Market Currents
Corporate boards in the U.S. need to brace themselves for a mounting attack on executive...
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Saturday, June 9, 2012, 9:05 AM ETCorporate boards in the U.S. need to brace themselves for a mounting attack on executive compensation in coming years, as Europe's current "shareholder spring" revolt makes its way across the pond. Anger in Europe is spreading over large payouts in the face of lackluster shareholder returns. People are fed up with paying ridiculous sums for bad performance. So far, it's been largely the banks on the firing line, as financial stocks have been pummeled by economic uncertainty and market turmoil.
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Very few of these CEO's are really all that talented. For every Steve Jobs there are about 50 smucks that have spent 20 years kissing every ass they can find. Their knowledge/ability is tied to one firm and they are mere managers of what others have created.
A couple million for CEO's is more than enough IMO - there are no shortage of capable replacements within most firms, and most CEO's really can't go off and effectively run another business.
We need a change in our corporate governance system. CEO's are able to take advantage of the fact that in most companies the vast majority of shareholders are "passive" holders - ie pension funds, mutual funds, etc, etc that really aren't paying attention. That has to be changed - and we need to change the perverse tax incentive that started the whole stock option boondoggle years ago (taxing executive salaries over 1mm at punitive rates). Switch the punitive tax to the stock options and get rid of them. Then shareholders won't see themselves diluted year after year by the very people that are supposedly working for them!
Our corporate governance system is due for a vast overhaul.