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Also note that the board is very often composed of current/past/future CEOs of other companies.
by dv_dt 7y ago
Also note that the board is very often composed of current/past/future CEOs of other companies.
- charlesdm 7y agoAnd generally the shareholder(s).. ?
- dv_dt 7y agoOn the board? Not really unless they're activist investors with some substantial slice of the total shares. The vast majority of shareholders do not actively participate in the compensation decisions of the CEO except perhaps at an essentially superficial approval of the compensation package. At best one might say a vote against would be to sell the shares, but if public companies broadly all overcompensate their CEOs then it's this tension between leaving most of the market or investing in companies that might make money despite overpaying.
- methodover 7y agoWe should require employee representation on Board of Directors. Germany requires half the board to be represented by the company's employees: https://en.wikipedia.org/wiki/Codetermination_in_Germany https://en.wikipedia.org/wiki/Codetermination_in_Germany I believe German CEOs typically make around 1/3rd of what American CEOs make (having trouble finding the source on that, but that's the number I've seen cited before), possibly in part due to these laws.
- zajio1am 7y agoNote that there is a difference in corporate management between USA and many european countries, where there is two boards: https://en.wikipedia.org/wiki/Dual_board https://en.wikipedia.org/wiki/Dual_board The requirement for half representatives for company's employees is for (secondary) supervisory board of directors, not for (primary) management board.
- methodover 7y agoI didn’t realize this. Cool, thank you for the information.
- anticensor 7y agoThis might be solved by requiring the CEO to not have had any shares. The CEO would focus on continuity of the company, followed by profit of shareholders, both large and small, then.