However You Slice It, CEO Pay Is Ripping You Off

Read it and weep. Chief executive officers in the U.S. now make 257 times the pay of average Americans -- a new record. The late Peter Drucker, the man dubbed the father of modern management theory, said that employee morale starts to decay and resentment starts to rise when CEO pay exceeds a 20-to-1 ratio. Despite the fact that Drucker is well-respected, that particular piece of advice is rarely heeded.

Census Bureau data shows that since the 1970s and early 1980s, median American employees' pay has basically stagnated. Still, shareholders haven't gone wild with ire this year during say-on-pay votes. In fact, votes against CEO compensation at public companies have been tame this year. However, heady stock market returns and short-term profits have dominated the news over the past few years, and such market states don't quite galvanize shareholder rebellions.

Still, one big story this year illustrates the possibility of a better future: Chipotle (NYSE: CMG  ) suffered a landslide negative say-on-pay vote despite outstanding financial and stock performance.

Big bonanzas
Equilar and the Associated Press released 2013 data this week, looking at the total pay packages for 337 CEOs at the S&P 500 companies that released the proxy filings between Jan. 1 and April 30. Median CEO pay was $10.5 million, an 8.8% increase. 

In order to provide a clear year-by-year picture, the data screens out new CEOs' pay, as signing bonuses often guarantee that new execs can make bank before they even demonstrate any performance. The CEOs in question had been at their posts for at least two years. 

One interesting trend: Media CEOs made out like bandits. In just two examples, CBS Corp.'s (NYSE: CBS  ) Leslie Moonves and Viacom's (NASDAQ: VIAB  ) Philippe Dauman are among the lists top earners, and six of the top 10 are in the media industry.

Speaking of the outlandish lump sums CEOs sometimes receive, Nabors Industries (NYSE: NBR  ) is a repeat offender in egregious CEO pay. Chief executive Anthony Petrello was paid $60 million in exchange for giving up future bonuses. This boosted his pay by 246% to $68 million, putting him at the top of the AP and Equilar's list for 2013. 

This is no surprise, given Nabors' track record. As of 2013, Nabors' CEO pay had been voted down by shareholders for three years running, and the company caused a shareholder uproar when it offered former CEO and current chairman Eugene Isenberg a $100 million golden parachute, even though he would stay on in the diminished role of chairman of the board. Isenberg did forfeit the outrageous payment, but this goes to show that eventually shareholders will lose their tempers. 

Scraps thrown to the rest of us
MarketWatch gave us some food for thought regarding CEOs' swelling salaries. The Economic Policy Institute said last year that between 1979 and 2012, average Americans' salaries grew just 5%, even though productivity skyrocketed by 74.5%.

Granted, productivity was likely at least partially increased by major innovations and American ingenuity, as well as the stewardship of great CEOs and company founders. For example, the Internet is only one of the major forces that have changed the course of our economy and enabled companies to conduct business with unprecedented efficiency.

Still, average human employees have been more than insignificant cogs in the wheels of progress.

Even if you were fortunate enough to be considered one of the highest performers in your career last year, you probably received something along the lines of a "whopping" 4.3% boost in your compensation. By now you must be ready go out and buy that Tesla, am I right?

What shareholders should not want
Even the most market-oriented investors and businesspeople should wonder how this makes any sense. Chipotle's situation shows that there is a point when a whole lot of regular investors and powerful institutional shareholders get fed up. The fact that only a quarter of Chipotle investors voted for the co-CEOs' pay is damning.

Many investors have done well with their stocks in the last several years. And that's by no means a bad thing.

However, the truth is that this owes partly to the prevailing market mania, which is floating all boats. This can lull us into a sense of complacency. Almost all CEOs, bless their hearts, look like pretty brilliant managers at the moment.

Even among the greatest corporate leaders, does any CEO's performance warrant the general 257-to-1 pay ratio? Shareholders should think about the current state of affairs and vote against outrageous pay policies if they don't want:

  • Employees who not only don't feel like innovating, but hate their jobs and talk smack about their employers on Glassdoor, on social media, and to anybody who will listen.
  • Public protests and boycotts -- or even unconscious defection to other choices.
  • Serious deteriorations in the quality of products and customer service.

The Chipotle vote may serve as a reminder that things can change going forward. Shareholders may well begin crying "enough is enough." The best-managed companies and smartest shareholders will realize that it's for the best when it comes to long-term performance.

Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.

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  • Report this Comment On June 02, 2014, at 12:45 PM, HoosierRube wrote:

    It's always easy to play the envy card and drum up support for bad policy.

    Why stop at the CEO's office? Lets make everyones pay up for popular vote.

    I challenge the author to publish her compensation and let every Fool customer vote on it.

    And while we're at it, lets look at the Fool founders and Board of Directories and vote on that also.

    How about our politicians? Can we vote on their pay and benefits? Can we throw them and their families into ObamaCare?

    No matter how you slice it, the government is ripping you off. Check back in a year and let us all know how you're feeling about the massive tax hike just put in place by the E.P.A.

    Funny thing about activists, once they have succeeded into doing their master's bidding, they are promptly executed.

    Read up on the French and Russian revolutions. Knowing whats in store for the activists if they are successful, gives me great comfort.

  • Report this Comment On June 02, 2014, at 1:24 PM, TMFLomax wrote:

    HoosierRube, these are publicly traded companies, shareholders are owners, and chief executive officers are employees. That's why the information is disclosed to the public (for shareholders and potential shareholders), and why we now have say-on-pay votes.

    Private companies don't face the same scrutiny because they are, well, *private*.

    Whether or not the government and politicians are ripping anybody off is a completely different topic.

    Alyce

  • Report this Comment On June 02, 2014, at 2:16 PM, HoosierRube wrote:

    It hasnt always been that way. Previous activisim put CEO pay in the public.

    I work for a public entity, and my pay is private. And the path has been cleared for that info to become public. If they can do it to a CEO, than they should be able to do it to me. Fair is fair.

    I think its fine that folks can vote on it, however your articles headline says it all. This isnt about voting rights, according to your headline, its about punishment. Your idea of 'fairness'.

    The 'conscience captialism' poster boys, Ben and Jerry tried going down this same road and came to the conclusion that they couldnt find anyone qualified to work for those wages. Ben and Jerry figured it out. They also tried to use the 20x number. And how was that determined? Darts? Bar room bet? Why not 19, or 35x?

    Oh wait, its just arbitrary.

    Once reality hit those boys in the face, they decided to just take their cash and run. They knew they wouldnt be able to keep up the facade they had painted for themselves.

    I do give them lots of credit for trying.

    Your headline was all about 'us helpless little guys' getting ripped off.. There is only one entity that can rip us off without recourse. And thats your government.

    You dont like a CEO's pay, dont invest in it and dont buy their products or services.

    Dont drive them out of the country. Ever hear the term 'shooting yourself in the foot'? Thats exactly what you're doing. All in the name of 'fairness'.

    Maybe Chipotlies will move out of country just to get away from this do-gooder noise.

  • Report this Comment On June 02, 2014, at 3:45 PM, djlaino wrote:

    "They also tried to use the 20x number. And how was that determined? Darts? Bar room bet? Why not 19, or 35x?

    Oh wait, its just arbitrary. "

    Au contraire. As Alyce pointed out:

    "Peter Drucker, the man dubbed the father of modern management theory, said that employee morale starts to decay and resentment starts to rise when CEO pay exceeds a 20-to-1 ratio." That does not sound arbitrary to me.

    There does seem to be one thread joining the issues of corporate and civil governance, and that is that most of the governed appear to be disinterested and unengaged and voluntarily forfeit their right to vote. In both cases, it seems the governed get what they deserve.

    Nice article Alyce.

    DJL

  • Report this Comment On June 02, 2014, at 4:31 PM, dreamimmigrant wrote:

    Plain old envy card... even every liberal's favorite billionaire Warrent Buffet recognizes that using the envy card to "punish" is just meant to be a distraction from real issues in the economy and in general is unhealthy for the business environment.

  • Report this Comment On June 03, 2014, at 1:16 PM, damilkman wrote:

    How come entertainers should not be envied despite making as much or even more? The expectation is that Beyonce will earn in excess of 100 million dollars. She will do this by demanding 100 dollar tickets to attend her shows and 20 dollars for the right to listen to her music. She will probably earn more money than every CEO in 2014 but she will not be hated. This is no different for the top movie stars or the top athletic stars. Some like Kobe Bryant did not even play a game and still collected their 20 million plus salary. Imagine if a CEO decided if he was going to take the entire year off for sick leave but still demanded compensation.

