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Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Re: Why executives aren't prosecuted...||Date: 4/22/2013 2:06 AM|
|Author: Umm||Number: 421169 of 440512|
"When push comes to shove, the CEO's who are paid so handsomely for their "acumen", "brilliance", "sheer mastery of business", "the Masters of capital allocation", simply plead IGNORANCE. They'll state they never knew what was going on at levels "beneath them". Fingers will be pointed at underlings. Fingers will be pointed in many directions, but never at the CEO or the Board of Directors."
This is what is so frustrating.
I remember a few years ago reading in one of the financial rags a story about Jack Welsh and his pay as CEO of GE. Despite getting paid an obscene amount of money in salary, bonus, and stock options that year(don't remember the exact amount in the article but it is likely north of $100 million in total) the article was making the case that it was a bargin to pay him that much because the market capitalization of the company had gone up tens of billions of dollars that year.
There are many problems with this but the biggest is that it makes the false assumption that Jack Welsh was responsible for all of the increase in the stock price! It ignores the fact that there were literally well over a hundred thousand other employees working to make the company money and increase the value of the stock.
Now there is no doubt that CEO's are generally the most important person at a company and have a huge influence in the conduct and culture of the company (Mr. Obvious I know). The double standard is terrible though. I am fine with using either standard. Either pay the CEOs obscene amounts of money but hold them accountable when problems arise or pay them more modest sums and recognize that they are important employees but are not masters of the universe and irreplacable.
You are right, we live in a plutocracy so the rules will never change.
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