TonyCinTX

CEO Pay and the Reverse Robin Hood

It is pretty simple, really. Once you get to these levels of compensation, the best interest of the Cxx and BOD is to maximize their own short-term compensation even if it screws the stockholders, investors, lenders, workers, and society. They can get their money and walk away from a total train wreck. We rely upon their honor and integrity and the potential for shame, but at our peril, because some of them HAVE NONE.

We may know who they are, but nobody gives a crap, because the big traders only own the stock for a few months before selling; they are all short termers too. Corporate governance be damned, that is always the next buyer's problem. I admit I am always surprised to receive a proxy statement to vote on the corporate executives; I usually don't know them and don't care, I just happened to be holding the stock on the day of record.

The problem is one of scale, that is all, and the way to fix it is to limit the SCALE of public companies. I am not sure what the best measure of that is, but perhaps we limit them to 1000 employees, or $1B in revenue, or both. If they grow larger than that, we require them to split in two with equal assets and equal rights to any intellectual property and to be completely independent. The shareholders get a share of each stock in return for their original share, but no officer of one can vote any shares in the other for at least three years. Let them compete with each other.

Then the companies always have competition, they must compete for the workers who now have a choice, the shareholders have more than one company to choose to invest in, and consumers can choose between their products and be rewarded by price competition.

If a company doesn't want to split equally, let them spin off independent public firms before they get to that point, but require true independence of the spin offs with no possibility of manipulation by the parent: All they get is non-voting stock.

And for any private company, no such limits, except for anti-trust laws already in place.

Keep companies small, and this runaway compensation will come to a halt.