    I have no problems with CEO's not being compensated if they are not doing the job. However, implying that none should be payed so well when we accept the same compensation in other professions is unfair. To imply we should resent someone because of how they make their money is not rational. If you hate CEO's because they make tens of millions, you have to be consistent. For every CEO that has failed there is a Kevin Costner who made tens of millions on a bomb like Waterworld.

    The moral of the story is if you hate Beyonce, don't buy her music. If you think Kobe Bryant stinks don't watch Laker games. If you believe the CEO for BLAH stinks, don't buy the stock.

  • Report this Comment On June 03, 2014, at 2:30 PM, miteycasey wrote:

    The difference for Beyonce is she's an entertainer. She get paid for entertaining you. It's a voluntary exchange.

    CEO's get paid to make you money. If they don't make you money, or worse lose money, why are they compensated so well???

  • Report this Comment On June 03, 2014, at 3:50 PM, damilkman wrote:

    There is no difference. Those who employ entertainers do so with the expectation that the entertainers will make money be it a sports star winning games, a movie star making a movie a block buster, or Beyonce making good music. If Kobe Bryant gets hurt or decides to take the game off, Kevin Costner makes a bomb of a movie, or Beyonce loses it, those who fronted the money with the expectation of a profit are also out.

    A CEO and entertainer are the same in that they are an employee of someone. If they are big enough they might be their own owner. They get paid based on pass performance and future expectation just like everyone else.

    If I used miteycasey's argument I should not hate the CEO of COKE because the CEO sells me a beverage that refreshes me. It is a voluntary exchange. I can say that because I own no shares of coke. Yet I am still expected to resent the CEO of Coke. Thus we have a circular argument.

  • Report this Comment On June 03, 2014, at 5:25 PM, andjoy wrote:

    "Chief executive officers in the U.S. now make 257 times the pay of average Americans -- a new record." is an over-broad statement of the situation. See

    http://www.aei-ideas.org/2014/05/despite-media-hype-about-ce...

  • Report this Comment On June 03, 2014, at 5:34 PM, devoish wrote:

    Hoosierrube,

    Alyce did not play the envy card. You did.

    For investors as business owners, it seems they are done using CEO's to transfer to themselves the income that used to go to their lower paid employees and now trickle up economics has the investor/owner with no business plan left, other than taking the income that goes to their higher paid employees.

    I don't think that Alyce sees it the way I just described it though.

    Best wishes,

    Steven Cecchini

  • Report this Comment On June 03, 2014, at 6:53 PM, warrenicahn wrote:

    CEO pay rose by 8% but the S&P is up what? 18%? I don't think shareholders are really hurting.

    As for employees, you have to think about this logically. Is it really a crime that the CEO of Walmart is paid considerably more than a guy handing out smiley face stickers?

  • Report this Comment On June 03, 2014, at 8:57 PM, wmcgee353 wrote:

    I have a different take on this. Shouldn't we be looking at these individuals like we would look at professional athletes in terms of what they're worth?

    Albert Pujols used to be worth more than his salary when he played for the St.Louis Cardinals. The Cardinals got two World Series Championships while he was there. It could be argued he is no longer worth his pay, as he does not put up the numbers he used to.

    If a CEO is able to boost the value for all stakeholders, not just shareholders, and keep that pattern up, then I feel like he is worth the excessive pay.

  • Report this Comment On June 03, 2014, at 9:01 PM, SuntanIronMan wrote:

    @damilkman

    1. Since when are entertainers (athletes, actors, musicians, etc.) not the subject of envy and/or contempt over how much they make? Turn on ESPN and all you'll hear is "Washed-Up Athlete X is an overpaid loser who should be run out of the league." or turn on a conservative AM talk radio station and you'll hear about how "Far Left Liberal Actor Y flies around in private jets!".

    2. That's not what Ms. Lomax is doing. She is not playing the envy card.

    3. Beyonce is not the CEO of a publicly-traded company who is (in theory, though seemingly not in practice) suppose to work to return money to shareholders.

  • Report this Comment On June 03, 2014, at 9:05 PM, skypilot2005 wrote:

    On June 03, 2014, at 6:53 PM, warrenicahn wrote:

    "CEO pay rose by 8% but the S&P is up what? 18%? I don't think shareholders are really hurting"

    Wise up.

    The CEOs run handpicked nominees to set on their Board of Directors. Many set on several boards. They approve each other’s extravagant pay packages. It is the equivalent of ”Legal Larceny”, I. M. O.

