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Author Topic:   Executive Pay - Good Capitalism Bad Capitalism?
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


Message 1 of 135 (647231)
01-08-2012 6:50 PM


Here in the UK the 3 main politcal parties are tripping over themselves to be seen as the implementors of executive pay restraint.
Conservative prime minister David Cameron has described top pay of executives and bankers as a "market failure" Link
Is he right?
Are the salaries of the economic elite out of control and in need of regulation?
Or should the unrestrained market decide what is, or is not, acceptable without state comment or interference?
In the wider context - What is 'Good capialism' and what is 'Bad Capitalism' and who (if anyone) decides which is which?

Replies to this message:
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 Message 29 by Taq, posted 01-09-2015 1:43 PM Straggler has replied

  
crashfrog
Member (Idle past 1457 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


(4)
Message 2 of 135 (647232)
01-08-2012 6:55 PM
Reply to: Message 1 by Straggler
01-08-2012 6:50 PM


Or should the unrestrained market decide what is, or is not, acceptable without state comment or interference?
Is the market deciding? These enormous CEO salaries are overwhelmingly the result of collusion between CEO's and executive compensation committees, who are usually also executives at the other companies the CEO in question serves on the compensation committee of.
Of course, the situation is much worse in the US.

This message is a reply to:
 Message 1 by Straggler, posted 01-08-2012 6:50 PM Straggler has replied

Replies to this message:
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Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


(1)
Message 3 of 135 (647234)
01-08-2012 7:02 PM
Reply to: Message 2 by crashfrog
01-08-2012 6:55 PM


Crash writes:
Is the market deciding?
Who is the market?
The currently colluding CEOs seem to think that they are the market in this regard. They may be wrong in some sense. But unless actually made to be wrong they are arguably "right" at least in market terms (given that they define the market).
So - I agree with you that they shouldn't be. But I would argue that the market is effectively rigged in their favour and that they rather self servingly define the market.

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cavediver
Member (Idle past 3634 days)
Posts: 4129
From: UK
Joined: 06-16-2005


(1)
Message 4 of 135 (647394)
01-09-2012 3:16 PM
Reply to: Message 1 by Straggler
01-08-2012 6:50 PM


Are the salaries of the economic elite out of control and in need of regulation?
From my perspective:
Exec salaries are high because they need to compensate the execs for not being free to set up their own businesses which, if successful, could make them much wealtheir than any salary. A typical exec-candidate will be in a prime position to set up his own business: market knowledge, business experience, and a wealth of contacts. In fact, he will almost certainly have a bunch of peers who have done precisely that. The companies want execs with these skills and knowedge bases and need to make the exec position tempting compared to the entrepreneurial route.
I think the bull-markets of the late 90s and the dot-com boom were partially repsonsible for taking the above to a new level. There was stupid money around for those setting up tech companies, and the money you could making trading was equally staggering; the execs were looking relatively impoverished. I remember back then reading complaints concerning exec pay (~500,000) and thinking it odd that no-one knew what the real big salaries/bonuses were like (as in the traders making multiple million bonuses) So the exec remuneration started playing catch-up through the 2000s.

This message is a reply to:
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Replies to this message:
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jar
Member (Idle past 384 days)
Posts: 34026
From: Texas!!
Joined: 04-20-2004


(6)
Message 5 of 135 (647411)
01-09-2012 4:05 PM


I think it is silly to even consider regulating or limiting compensation.
But I also think that it is in everyone's interest to make it difficult to create a "monied class" and so favor very high progressive taxation on all compensation as well as a very high progressive inheritance (as opposed to estate) tax.

Anyone so limited that they can only spell a word one way is severely handicapped!

  
Phat
Member
Posts: 18248
From: Denver,Colorado USA
Joined: 12-30-2003
Member Rating: 1.1


Message 6 of 135 (647836)
01-11-2012 2:35 PM


From A Union Perspective
I believe that these individuals are by and large grossly overpaid for the value (if much) that they provide to their corporations. Usually, it is labor that gets cut in order to trim expenses, even though we indirectly collect every nickel of profit that the corporation makes. (In my industry, at least) To me, it makes much more sense to chop ten million off of one salary rather than lay off 1000 people costing $10,000 too much in terms of labor. (yearly)
The American Dream has already been poisoned and taken over by the 1% U.S. monied class, and its about time that the blue collar workers reclaimed their justified share.

  
DC85
Member (Idle past 370 days)
Posts: 876
From: Richmond, Virginia USA
Joined: 05-06-2003


(4)
Message 7 of 135 (648054)
01-12-2012 11:55 PM


How is it that in the modern world it's ok for Executives to have salaries in the millions plus bonuses Even when the company does poorly? Then these same companies have the nerve to turn around and blame Labor costs a benefits?
When did Bankruptcy come to be a way to protect a bonuses instead of real structure? Why is it always and only the fault of the "greedy" Unions?
American Airlines is the most recent to blame labor costs...
Am I the only on annoyed by this? Why don't THEY take a pay cut? Why do employees have to be the only ones to concede and sacrifice?
Edited by DC85, : No reason given.

