Arianna Discusses Executive Compensation, Dick Cheney On Morning Joe
Arianna Huffington and Gayle King of "O" magazine joined the Morning Joe round table on Friday morning to discuss Dick Cheney's recent criticism of the White House and the administration's efforts to limit executive pay on Wall Street.
On executive compensation, Arianna said: "It shows the arrogance that is still so much at the heart of the system. And it also shows that this administration really has not been tough enough with Wall Street. It isn't just about executive compensation."
"Risk is still there," Arianna went on. "Systemic risk is still there. The banks are still too big to fail."
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Washington's Executive-Pay Crackdown: Bad for Business? - TIME
Obama: Excessive Pay Offends our Values
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Does not matter if you are Democrat or republican on this one!!
mark my words: THIS WILL AMOUNT TO CENSORSHIP FOR ALL OF US!!!!
It's interesting that she thinks she knows how much money a CEO should make.
Compared to what?
Indeed, how much SHOULD a person who is charge of a huge corporation and is in charge of thousands of employees be paid?
In our society we watch people like sports figures and movie stars get paid vast sums of cash even if their teams lose money or their movie tanks and no one seems at all concerned about that.
In fact, the last I heard movie stars and sports figures make WAY more money than CEOs.
Who has the more important job?
When's the last time a sports figure or movie star nearly brought down our economy because they are paid for short term goals?
So...
You are actually OK with how much a movie star makes in relation to the head of a large corporation?
I'm fine with that.
Remember though, you need to apply that logic in your everyday life.
That means no more talk about wealth redistribution or anything along those lines.
I also don't want to hear anything about government programs that start with the word "free."
To me, this is where the problems begin.
Maybe like CEOs and CxOs in other nations are paid? At a ratio that is less than 50% of the price paid for US executives who have brought their companies and the world's economy to its knees? And the foreign executives also run massive corporations. Here's an idea, since most of these executives think we should all be paid Chinese style wages, perhaps they should share in that kind of wage system also. While our world class banking clowns, who have done their best to work to export the economic strength of this nation overseas in order to boost their personal incomes and making billions per year while doing, so the highest paid Chinese banker, who now manages funds greater than that of any managed by any US banker, is paid less than $500K per year. And if we are going to look at the most expensive HR resources in the corporate equation it is pretty obvious that the greatest wage disparity between us the overseas equivalent is at the CxO level, so let's cut the fat starting with the fat cats. If wage cuts and career insecurity is good enough for us, let it be good enough for them as well.
You should look into how much billionaire private investors pay their CEOs. It's WAY more than any public company pays and why?
Because when it's THEIR billions at stake they pay top dollar.
Circuit City is a good example of a company that was always doing well until they canned all of their highest paid execs. In just a few short years the lower payed CEOs ran the company out of business.
Time will tell how well your beloved Chinese bankers will do in the end.
Oh, and as to who has the more important job, according to the invisible pilfering hand of the free market, the movie stars and sports stars, as after all they are getting paid more. But note this, the average movie star or sports star is rarely guaranteed that kind of money for decades, for most of them a run of a few years is a good career, people like Tom Hanks or Michael Jordan are the exception. The hedge fund outfits paid more than 50% of their gross in salary - any other organization with a cost structure like that would be considered to be poorly run and Deloitte, whom I have worked for, would be advising them to outsource the work to cheaper labor countries. And personally, I think we should export the jobs of our CxOs and bring back the actual productive jobs here, these CxOs hace screwed up massively but do not want to see their incomes reduced one cent - tails they win, heads we lose. Excellent, nice work if you can get it.
Of course movie stars and sports figures are way overpaid. That's just obvious.
But the point about management compensation precisely isn't about 'too much', it's about what for?
The obvious case is when their firms are failing and get bailouts. In that case, $1 is appropriate, assuming the CEO being paid $1 can credibly commit to improving things.
The interesting case is in general, and then it's not just about executives and senior management. It's about all incentives.
And the basic point is that it is NOT true that revenue-based or profit based or even risk-adjusted profit based compensation is good enough to guarantee the workings of the invisible hand. It's a fallacy to assume that it is enough to make that invisible hand work.
It just isn't true. It's true only in simplistic views of financial markets, views that ceased to be applicable roughly in the 1920s.
That's just how it is. If you wanna know why these views have survived to the present day, just study the time-scale that brought down the chinese emperors of old, or the romans, or the russian czars.
The problem is 'perverse incentives', which in a nutshell means that it's possible to make money out of the risk of going bankrupt as soon as those who provide capital (shareholders or creditors) don't know what's really going on.
End of story. It's known for decades and it has been silenced for decades. Guess why?
This is REAL news. Thank you to all of the participants. More of this stuff.
The buzz word of 2010 for people interested in reforming economic policy is incentive. Every facet of the economic catastrophe of the past 18 months can be traced back to an incentive structure that rewards only short term gain.
If executives were compensated based on stable long-term growth investment firms would never have taken the kind of risks involved with credit-default swaps. A director of public finance investment banking whose pay was based on 10 or 15 year performance would never have relied so heavily on the 2/1 and 3/1 arms that look so good in the short term but have been the one of the major contributing forces to this crash. Never would they have created exotic programs like pay-option arms which couldn't be much more effective at putting people upside down on their mortgages if there were intentionally designed for that purpose. If mortgage companies had to keep a 5% interest in the loans they sold, they never would have sold mortgages to such risky borrowers.