    To think that these CEOs are so uniquely qualified so as to deserve their obscene levels of compensation is laughable.

  • Report this Comment On June 03, 2014, at 9:08 PM, SuntanIronMan wrote:

    * 3. Beyonce is not the CEO of a publicly-traded company whose primary duty is (in theory, though seemingly not in practice) suppose to work to return money to shareholders.

  • Report this Comment On June 03, 2014, at 9:15 PM, SuntanIronMan wrote:

    @skypilot2005

    Yep. If supposed 'independent' directors setting on company boards were truly independent, there is no way we'd have the kind of pay packages we see on a regular basis.

    People end up sitting on multiple boards and they all watch out for each other. You vote for my ever increasing pay package and I'll vote your yours.

    Great gig if you can get it.

  • Report this Comment On June 03, 2014, at 10:21 PM, gskinner75006 wrote:

    I don't usually agree with Alyce, but she is spot on this time. A company is the work of many, not that of the one. We need to pull the position CEO off the pedestal and treat the position as it really is, just one of the of the many pieces that make up the pedestal.

  • Report this Comment On June 03, 2014, at 10:46 PM, tjwheel1967 wrote:

    No comment on anyone else's post, but on the subject in general as I see it. A blanket rule won't work as it could discourage innovators. I have often thought it should work like this: If the CEO is also the founder, then he should take whatever pay he thinks is fair, after all he is the original innovator. But after that guy retires/ moves on etc... Then there should be some sort of multiplier that comes into effect. 20 times seems about right to me, and who am I to argue with Drucker.

  • Report this Comment On June 03, 2014, at 11:01 PM, SkepikI wrote:

    OK Alyce: For a wonder, I agree with you to a point. HOWEVER I feel the need to call you and the MF on the general attitude regarding cronyism, boards, and the CEO/Chair combinations that perpetuate this cesspool. SEVERAL of your coworkers, many of your editors and perhaps your founders (I really can't tell) seem to wish this ignored. They certainly do not want to confront some of the worst offenders, the banks particularly JPM and BAC where CEO/Chair in one person seem to be the rule. If one does the research, which your financial colleagues seem to NOT wish to do, there is a reasonable correlation between success and performance AND the split of CEO and Chair. I could expound on this at length with examples, but it would be too long. Ever get in the face of these people you work for to ask them about it? I know, I know not the MF way.....

  • Report this Comment On June 03, 2014, at 11:42 PM, SuntanIronMan wrote:

    @SkepikI

    Who exactly are you talking about? Certainly not the Gardner brothers (the Motley Fool's founders).

  • Report this Comment On June 03, 2014, at 11:54 PM, TerryHogan wrote:

    Other that some of the rather egregious examples, (where the performance is poor and the pay is way above industry average) I don't on the whole have a problem with CEO pay or movie star pay (other than egregious examples like Keanu Reeves) or sports star pay.

    It's not so much that it's motivating for the current CEO or the player or the actor to do a good job, but it is motivating for all those who are trying to get there.

    Business does often steal the best and brightest away from politics and education and science, which is maybe bad for society, but probably good for shareholders (I guess there's a bigger argument about the very long-term effects, but that's a huge other policy debate)

    All those MBAs toiling away working 80 hour weeks as executive VP of brand awareness are not all doing it for love of the job, their doing it with the hopes of winning the CEO lottery. Same goes for a lot of the hockey moms driving their kids 3 (10?!) hours every weekend to a tournament (yes I'm Canadian) they aren't all in it to get their kids exercise, a lot are hoping for scholarships and eventually summer cottages in Muskoka paid for by NHL contracts.

    As for the actors.... well, they're a special breed, a lot of them actually are starving for the sake of their art. But there's also a lot of them waiting tables because they have visions of 1% of gross on a comic-book-based blockbuster.

    I do admit to a certain sense of envy and even anger (Don't get me started on Ashton Kutcher and 50 cent) when it comes to some of the outsized compensation, but I recognize that it's just a by-product of an otherwise successful market-based economy, and does serve as a powerful incentive to a lot of the people who have not yet achieved millionaire status. Then I go pay $100 for an Eagles ticket and get a peaceful easy feeling collecting my JPM dividends which were just increased.

  • Report this Comment On June 04, 2014, at 12:00 AM, DXM wrote:

    I have no idea what I would do with a $100 million golden parachute. Surely $10 million is more than enough!

