen to a few small people and do their bidding when the majority wants something else? No.

    I also find it interesting that the same people calling for more government intervention, which is socialism no matter how you want to phrase it, are the same people who hate big government looking in on their lives. You can’t have it both ways.

    It’s also amusing to me when people try to use their education levels and degrees to prop up their position as if they know better than others. You didn’t inquire about the other’s education level; you just assumed yours was higher and proceeded to display your elitism and arrogance as if no one else can understand what you understand. Bill Gates didn’t finish college so I guess he can’t possibly understand high level economics as well as you. Will telling you how many degrees I have make my opinion worth any more?

    This Golden Coffin is a direct result of previous people in government trying to cap CEO pay. I think it was the illustrious socialist Jimmy Carter who put some of this into play. When they do this, the evil profit making companies will find a way around it. We want to cap CEO pay? Fine. We will just give the CEO stock options and pay their insurance, their travel expenses, give them an expense account, etc. If the corporation has any money left at the end of the year they have to pay huge taxes on it. It’s far better to disperse it than to give it to the government so they can waste it. Yea, I am sure that concept made a few socialist heads spin.

    @EastToMidwest – “Now, I would like you and this greg fellow to find ONE place in the comments posted by those to whom you replied where anyone makes a statement about salary caps for CEOs.”

    Everyone against the high CEO pay is for caps. You are stating such when you state they make TOO MUCH MONEY. Tell me what the dollar amount is, and I mean give me an EXACT number, that these people should be allowed to make?

    @EastToMidwest – “And lastly, I and some other posters are not “disconnected” because we aren’t CEOs. Although, if we were disconnected for that reason, then it would follow that CEOs are disconnected from the effects of their actions on everyday people.

    No the real disconnect from reality is that YOU actually think you can be one of these guys. You can’t. You won’t. And they will fuck you over any way they can and you’ll take it with a smile. And that’s sad.”

    That is a ridiculous statement. You have already fucked yourself and they didn’t even have to lift a finger. If CEO’s were not concerned about the effects on people the company would not survive, hence they would not be able to steal all of that money. It is not in their best interest to destroy a company or run it into the ground as they are killing their own job, and income, too. In fact, their doing so is much worse than the common worker. If they destroy a company they are less likely to be able to move on to another.

    The real disconnect from reality is that you actually think you can not achieve more than what you have already done. You have created your own glass ceiling and probably don’t even realize it. I can, and will, do it and you can not tell me I can not. I may never make it, sure, but I won’t give up as you already have, without even trying.

    @Tiber – “Once again, the issue is the fact that the system allows the CEO to have such enormous influence on their own paycheck.”

    What is your take on our elected government officials doing the same thing? The fact is, our elected officials really DO NOT NEED any income. Everything in their life is paid for and taken care of by tax payer dollars. CEO’s and large, evil profit-making companies at least actually produce something.

    This whole discussion is actually pointless. We have, from what I see, two sides here. There is the side of people who know they are capable of more and strive to achieve that, without forcing other people pay for it. If you don’t understand that then I can’t explain it to you. Then there is the side where some want other people to suffer like them in some ridiculous attempt to bring everyone down to their level so they feel better about not achieving anything on their own.

    I will work to achieve what I want and take care of myself and my family. I will not work to give money to someone else so they can sit on their ass and watch American Idol on their big screen and not lift a finger to take care of their self.

    Greg-USA

  70. Tiber says:

    @Greg-USA: Okay, this is going to be my last comment as well. Debates are fun and all, but there comes a point when they just become an exercise in masochism. I’ll still check in if you’d like to respond though.

    “I am continually amazed at these pro-socialist comments.”

    That’s because your imagining them. I may have some socialist leanings (mainly health care), but I don’t want your money (and I don’t even like American Idol). My philosophy on government is like hiring someone to do a job. I’d rather pay twice as much for someone useful than pay half as much for someone useless.

    “@EastToMidwest – “Now, I would like you and this greg fellow to find ONE place in the comments posted by those to whom you replied where anyone makes a statement about salary caps for CEOs.”

    Everyone against the high CEO pay is for caps. You are stating such when you state they make TOO MUCH MONEY. Tell me what the dollar amount is, and I mean give me an EXACT number, that these people should be allowed to make?”

    You failed to provide a quote, so I’ll do it for you. A simple Ctrl-F reveals that the first mention of “salary cap” is actually EastToMidwest’s comment above! No one ever said they wanted caps at all! Saying that they think someone is over-payed is not the same as wanting caps. It’s like saying, “when does a product cost too much?” It depends on what the product is, it’s quality, usefulness, ease-of-use, etc. There’s no hard limit; you simply call it when you see it.

    “I have yet to receive a reply from any of you people against CEO’s whether or not you have ever been in any upper management capacity or owned your own business.”

