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As a thought experiment, consider what it would take to make CEO pay gap even BIGGER, in addition to stock-based comp* and buybacks, which are mentioned in head
by CGMthrowaway 1y ago
As a thought experiment, consider what it would take to make CEO pay gap even BIGGER, in addition to stock-based comp* and buybacks, which are mentioned in headline. Here's what one might do:
- Reduce unions
- Outsource and automate labor
- Slow minimum wage increases
- Consolidate power via M&A (you mentioned this)
- Cut back on benefits like healthcare, pensions and paid leave
- Promote "guru culture": indispensable, iconic leaders like Jack Welch, Steve Jobs etc
- Shift economy towards high-margin industries (tech, finance, pharma) and away from lower-margin ones (retail, manufacturing)
Turns out all of these have been happening since the 70s. So this result should not be surprising.
*Important note that the 1993 Clinton tax bill made it so corporations could no longer deduct the full amount of top executive salaries as a business expense. Only up to $1 million. UNLESS the amount beyond $1 million was performance-based (leading to stock option comp boom).
- NoahZuniga 1y agoNone of these issues are specific to CEO wages. This is essentially just a list of reasons why you don't like capitalism. ie if a CEO doesn't do these on their own accord, the shareholders might contact the CEO and tell them to take some of these measures. This mechanism isn't dependent on CEO pay, because the CEO is always beholden to the shareholders, and shareholders always want more money. The solution to this isn't to get mad (or even do something about) CEO wages, but to make sure there are other good reasons why companies might not use these approaches to maximize shareholder returns (ie stronger government regulation, making these approaches illegal).
- shortrounddev2 1y ago> This mechanism isn't dependent on CEO pay, because the CEO is always beholden to the shareholders, and shareholders always want more money Legally the CEO has a fiduciary duty to the shareholders. In practice, can we honestly say that every CEO of a publicly traded corporation acted in the long term interests of EVERY shareholder and didn't just parasitically extract value from the company for themselves and a handful of LARGE shareholders? Facebook is essentially the personal property of Mark Zuckerberg
- singleshot_ 1y ago> Legally the CEO has a fiduciary duty to the shareholders The CEO has two fiduciary duties: 1) To act with appropriate information; 2) To avoid usurping corporate opportunities The duty to make money for the shareholders is distinctly not a thing.
- WalterBright 1y agoSounds like you should start a company, name yourself CEO, and execute this strategy!