  • Report this Comment On June 04, 2014, at 12:02 AM, mtr wrote:

    Thats why is important to vote your shares. If you don't like what they get paid then sell the shares immediately and find one that you do like.

  • Report this Comment On June 04, 2014, at 12:07 AM, damilkman wrote:

    The reason why I use the entertainer in comparison is that it really comes down to the same situation. For every entertainer or CEO that deserves their money there is one that does not. I was waiting for someone like SuntanIronman to be my straw man. Just because there is a crummy CEO who has worked himself into a position and we resent him does not mean the other five who are worth their compensation should have their pay dinged? Same thing with entertainers. Just because one free agent does not work out does not mean the ones that did pass value or exceed value should take a pay cut.

    The bottom line if we are being ripped out it is our fault. If a sports teams team sucks, shame on us for paying good money to watch them lose. If you do not like the compensation package of a CEO why the heck do you have any stock! That is the crazy thing. We have the freedom to choose the companies we choose are well run. If CEO pay like any other pay is out of line than the boards will get the clue when the stock price goes down because of poor performance.

    As far as I can tell this just comes down to resentment. I'm in a field where we where there is 10% annual turnover because it is an employee's market. Everyone is poaching everyone else. Should those people now be resented because they can command an increase in their salary?

    Who on this list if would turn down a seven figure salary even if they believed they were worth it? We are our own business. If we can convince someone we are worth more what is wrong with that? If we lie, cheat, or take credit of others work, than we should be beat down. If someone can prove that CEO scandal other than hypothetical is higher now than 20-30 years ago I would be interested.

  • Report this Comment On June 04, 2014, at 1:13 AM, SuntanIronMan wrote:

    @damilkman

    You didn't need me to be your straw man when you can just create your own straw man from scratch. You're attributing things to me that I didn't say at all.

    It isn't about envy or resentment. If we were talking about a private-owned company, I have no issues at all with a CEO making whatever dollar amount. Great for them. But we are talking about shareholder-owned companies and shareholder money. That's the difference. It isn't an issue of envy. It is an issue of shareholder money.

    And unfortunately, because of the 'you pat my back, I'll pat yours' nature of American board of directors, it isn't as simple as "boards will get the clue". It takes quite a lot for boards to get a clue.

  • Report this Comment On June 04, 2014, at 8:22 AM, pondee619 wrote:

    IF: "employee morale starts to decay and resentment starts to rise when CEO pay exceeds a 20-to-1 ratio." and

    IF: "Chief executive officers in the U.S. now make 257 times the pay of average Americans" then

    The slope of morale decay and resentment must be very shallow or morale decay and resentment are irrelevant.

  • Report this Comment On June 04, 2014, at 9:13 AM, Mathman6577 wrote:

    Citizen morale starts to decline when the government starts to interfere with private companies.

  • Report this Comment On June 04, 2014, at 9:50 AM, TopAustrianFool wrote:

    Who cares what some one else makes? If you ask me you are making too much for writing articles like this.

    Your greed is off the charts...

  • Report this Comment On June 04, 2014, at 9:50 AM, TMFJCar wrote:

    Good article Alyce.

  • Report this Comment On June 04, 2014, at 10:30 AM, mcampbell8 wrote:

    The real question IMHO is are the companies and shareholders getting a value commensurate with the salary of the CEO? My guess is probably not. And to further point out the issue, many of the CEO's sit on the boards of other companies and vote on their peers salaries. It does sound like a stacked deck in favor of ridiculous salary packages. Alyce only pointed out this issue.

    I think management should be able to submit three salary plans (25:1; 100:1;200:1) for the CEO to shareholders and let them decide. But maybe a cap or limit should be imposed. Jack Welch walked away from GE while earning hundreds of millions. My guess is the shareholders would have supported this since they and the employees did exceptionally well under his leadership. But this is the exception and not the norm. Yet too many CEO's are getting paid very well even when the company isn't doing well.

  • Report this Comment On June 04, 2014, at 10:46 AM, Frank3858 wrote:

    When I see a CEO making 60 million, I think, they couldn't get someone to come in for 15 million!

    It's no about envy, it's about looking out for the shareholders.

    The board members are under pressure to go along, to get along. We need more shareholder participation.

    Maybe long term stock compensation instead of cash.