    I already said what my income is; I think it can be inferred that I haven’t. In my defense, I’m still young and doing pretty well considering, so I’ve got my whole life ahead of me if I choose to go that route.

    “Should the majority stock holders listen to a few small people and do their bidding when the majority wants something else? No.”

    The issue is excessive CEO pay even in the face of failure. It’s been in the news and a great many people are against it. Many companies are reacting and switching to more performance-based pay. You make it sound like a fringe issue and it’s not. I’m actually happy to see that progress is being made.

    “It’s also amusing to me when people try to use their education levels and degrees to prop up their position as if they know better than others.”

    It’s official. You’ve gone completely insane. No one EVER claimed to do such a thing.

    “If CEO’s were not concerned about the effects on people the company would not survive, hence they would not be able to steal all of that money. It is not in their best interest to destroy a company or run it into the ground as they are.”

    Comcast has incredibly low customer satisfaction ratings, yet they’re the largest cable provider in the country. Why, because if you want high speed internet, in many areas it’s Comcast or dial-up. I can say with absolute certainty that they’d lose at least $70 a month if I had a comparable alternative.

    “If they destroy a company they are less likely to be able to move on to another.”

    True, although in the largest companies just their golden parachutes provide enough money that they’re set for life as long as they can take a small hit in their quality of life.

    “You have created your own glass ceiling and probably don’t even realize it. I can, and will, do it and you can not tell me I can not. I may never make it, sure, but I won’t give up as you already have, without even trying.”

    Did it ever occur to you that it may not be a matter of self-confidence? There are some people who have such a negative view of the corporate world that they wouldn’t take such a job if someone gave it to them.

    “What is your take on our elected government officials doing the same thing? … CEO’s and large, evil profit-making companies at least actually produce something.”

    I’ve already said that I’m against that too. You really don’t like government do you? I guess police, roads, an army, emergency rescuers, city planners, etc. are all completely useless then?

    “This whole discussion is actually pointless. We have, from what I see, two sides here. There is the side of people who know they are capable of more and strive to achieve that, without forcing other people pay for it. If you don’t understand that then I can’t explain it to you. Then there is the side where some want other people to suffer like them in some ridiculous attempt to bring everyone down to their level so they feel better about not achieving anything on their own.”

    I know I am capable of more and I try to achieve it, and I don’t want others to pay for it. So I must be on your side then? This is the part where you completely misinterpret everything. If that is what you see, then I recommend an optometrist. It’s like the words are all blurring together, and you have to try and guess what sentence they make, like some sort of Rorshach Test. Only this time there is a correct answer, and your completely missing it.

    The issue as I see it, is that CEO’s are taking money out of companies that they shouldn’t be. I don’t think the money needs to be redistributed to workers, I think it should stay in the company’s bank account (what do you know, my agenda isn’t pro-socialist at all!). If an accountant thinks they deserve a cut of the money they count, that’s embezzlement. A CEO is able to take advantage of their authority to do something similar in a legal way. It may not violate the law, but just because something is legal does not make it ethical. If CEO’s were supposed to determine their own pay they would have the authority themselves. Instead they bring in their buddies and take advantage of the system, much like the government does. Do you find it acceptable when the government does? Then why is it acceptable when companies do?

  71. Greg-USA says:

    @Tiber – “That’s because your imagining them. I may have some socialist leanings (mainly health care), but I don’t want your money…”

    This is my last post. Do you see the contradiction here? I am imagining them, and then you say you have some socialist leanings. Nationwide Healthcare IS socialist. You say you don’t want my money, but who do you think is going to pay for all of this health care? Everyone, whether they want to or not. It’s no different than going to your neighbor’s house and asking them for their money.

    “No one ever said they wanted caps at all! Saying that they think someone is over-payed is not the same as wanting caps.”

    When people make wide-sweeping all-inclusive statement that CEO’s are paid too much it implies a cap. No one has yet to state the exact amount someone should be allowed to earn. You do realize the company and CEO negotiate pay and incentives, including what will happen if they need to leave the company. It’s not like the CEO makes it up along the way and does as they please while in that position. They have to answer to their board.

    “I already said what my income is; I think it can be inferred that I haven’t. In my defense, I’m still young and doing pretty well considering, so I’ve got my whole life ahead of me if I choose to go that route.”

    I hope you exceed your own expectation. I truly do. I can guarantee if you get to that level you will see things differently. I also hope when someone tries to take your money away, Nationwide Healthcare for example, that you fight to keep what you earned. I also hope when someone else tells you that you made too much money, and it will happen, that you realize you made the money and they have no right to tell you what you are allowed to make or do with it.

