LA Times: Bringing overpaid executives to heel

[marmar]

Bringing overpaid executives to heel
Power, not productivity, determines earnings. That's why new laws are needed to check the unfair distribution of the fruits of workers' labors.

By Moshe Adler
January 4, 2010


A recent Time magazine poll found that 71% of Americans who responded want the government to place limits on the executive compensation at firms that received bailout money. Yet accomplishing this task selectively is impossible to do.

The government did appoint a czar of executive compensation for these corporations, but he approved a $7-million salary/$3.5-million bonus plan for the head of AIG, 80% of which is now owned by taxpayers. Few workers, executives included, would agree to work for less than the going rate. Executives are simply used to earning millions of dollars, and there is little that either the czar or shareholders can do about it unless Congress limits all executive compensation. But the chance of such legislation passing is slim.

Why is limiting executive compensation so difficult? Because executives have a seemingly unassailable argument -- market forces -- that University of Chicago professor Steven Kaplan defended in an October debate: "Market forces govern CEO compensation. CEOs are paid what they are worth."

Of course, market forces are cited not only to justify outsized compensation for executives but also poverty wages for workers. Textbooks claim that minimum wage laws and union wages create unemployment. Just what are these market forces, and should we let them determine executive compensation and wages? .............(more)

The complete piece is at: http://www.latimes.com/news/opinion/la-oe-adler4-2010jan04,0,7694112.story

[tularetom]

1. If CEO's are paid what they are worth they wouldn't get golden parachutes

as a reward for running a company's value (and share prices) into the ground, as seems to happen with unseemly frequency. They'd have to pay their companies back for the loss in value they caused.

A better solution is to end the practice of staffing Corporate boards of directors with CEO's form other corporations, thus creating a high level good old boys club that exists not for the benefit of the public or even the shareholders, but solely for the executives themselves.

[Warpy]

2. See? Another MAJORITY, CENTRIST position

that is being largely ignored by the party insiders.

I wish these bastards would learn that ignoring the centrist base is going to lose Congress for them.

Of course, they likely don't care as long as the cash flow is still positive.

[Waiting For Everyman]

3. Not market-forces, it's price fixing.

Join in treaty with other countries (like Europe) which want to top-limit pay, and there's nowhere to go to be overpaid anymore. Tax the hell out of compensation above a certain point, and there's no longer any point in being paid that much. It's a no-brainer. It didn't used to be this way, and it doesn't have to be this way. It's totally unhealthy, for several reasons. Not least of which is, it concentrates enough power to influence governments, and even the possibility to conduct private wars. Uber-rich are a threat to legitimate government.

And... it's just plain wrong. There is a minimum wage, there should be a maximum too. Nobody is worth what some of these people are being paid, I don't care who they are or what they do or how smart or talented they think they are. It's bull. They don't walk on water, and they aren't worth the pay of hundreds or thousands of low-paid people.

It's unbelievable arrogance to match their unbelievable greed. And we wonder why these "leaders" go wrong?