Replies to this message:
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Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


Message 8 of 135 (648184)
01-13-2012 5:08 PM
Reply to: Message 4 by cavediver
01-09-2012 3:16 PM


Cavey writes:
Exec salaries are high because they need to compensate the execs for not being free to set up their own businesses which, if successful, could make them much wealtheir than any salary.
IF successful.....
Isn't good capitalism about rewarding innovative and entrepreneurial risk taking?
Frankly - If these execs could all successfully start their own highly rewarding companies then they could contribute to the collective wealth of the nation far more effectively by doing so than by heading up the existing companies that they do. I think we should take measures to encourage them to leave these jobs and setup the sort of new companies that you are saying they would.
But it strikes me that the risk factor of taking a position in a FTSE 100 company (or equivalent) is far less than investing one's existing wealth in starting a new company.
The CEO of the multi-billion multi-national I work for spends most of his time on the golf course. He also conveniently arranges his globe trotting around various sporting events. He is in London for Wimbledon, Melbourne for the boxing day test, wherever for the champions league final and so on and so forth. No doubt he will be in Eastern Europe for the Euro football this summer and back in London well in time for the Olympics. Could he go off and have an equally comfortable and profitable life by risking his own money in his own startup company? I very much doubt it.
What we seem to have in place at the moment is privatised profit and socialised risk.

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frako
Member (Idle past 296 days)
Posts: 2932
From: slovenija
Joined: 09-04-2010


Message 9 of 135 (648187)
01-13-2012 5:51 PM
Reply to: Message 7 by DC85
01-12-2012 11:55 PM


Why don't THEY take a pay cut?
Um our former "Prime Minister" said he had a monthly wage of 3001 EUR (lied of course more in the 12 000 range plus benefits perks and 400 eur every time they have a session)and claimed he can barley survive on that salary if he dint have saved up funds he would go broke.
Now the only part i believe is that if he dint have saved up funds he would go broke because people with allot of cash flow tend to spend way more accumulating debt they have to pay off. A wage cut would would mean for a lot of them that they would have to sell their boat, or their mansion, and buy something they can afford, and that is a serious no no, its better that a few thousand live on the streets then them having to give up their Lamborghini.

Christianity, One woman's lie about an affair that got seriously out of hand

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cavediver
Member (Idle past 3634 days)
Posts: 4129
From: UK
Joined: 06-16-2005


Message 10 of 135 (648191)
01-13-2012 6:15 PM
Reply to: Message 8 by Straggler
01-13-2012 5:08 PM


But it strikes me that the risk factor of taking a position in a FTSE 100 company (or equivalent) is far less than investing one's existing wealth in starting a new company.
Very true. I have no real objection to the large rewards given for running a successful company, and I probably disagree with you that it would be better for good execs to be starting their own businesses instead of running existing corporations: I have seen large companies fail under bad leadership and the fallout is unpleasant to say the least.
But I strongly object to the golden parachutes and downside remuneration that seems to have become endemic. It is akin to the problems with trader bonuses encouraging excessive risk taking owing to a lack of downside consequences. This was something I tried to address long ago whilst advising banks in my role as a risk management consultant.

This message is a reply to:
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Replies to this message:
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crashfrog
Member (Idle past 1457 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 11 of 135 (648194)
01-13-2012 7:36 PM
Reply to: Message 10 by cavediver
01-13-2012 6:15 PM


This was something I tried to address long ago whilst advising banks in my role as a risk management consultant.
How'd that turd in the punchbowl go over?

This message is a reply to:
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cavediver
Member (Idle past 3634 days)
Posts: 4129
From: UK
Joined: 06-16-2005


Message 12 of 135 (648382)
01-15-2012 4:31 AM
Reply to: Message 11 by crashfrog
01-13-2012 7:36 PM


How'd that turd in the punchbowl go over?
In the banks' risk departments, great.
But until risk departments are regarded as "profit-saving" centres and not just cost-centres merely there for the sake of compliance with the FSA/SEC, then don't expect too much...

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hannahdelavel123 
Suspended Junior Member (Idle past 3357 days)
Posts: 1
Joined: 01-08-2015


Message 13 of 135 (746551)
01-08-2015 7:42 AM
Reply to: Message 12 by cavediver
01-15-2012 4:31 AM


Due to financial crisis, the idea of executive pay is a touchy issue these days. Numerous critics of executive compensation have raised concerns. Apparently, extravagant exec payment and bonuses were believed to be curbed for businesses receiving TARP funding. However, a brand new report by the TARP inspector general has found that is not the case whatsoever.
Edited by Admin, : No reason given.

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Admin
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Posts: 12993
From: EvC Forum
Joined: 06-14-2002
Member Rating: 2.1


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Message 14 of 135 (746566)
01-08-2015 10:35 AM
Reply to: Message 13 by hannahdelavel123
01-08-2015 7:42 AM


Hi Hannah,
I suspect you're a link spammer, so I'm breaking your link and suspending your account. If you're not a spammer then you can send me an email at admin@evcforum.net, or just send me a private message by clicking on the "send private message" link that appears to the left.

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Minnemooseus
Member
Posts: 3940
From: Duluth, Minnesota, U.S. (West end of Lake Superior)
Joined: 11-11-2001
Member Rating: 10.0


Message 15 of 135 (746657)
01-09-2015 12:47 AM


What someone gets vs what they earn
In parallel with the Marxism vs Socialism vs Communism vs Totalitarianisms topic.
For here, my definition of "earn" - Doing something that justifies a certain payment, but not more.
Slacker, who has "earned" $1000, but is paid $10,000
vs
Company CEO who has "earned" $100,000, but is paid $1,000,000.
Both are paid 10 times what they "earned". Which is being the greater leach on the economic system?
Moose

Professor, geology, Whatsamatta U
Evolution - Changes in the environment, caused by the interactions of the components of the environment.
"Do not meddle in the affairs of cats, for they are subtle and will piss on your computer." - Bruce Graham
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness." - John Kenneth Galbraith
"Yesterday on Fox News, commentator Glenn Beck said that he believes President Obama is a racist. To be fair, every time you watch Glenn Beck, it does get a little easier to hate white people." - Conan O'Brien
"I know a little about a lot of things, and a lot about a few things, but I'm highly ignorant about everything." - Moose

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