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.

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!

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.

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

preventative measure to keep shareholders from strangling the execs?

@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.

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.

@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?

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?

@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.

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

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.

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!

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

"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!

@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.

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.

@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)

@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.

@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.

@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.

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.

It's actually pharaoh, not pharoah.

@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.

@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.

@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.

@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.

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.

@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...

@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.

@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.

@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.

(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.)

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.

@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?

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)

@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.

@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.

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.

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.

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.

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

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

@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.

@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.

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.

@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.

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.

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

@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*.