One More Way That CEO Pay Is Disgustingly Corrupt
A new study shows that the way that CEOs of large corporations are paid is a thoroughly corrupt, disgusting, despicable process more akin to the Mafia than to a well-run business. I’m paraphrasing.
What the study, from Institutional Shareholder Services, does say is that companies that have corporate boards that are independent—meaning the board is not led by “a controlling shareholder, founder or other insider,” or by the CEO himself—pay their CEOs significantly less than companies where the chairman of the board is not independent. Perhaps a less complicated way of saying this is: CEOs who are able to rig boards in their favor end up getting paid millions of dollars more per year because either they or their close pals are the ones overseeing their pay.
Funny since corporate boards are supposed to represent the interest of shareholders not CEOs!!!!!!!!!!!!
This also statistically demonstrates that what the average person intuitively believes to be true is in fact true: this shit is all rigged. Super powerful executives who have a hand either directly or indirectly in setting their own pay get paid more. Big surprise!!!! The only real surprise is that corporations have been able to so successfully pretend for so many years that not having an independent board is somehow proper and fair.
What is happening here? What is happening here is that corporate CEOs are very literally skimming millions of dollars per year for themselves out of the pockets of their own shareholders via a form of regulatory capture. From the Wall Street Journal: “CEOs that also serve as chairmen were paid an average of $13.8 million a year over the three-year period, while those reporting to an independent chairman were paid an average of $11 million a year, according to ISS. The highest-paid leaders were CEOs reporting to a controlling shareholder, founder or other insider. ISS found this group was paid an average of $15.6 million a year.”
If your best friend set your pay, you’d be paid very well. If you helped set your own pay, you’d be as greedy as possible while still trying to maintain plausible deniability that you are greedy as hell. And if an independent board not beholden to you that judged you more or less on your performance set your pay, you’d be paid less, because you would not get any multimillion-dollar bonus just for being One of The Boys.
This shit is legal. Meanwhile the wages of average workers have remained stagnant for decades. No wonder people are mad. They should be.
[Photo of Les Moonves, the poster boy of outrageous CEO pay: AP]
