The problem with our country summarized

It still isn't clear what you are after.

From my understanding, unless you are buy major amounts of shares, the investing normal folks do is not to run the company, but to profit from it by investing.

What you are talking about is being on a board and making decisions.

 

Generally executive management owns a substantial part of a large corp. The bulk of the rest is held by institutional investors. The typical guy who owns stock in a company, like you and me, even in aggregate, don't hold enough stock to make any difference on exec comp. Even in instances where individual investors could actually influence a vote, how many of them have any idea what a reasonable salary for a fortune 100 executive should be?

This type of nonsense kills corporations, it will drive talented execs away, and reduce the corps ability to hire.

 

Fair enough

 

Red, how many CEOs and the like make $250MM/yr in salary alone or even in total compensation? Most cases I have seen reported the greater portion of the compensation comes from the stock options you mentioned. In fact that was one of the metrics I noted earlier on. Jobs, Gates Zuckerberg and the like can take lower salaries because they founded the company and have huge masses of stock to use for income. Historically that has been the way with first generation and or family owned companies including Ford today. However when people outside of the first or second generation take over they don't have the ties that their predessors did. In the 60's & 70's large salaries (for the time) caused a problem because just as you note people paid on a salary & bonus plan look to the short run. That is why many corporations trended to stock options to pay execs. There are 2 benefits. First is to tie the exec to the corpoations' future. Second to reduce the actual cash outlay the corporation makes to the exec. Most options are for the right to buy stock at a reduced price from the treasury at specific time. Most of those you claim are being paid such high salaries are getting lower salary and the potential value of the option is added in
.
Managing exec pay is a challange in a competitive market. There are few people capable of be Jack Welsch or Bill Gates or the like and leading very large organizations successfully just like there are few Nick Sabans and Les Miles who can run football teams at a high level. Like FB coaches the Sabans pull the other weaker coaches salaries up as we clearly observe. That was Gene Chizak gets $4MM+ though he can't hold Sabans jock. Same thing in business. (BTW I'm using the simple analogy as Paul Krugman does in his new book on the crash and failed recovery)

The question is what does one do when an exec is overpaid and under performs? That is the challenge. I have faith that overall the market will work things out and the end result will be positive as it has for so many years. Will some fools get more than they deserve and will some working people be hurt yes truly sad to say. BUT the proof of the overall success of the system as we have it is that the GDP has grown fro about $1trillion in 1980 or so to the $16 trillion today.

Can things be improved? Yes and I hope they are but when I hear people on the left talk about controlling these things it seems to me they want government to taken a direct say in how business is managed. I think history show that 99% of the time government is a heavy handed and inefficient manager. We need regulation and not a Hayak/Ryndian Libertarian lazze faire every one for himself let me be free chaos. Where the proper place is will vary as times change and all have to be flexible to adjust to specific requirements.

 

You are disputing something I did not say. I said individual investors don't hold enough shares to be influential, and that is true. I doubt institutional investors would want to vote on such matters.

How is knowledge not relevant. You are delegating a massive management responsibility to a group of people who may not understand the business or the going rate for talented managers, and you are essentially giving them power over who executive management will be.

How many CEOs are making that kind of money? Almost none. And to get to that kind of number you have to include stock options.

That's great. I am for letting the market dictate what people make.

Andrew Fastow's compensation was largely Enron stock. And Ebbers only compensation was Worldcom stock and loans from the company to buy more Worldcom stock.