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If I embezzle $10,000,000 from a giant company like GE, its also a drop in the bucket on their balance sheet. But that doesn’t make it right. American public c
by pembrook 6y ago
If I embezzle $10,000,000 from a giant company like GE, its also a drop in the bucket on their balance sheet. But that doesn’t make it right.
American public company executives are grossly overpaid, and there’s been numerous studies proving this. Both historically in the US (exec pay has ballooned here since the 1980s) and currently in most other developed countries, companies with lower exec compensation don’t show lower ROE when sorted by industry.
Exec compensation in many American companies is basically normalized theft from shareholders given the revolving door of incestuous boards and C-suites and the constant conflicts of interest.
However, the money execs are looting from American companies doesn’t belong to employees. It belongs to shareholders. So a metric of giving that money to employees is irrelevant. Employee salaries are (and should be) set by broader market demand.
- sytelus 6y agoIf you are responsible and accountable for $5B revenues and associated decisions, won’t you agree you deserve 0.5% of that revenue? This is generally accepted reasonable management fees for things like index funds. Your credit card company or your iOS platform or Uber takes much bigger cuts.
- zxcmx 6y agoMaybe we should give the president a share of GDP?
- maerF0x0 6y agoRecently I had been thinking what if we pay all elected officials this way, except as something like a multiplier on the median income in the country... GDP growth could be few getting a lot richer or many getting moderately richer. Their pay increases would be inflation indexed and tied to "rising tides lift all boats"
- pembrook 6y agoManagement fees on index funds are trending towards zero for a reason. Just because it’s generally accepted doesn’t make it correct. It was generally accepted 15 years ago that paying 2 and 20 in fees for a hedge fund was reasonable compensation. Then everybody realized that 98%+ of hedge funds aren’t providing alpha and were basically stealing money from the ignorant. A similar realization will eventually happen on exec compensation as we get more data.