Companies Balk at Revealing Ratio of CEO Pay to Average Employee Pay

BigG · 08-31-2010, 04:54 AM

FT.com / Industrials - US pay law branded ?logistical nightmare?

Companies which know how much they spend on surfactants or drill bits to the nearest cent cannot calculate this number?

That , to me, seems incredible as in NOT credible at all.

Related;
http://seekingalpha.com/article/9849...r-over-ceo-pay

If CEO's were earning their money, why has the stock market been flat for a decade?

dstark · 08-31-2010, 06:38 AM

Love the seeking alpha article.

There are many pro business, pro shareholder people that argue that CEO pay and other executive pay is not an issue. It is an issue. Exorbitant pay is coming out of the shareholder pockets.

For example...how are the bank execs doing? How are shareholders in bank stocks doing?

And this issuing of stock options..then using the company's cash...or going to the credit markets to raise the money to buy the stock...what does that do to a company's balance sheet?

"Pay experts said business had been caught off-guard by the measure, which was not one of the high-profile battlegrounds of the Dodd-Frank legislation. Companies are now gearing up to lobby the Securities and Exchange Commission, which has to write detailed provisions for the new rule.

The rule could also reward with a relatively low ratio those companies that outsourced low-paid work rather than keeping jobs in-house, lawyers said."

Really...how does that math work?

BigG · 08-31-2010, 07:42 AM

Figures don't lie but liars figure, especially lawyers.

Any valid way the ratio is calculated penelizes outsourcers. Probably why German CEO's are less enamored of outsourcing. It lowers their personal compensation since they are limited by law to a multiple of average employee compensation.

Don't look for anything useful to actual stockholders from the SEC. They are likely to ignore or subvert Congress.

It is really time to tear the system down and substitute anything else. A decade of poor performance is enough.

osdad · 08-31-2010, 08:08 AM

How does outsourcing help the ratio? Simple, if all the lowest paying jobs are outsourced, then the company only has mid and high paying jobs on its payroll. (It writes off the outsourced jobs as an expense not as salary.)

dstark · 08-31-2010, 08:32 AM

Interesting...

And we should reward outsourcing....

poetgrl · 08-31-2010, 09:19 PM

Quote:

It lowers their personal compensation since they are limited by law to a multiple of average employee compensation.

This seems like a sane policy.

BigG · 08-31-2010, 10:01 PM

I am not an accountant but I think all salaries andf wages count as expenses.

They are not capitalized.

???

mam1959 · 09-01-2010, 10:08 AM

dstark - you have a penchant for viewing everything through a partisan lens.

So your posts are predictable, and often don't focus on the practical issues.

I am not sure whether pro-business types argue for the continued excesses in CEO pay. I am a shareholder of many companies, and certainly take umbrage at pay that often has little correlation to performance.

The real problem - and it is not with right wingers but more of a problem borne from having far too few people understand economics - is with corporate governance. Shareholders most often do not have meaningful influence or a say in matters, and all too many boards are captive to a company's executives.

One would think that with a Democratic administration we would make real inroads towards corporate governance - but all we have is unintelligible financial reform to which the financial institutions will manipulate to the death and still end up on top.

Reform corporate governance - make it a federal rather than a Delaware issue - and give real power to shareholders, including an ability to have executives paid in accordance with their performance - and not just in the relevant reporting period - and there will be positive changes.

dstark · 09-01-2010, 10:10 AM

Can you read? Mam1959?

Seriously.

Executive pay is an issue for shareholders.

Where am I disagreeing with you?

Is this false?

"There are many pro business, pro shareholder people that argue that CEO pay and other executive pay is not an issue. It is an issue. Exorbitant pay is coming out of the shareholder pockets."

Nevermind...you read what you want...

crescent22 · 09-01-2010, 10:38 AM

Shareholders don't care as long as the stock goes up.
Outrage is a financial journalist-centered issue.

stark does not speak in a partisan manner, but he does tend strongly to reflect the consensus outraged citizen with above average knowledge of government financial affairs.

poetgrl · 09-01-2010, 12:30 PM

Quote:

Reform corporate governance - make it a federal rather than a Delaware issue - and give real power to shareholders, including an ability to have executives paid in accordance with their performance - and not just in the relevant reporting period - and there will be positive changes

exactly.........

BigG · 09-01-2010, 01:03 PM

crescent22,

The "stock" has not been going up for 10 YEARS! Except for a very few exceptional companies. The S&P, DOW and NASQAQ are flat!!!

Outrage is a generational issue. The "baby boomers" have been s?@red out of that last critical doubling of assets before retirement.

Yet ALL CEO's are reaping big bucks when they are NOT exceeding the performance of their peers in other developed nations.

If CEO's really worked for stockholders, why would they ever declare bankruptcy and DESTROY their bosses property????

From my perspective it looks like foreign CEO's are much, much more cost effective than domestic ones. Let's outsource them.(of course that is what's happening. Kia, Hyundai, BMW, Daimler-Benz, Volkswagen etc. are doing just great in Alabama, Georgia, South Carolina, Tennessee, etc. with foreign CEO's and American workers).

Hunt · 09-01-2010, 01:13 PM

Quote:

Reform corporate governance - make it a federal rather than a Delaware issue - and give real power to shareholders, including an ability to have executives paid in accordance with their performance - and not just in the relevant reporting period - and there will be positive changes

Not to be partisan, but...does anybody think the Republicans would ever support this? You could barely get Democrats to support it. Maybe the Greens.

crescent22 · 09-01-2010, 01:56 PM

> The "stock" has not been going up for 10 YEARS! Except for a very few exceptional companies. The S&P, DOW and NASQAQ are flat!!!

Is the system not eligible to be considered legitimate if it's flat for any ten year period? It did quite well for 7 of those 10 years. It's my job for myself and your job for yourself to figure out which are those up years so I/you can make more money than the next guy.

> If CEO's really worked for stockholders, why would they ever declare bankruptcy and DESTROY their bosses property????

<shrug> you know very well it's in stockholder interests to declare bankruptcy sometimes to keep assets away from creditors.

crescent22 · 09-01-2010, 01:58 PM

> Reform corporate governance - make it a federal rather than a Delaware issue - and give real power to shareholders

Corporations are republics just like the U.S. government, with elected officials empowered to handle major affairs. I see no major effort to unseat Boards now.