One in five in our country does not have decent paying work. We have the greatest divide between rich and poor in 100 years. A secure retirement is now something that millions of people are quite worried about -- thanks to the behavior of the people who were entrusted with the responsibility to manage the economy. The people are begging for reform. Yet, because of a combination of the corruption of the political system (aka campaign contributions) and a simple lack of common sense and decency, greed has not abated. The opposite: it has increased and resumed its rampage.
I was a skeptic, from the outset, that the Administration's efforts to cap CEO pay would amount to much. And, today, we see evidence that the CEO class is back at the trough again:
When the Obama administration imposed restrictions on executive pay last year at some of the largest companies the government had bailed out, officials said they were aiming to set a new standard for compensation across corporate America that would discourage risky business practices.
But as firms begin to disclose last year's bonuses ahead of annual shareholder meetings, it is becoming clear that companies across a wide range of industries are paying executives in ways that officials worry will not discourage the kind of excessive short-term risk-taking that led to the financial crisis.
"I see no indication whatsoever that the business community is paying any attention to the administration's suggestions," said Nell Minow, co-founder of the Corporate Library, an independent corporate governance research firm. "On the contrary, I think pay is worse this year than it's ever been." [emphasis added]
Minow is a long-time leader and thinker on this topic so her views that things have never been worse have to be taken seriously.
The hedge fund world is feasting as well:
The Lazarus-like recovery of the nation's big banks did not benefit just the bankers -- it also created huge paydays for hedge fund managers, including a record $4 billion gain in 2009 for one bold investor who bet big on the financial sector.
...But in a startling comeback, top hedge fund managers rode the 2009 stock market rally to record gains, with the highest-paid 25 earning a collective $25.3 billion, according to the survey, beating the old 2007 high by a wide margin.
The minimum individual payout on the list was $350 million in 2009, a sign of how richly compensated top hedge fund managers have remained despite public outrage over the pay packages at big banks and brokerage firms.
And just so we know that this is a global phenomena, via The Financial Times:
The top 400 executives of Credit Suisse will share a jackpot of more than SFr3bn when a special bonus scheme that reached maturity on Wednesday pays out next month.
The end of the bank's five-year performance incentive plan (PIP) means that Brady Dougan, chief executive and the biggest beneficiary, will receive 1.3m shares. Based on Wednesday's closing share price of SFr54.35, he stands to make SFr70m (€49m) - on top of the SFr19.3m compensation he received for 2009.
Paul Calello, head of investment banking and the second biggest beneficiary, is set to receive SFr37m, while Walter Berchtold, head of private banking, should make SFr34m.
So, these are the two main lessons:
We cannot rely on our current political leadership to change the rules of the economic game that shovel enormous wealth into the hands of the few. Those few in the CEO elite are buying off our elected officials, even people who might mean well, via our legalized but corrupt system of election financing.
Whether it is a year from now or five years or ten years, we are virtually guaranteed to have another financial crisis (built on the 30-year crisis of wage depression in our country) manufactured by the CEO elite because they will always act in a way that maximizes their wealth to the detriment of the rest of the people. That's the way the rules are set up.
That said, I believe we are in an Age of Possibility -- because the people are angry and they understand that the system is rotten. We have a choice: change the rules in a serious way, or let the people suffer.
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