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| *Ostroff, Fair and Company>>>Investing |
What is the big deal about executives' annual salary, bonus, stock-option awards, other "incentintives"? |
If the Board of Directors approves the package, why the controversy? The problem is executives in effect looting the companies they are supposed to be helping, draining the company of resources so they can line their own pockets. The more money you pay the executives, the less profit for stockholders. Another problem is that sometimes these CEOs draw incredible salaries for poor performance. Premium salaries should be tied to superior performance for the company and its stockholders. It would be nice if the board of directors always had the company's and its stockholders' interests at heart, but in fact, oftentimes the board of directors and the executives are in cahoots with each other. It's like a club, and they all scratch each other's backs. The board of directors are typically executives of their own companies, and they all work together to rob their companies and its stockholders. It's a shady business and congress is working on reforms to give stockholders more power. Is there any human being who deserves over 100 million dollars salary a year? Especially when the workers don't make enough to support a family? Executive compensation has risen exponentially compared to worker compensation. There is controversy because the executives in some cases, such as dick grasso of the NYSE, have captured the board and are able to bend it as the executives see fit. In these cases, the compensation decision is not about an arms length deal between an executive selling his/her managerial services and a board exercising its fiduciary duties to share holders, instead it is about executives unilaterally setting their pay just below the "outrage" level where shareholders take action. |
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