Reforms targeting incentive have been talked about here and there, but it seems nothing serious is on deck. I'm looking forward to the day when the administration targets the structural problems that brought us to this point in order to prevent the next crash, which, on our current heading, is probably an eventuality.
Yet again, Arianna proves she's often the smartest, most issue-savvy person at the table.
I'm always waiting for her to say "dahling" at the end of each sentance, but yeah, she's great in a roundtable discussion.
Me too!!! I do think she's great!
does business get no but they will have to face reality the old game didn't work new game alot of less money for executives and it is about time
There is one very quick fix to this insanity of banks using our capital to gamble on profits that are made by specultating as opposed to creating wealth....
TAX HEDGE FUNDS 50% OF PROFITS!!!!! WHAT VALUE DO HEDGE FUNDS HAVE EXCEPT TO SPECULATE?!
Airlines buy insurance against a spike in fuel prices. Manufacturers need to make sure they won't go out of business if short term credit freezes. It's not the hedges themselves that are problematic. The securities they invest in need to be given a value. That's where we get the shenannigans.
Banks are bigger and fewer but how exactly are they in danger of failure? Despite what many people think, gawd didn't punish us last October for arrogance, greed or whatever. People who were good at sales and not so good at math figured it wouldn't be a big deal to include an optimistic assumption about trends in home prices into the value model used to insure some securities. That optimism infected AIG as well and affected the reserves they thought were necessary to pay out if those securities lost value.
Regardless of whether a company can count on a bailout, it still probably wants to avoid losing 50% of its value, so investment houses that survived had to put the MBAs in the back seat and move the statisticians in the front. Because 95% of americans are not mathematically literate beyond simple algebra, that's an expensive move. So hooray for math guys! Whey you guys take it to the street and eat the rich, can you please make sure to spare a few of the researchers and analysts? Keep some science in the equation.
Should not have given them Bail Out money. Case Closed.
Should never have had Deregulation, period, exclamation point!
Exactly. GOP "smaller" government means "bigger" (see GW Bush) and "let capitalists" monitor themselves (i.e., deregulation for Bank Ponzi schemes!).
amen
It is Now or Never, to change the Culture of Wall Street,,,and in turn the Country.
http://money.cnn.com/2009/10/23/news/newsmakers/fed.feinberg.fortune/?postversion=2009102310
Who needs 'em?
It should be a crime to support a theory of "I got mega rich with Capitalism" but I want none of the responsibility that goes along with it. Most certainly these men would undo Democracy in favor of keeping their stash.
36 years ago, the median income in America was about $47,000. Today it is about $46,300. I wonder if the same "gains" were made in executive compensation on Wall Street. What do you think?
WRONG!! According to the US Dept of Commerce, the median income for families in the US in 1973 was $12,050. $47,000 was an insane amount of money back then. Top flight medical plans (The Guardian) were $27 A MONTH inthat particular year! Feel free to check these facts.
No offense, but are you a republican strategist?!?
I don't think limiting pay is the answer. Tax the crap out of it. Excessive pay has run a muck in more than the financial area. And the argument that it will effect the quality of the executives that companies get is a red herring. A strong case can be made that the current ones suck at these rates and that money isn't the only thing that motivates people. It's become a my dick is bigger than yours competition with dollars the points. The gap between what the average Joe makes and executives has never been wider. Plenty of blame for the board oversight too but most are CEO's at other companies so they scratch each others backs. Are we getting better corporate management with these ridiculous payouts? Doesn't look that way to anybody I talk to. When they talk about improving things like schools the repugs say money isn't the answer (and I generally agree in many cases) but with big business it always is. Why the double standard? As if we don't know the answer...
All that excessive pay is not reinvested in the companies for sustainabliltiy and long-term employment for Americans. It's a short-term Bernie Madoff scheme to take as much cash as they can and sell and merge for more outrageous cash.
The whole pyramid scam of the ceo's and excutives is just to rape and pillage and keep the scam of the, " Trickle Down Theory," going to the sheeple.
They tell the sheeple it's the unions causing all the economic trouble and, of course, the sheeple take it hook, line, and sinker. Nice trick and diversion for the sheeple.
It's a corrupt and sick business model to allow unhealthy pay for the least productive whose business model is to gut and merge and put people out of work. That's what has been transpiring for the last three decades.
The rapists ( the ceo's and executives ) of our companies and country take but don't put anything back into our democracy. Look at schools, roads, healthcare that has been allowed to be undermined, we have taxpayer money for the rich and their toys, but not for the rest of America. THAT'S NO DEMOCRACY, IT'S BEEN A KLEPTOCRACY!
Could not have said it better.
I worked for a large corporation for many years. The executives make huge amounts of money and still get paid even if they fail to enrich the company.
Corporations(not just Wall St but based on earning that Wall st. expects) have stripped the middle class to make money for the wealthy and now look what has happened. This has been going on for 30 years and will not be reversed anytime soon if ever!
Exec pay, over 20X the pay of the lowest paid employee, should not be tax deductable. And profits, not immediately reinvested in plant and equipment should be taxed at 70%.
If a worker wants a nickel more an hour the boss screams SOCIALISM! If the rich want a couple of million more bucks a year that's American capitalism.
Steal a loaf of bread - go to jail for 5 years. Steal $500 Million and get a government bailout.
Decreasing their salaries will destroy the economies of their surrounding states. NJ, CT, etc.
You are joking right. I mean we are talking about less than a hundred people in states which each have millions of citizens.
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