    “The issue is excessive CEO pay even in the face of failure. It’s been in the news and a great many people are against it. Many companies are reacting and switching to more performance-based pay. You make it sound like a fringe issue and it’s not. I’m actually happy to see that progress is being made.”

    See what I stated above about pay being negotiated before they take office. I am all for performance-based pay but I have no right to tell any company, except my own, how to pay employees. If it causes the company to increase profits that is great, and I will probably buy stock in that company.

    “It’s official. You’ve gone completely insane. No one EVER claimed to do such a thing.”

    I am not sure who it was, but somewhere in the comments someone eluded to their education and why they understood things we didn’t. My last reply was more general about some of the comments.

    “Comcast has incredibly low customer satisfaction ratings, yet they’re the largest cable provider in the country. Why, because if you want high speed internet, in many areas it’s Comcast or dial-up. I can say with absolute certainty that they’d lose at least $70 a month if I had a comparable alternative.”

    DSL, satellite, or wireless cards for your laptop. We have many options where I live. I also travel a lot and have many options wherever I go. Maybe your area doesn’t have these yet. Still, some of these companies, like you mention above, will not do anything to improve their performance until they have a threat in their area. That would be the market correcting the problem.

    “True, although in the largest companies just their golden parachutes provide enough money that they’re set for life as long as they can take a small hit in their quality of life.”

    I would say they have no interest or desire in reducing their quality of life. It makes no sense that they would purposefully ruin a company. There are also things that can affect the profitability of the company that they can not control, such as the market.

    “Did it ever occur to you that it may not be a matter of self-confidence? There are some people who have such a negative view of the corporate world that they wouldn’t take such a job if someone gave it to them.”

    It absolutely did occur to me. I was in the corporate world for a few years and hated it. I decided to do my own thing so I can decide for myself. Still, none of us have the right to tell these companies how to run their business. If you don’t like them don’t buy from them.

    “I’ve already said that I’m against that too. You really don’t like government do you? I guess police, roads, an army, emergency rescuers, city planners, etc. are all completely useless then?”

    You are getting things a little mixed up here. I don’t like Big Government and them putting their noses where it doesn’t belong. We need less government control, not more. Socialists think the answer to any problem is government intervention, raise taxes and take away from the rich and give to the poor. There is a reason businesses are not run like the government – it would fail.

    Police, army, emergency rescuers and city planners are needed. However, they do not, and should not, tell our citizens how they should live. These two things are completely different.

    “I know I am capable of more and I try to achieve it, and I don’t want others to pay for it. So I must be on your side then?”

    I hope so. We will all be better off without socialism. Socialism fails every time it is tried yet some think it just hasn’t been done correctly. If you don’t want others to pay for it then you can not be for Nationwide Healthcare.

    “The issue as I see it, is that CEO’s are taking money out of companies that they shouldn’t be.”

    They can’t just take money out of a company. They can, however, take money out of the company based on the agreement they have with the company.

    “I don’t think the money needs to be redistributed to workers, I think it should stay in the company’s bank account…”

    If they leave the money in the company’s bank account they get hit with huge taxes. The goal is to NOT have any money in their account at the end of the year. This is why at the end of the year lots of companies spend money to buy stuff they need for the business. If they don’t spend it they will lose it due to taxes.

    “Do you find it acceptable when the government does? Then why is it acceptable when companies do?”

    These are two completely different things. You need to separate business and government. I do not find it acceptable when government does this. Government, however, does not produce ANYTHING.

    Greg-USA

  72. RvLeshrac says:

    @Greg-USA:

    Interestingly, Warren Buffet is possibly the greatest capitalist success story of the 20th century, is CEO of one of the (if not the) most successful holding companies in the world, and has stated many times that most CEO compensation plans are broken.

    His solid financial and leadership decisions helped earn the company $118bn in gross revenue last year, and yet his pay is still $100,000/year. He lives in a small house. He does not take out “loans” from the company, and does not utilize company funds for any of his personal business.

    He does not have a “golden parachute” or a “golden coffin.” If the company fails, he earns nothing, and he loses a majority of his fortune. Yet, somehow, he has managed to do his job, and extraordinarily well, for nearly 40 years. For a decade prior to that, he managed to make large amounts of money for both himself and others while working for far less.

    ———-

    With regard to corporate finance, it is only in a company’s SHORT-TERM interest to empty the accounts at the end of the fiscal year. I’m not even going to bother explaining this beyond the basics: The more flexibility your company has, the more customers you are capable of retaining.

    ———-

    Governments have one product, and only one… but it is important: Order. That’s the entire purpose of any government, to provide order for the citizens. Situations like this, where everything is out of balance and shows little promise of correction, are precisely the government’s purvey. Is it possible for the government to overstep its bounds and over-regulate? Certainly. It is supposed to be our job to ensure that this does not happen, and that corrections are made to ensure that the government stays within its bounds.