  • Report this Comment On June 04, 2014, at 11:16 AM, FredIsDead wrote:

    Salaries stagnant?? I am making 250% more today than I was then (I track my pay using spreadsheets, I'm not making it up). The only thing I've done is read books, learn more skills, and change jobs about every 3-5 years.

    My wife, on the other hand, isn't doing as well because she stays in jobs for many years and works in the non-profit industry. And she hasn't done much to acquire more skills. It's her choice, I'm not complaining. Just making an observation.

    If someone has a stagnant paycheck, then they either aren't doing anything to improve themselves or aren't seeking better compensation elsewhere.

    Why should a company pay someone more today for the same job they did last year?? Or 5 years ago??

    You want more money, stop whining about it being another person's fault. Make yourself more valuable and take responsibility for your life.

  • Report this Comment On June 04, 2014, at 12:04 PM, ysroq wrote:

    So other than letting the free market work, what are you proposing we do about this "problem"? Last I checked, to be competitive, businesses have to keep their costs in check. If they are not doing so, and/or not providing goods and services folks want at a reasonable value, they will go out of business. This does not happen over night, but nothing worthwhile does.

  • Report this Comment On June 04, 2014, at 12:10 PM, SkepikI wrote:

    @SunTanIronman: Its not for me to say if the strategic decisions that drive MF support for CEO/Board cronyism (or maybe more properly lack of critics except for Alyce) comes from the G brothers. Though I will point out they put the WFM CEO on the MF board to gales of critical comment....I notably did not, defending the idea of give MF a chance to be MORE watchful and critical of WFM as a result of this potential conflict...which I believe has NOT happened BTW....

    But if you want specifics, all you have to do is "Search" for JPM and BAC and see all of the MF writers who have lined up to support these as investments...and Alyce nary a mention of the dangers of CEO/Chair combinations in each of these.

  • Report this Comment On June 04, 2014, at 12:12 PM, SkepikI wrote:

    ^ Oh and I might add, if you think I am being too harsh on JPM, BAC and the generic problems they have concerning Board Cronyism, I suggest you read or re-read "Crash of the Titans"

  • Report this Comment On June 04, 2014, at 12:23 PM, TMFLomax wrote:

    SkepikI, to your comment:

    "But if you want specifics, all you have to do is "Search" for JPM and BAC and see all of the MF writers who have lined up to support these as investments...and Alyce nary a mention of the dangers of CEO/Chair combinations in each of these."

    Just a few of my pieces that show Alyce (me haha) has definitely "mentioned":

    On separating Chairman and CEO roles:

    http://www.fool.com/investing/general/2012/07/04/this-trick-...

    (Includes mention of Goldman Sachs and Wells Fargo)

    Another, hoping more investors will vote to separate roles in 2014:

    http://www.fool.com/investing/general/2014/01/03/thinking-di...

    (Includes Jamie Dimon of JPMorgan, shareholders not giving at least that slap on the wrist was a bizarre vote IMHO)

    Piece from 2009:

    http://www.fool.com/investing/general/2009/10/02/lets-reform...

    "Shareholder Bill of Rights" -- mentions Citigroup, Bank of America, now busted up Merrill Lynch and Countrywide Financial.

    I guarantee there are more, but these came up rather quickly through a simple Google search of specifically Fool.com articles and I don't have time to dig. I just want to set the record straight on THAT, since corporate governance is my beat and separating the chairman and CEO roles is a positive policy (that often does help returns, reduce risk, and so forth).

    (Meanwhile, as always at the Fool, I don't have angry "issues" about my colleagues who are positive about these stocks, I simply have just another opinion and one that I do believe more investors should think about.)

    Alyce

  • Report this Comment On June 04, 2014, at 12:34 PM, grusilag wrote:

    @warrenicahn

    "CEO pay rose by 8% but the S&P is up what? 18%? I don't think shareholders are really hurting"

    I assume you would then also be fine with employee pay also increasing 8% during the same time frame? After all the productivity of a company cannot be solely attributed to the CEO alone right? If a company is doing well its because everyone is contributing. But employee pay has stagnated for decades while CEO pay goes up. The only conclusion can be that CEOs are the only ones contributing to the productivity of a company. I'd love to see these superhuman CEOs in action!

  • Report this Comment On June 04, 2014, at 1:38 PM, HoosierRube wrote:

    Here is what the issue is with activists;

    Activists believe people cannot be trusted to do the 'right' thing (and buddy, that is totally subjective) so they must be controlled, managed, observed and commanded by the people we can trust. Truth of the matter is, you cant trust anyone with power and authority.

    We can see that beginning with the first recorded history of human activity it was well understood that people are flawed. Not just some people, All people. There are no saints walking among us and never will be.

    If you think taking the decision making capabilities from one group of people and giving that authority and power to another group of people is somehow different, you would be sadly mistaken. Not only sadly mistaken, but sowing the seeds for your own enslavement to the ruling class.

    And whats worse, the activists continue making this same mistake over and over and over again. Until we have no freedom to choose our own lives and our own destinies.

    The I.R.S. now determines which political activities are allowable and which are illegal. The Education department now determines what students learn, how they learn and what they will eat. The E.P.A. now determines what is science and what is not science.

    If thats the world you people are building, then whats the point of being alive? If i cannot make a determination of what life is for myself, that my whole existance will be nothing more than pleaseing those that have taken power and control away from the individual and unto themselves, then its all futile.

    Here is the gods truth, all men are capable of great good and great evil and that all men have demonstrated both in greater and lesser degrees. There are NO saints walking among us.

    So, go ahead and concentrate all decision making to the few, and you'll deserve what you get. Because even if you could find a living saint to bless us all and provide for us, the next person in line for that power will be the tyrant you'll have to answer to. Unfortunately, there are no living saints so we go right to the tyranny.

    I dont want to live in a Hugo Chavez world where my existance is nothing more than a resource for the powerful to exploit for their own good.

  • Report this Comment On June 04, 2014, at 3:47 PM, SkepikI wrote:

    Alyce: I rarely apologize for what I write, because I say what I mean and mean what I say. HOWEVER, in this case, my haste led to "shorthand" and my shorthand led to well, you misapprehending my comment. I did not mean to say: Nary a mention by Alyce of the CEO/Chair flaw.... I DID mean to say: So, Alyce, I note that all these writers or most of them who tout JPM and BAC have nary a mention that they posses the flaw of CEO and Chairman being one in the same. So rather than accusing you, who I know to be vocal on this subject I was accusing others at the MF of lets say ignoring this basic flaw if not hiding it. I was also indirectly suggesting that you take note of this. And do something about it. I do not expect you to have anger issues with your colleauges. I do suggest you ensure their attention is focused on this legitimate issue that they would like to duck. And yes I have watched it for months, have reason to believe your editors wish to duck the issue, and been my (usual) direct and implacable skeptical self in a number of commentaries (imagine that?) and one longer missive. Ducked by your fellow MF editors.

    Last but not least, let me point out that you focus on what I view as the SYMPTOM (outrageous pay for pitiful performance) of the problem rather than the root cause - ie Board and CEO/Chair cronyism. Until it gets yanked out by the roots, it will continue. And because nobody complains about outrageous VP or GM or ....pay, I think I am right about this as the root.

  • Report this Comment On June 05, 2014, at 10:22 AM, AncientCthulhu wrote:

    What amazes me in reading through the replies to this thread is the surprising number of people who just spout off at the mouth, clearly thinking they are dropping pearls of wisdom on us, the unwashed masses. The myopic ego behind some of these opinions (stated as fact) is staggering!

  • Report this Comment On June 06, 2014, at 8:24 AM, LittleBluestem wrote:

    @AncientCthulhu, more amazing is the number of people who replied in this thread who are going to read your comment and agree with you.

  • Report this Comment On June 07, 2014, at 12:56 PM, SkepikI wrote:

    Case in point: Today's MF headline article "Bank of America's stock is cheap" An encouragement to fools everywhere and certainly to Fools reading their daily, to invest in one of the least ethical and most rip-off inclined banks anywhere. A bank that was fueled on cronyism, crashed and has continued its fine? tradition of CEO/Chair being one and the same, a crony board that perpetuates it, and the resultant out of whack CEO pay...as compared to performance.

    I don't keep detailed track of this but I reckon I see 3 Articles of this sort to 1 pointing out Alyce's critique of BAC. When your editors favor this kind of disparity, Alyce, you are shouting into the wind.... And then some new crop of shareholders feeding the CEO/Chair ego and pushing up BAC price without sustainable, ethical and valuable service.

  • Report this Comment On June 07, 2014, at 4:50 PM, Minow wrote:

    Nice article Alyce!

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