[quote]DoubleDuce wrote:
My point is that if it isn’t your money, why do you care?
[/quote]
If we are talking about JP Morgan, Citigroup, and Goldman Sachs, it is “our” money. Collectively these three institutions have been bailed out to the tune of over $70 billion in government [EDIT: i.e., TAXPAYER] funds.
I can’t say about the others, but Jamie Dimon was worth every penny that JPMorgan paid him.
http://money.cnn.com/2008/08/29/news/companies/tully_dimon.fortune/
[quote]jwillow wrote:
I can’t say about the others, but Jamie Dimon was worth every penny that JPMorgan paid him.
http://money.cnn.com/2008/08/29/news/companies/tully_dimon.fortune/[/quote]
I note that that article published Sept 2, 2008 was prior to the October infusion of TARP funds. While JP Morgan took the funds at the government’s request, not because the needed it, the sooner they return the money the less I care what they pay their CEO.
Not saying this is always (or even usually) the case, but just because a company did poorly in a year does not mean the CEO did poorly. What about a company that lost 10 billion when other similar companies lost 30 billion? The extra 10 million you paid that CEO was a hell of a return.
[quote]borrek wrote:
tGunslinger wrote:
It seems the only thing smaller than borrek’s dick is borrek’s paycheck.
I have more respect for a thief who does his dirty work himself than a person like you who wants his government to do it for him.
Yeah, you “make it your business”! That’ll turn out great for everyone!
Zing! You really got me there. Your well thought and deep contribution to the discussion is appreciated.[/quote]
Abject stupidity rarely warrants more than a snarky one-liner.
[quote]borrek wrote:
tGunslinger wrote:
It seems the only thing smaller than borrek’s dick is borrek’s paycheck.
I have more respect for a thief who does his dirty work himself than a person like you who wants his government to do it for him.
Yeah, you “make it your business”! That’ll turn out great for everyone!
Zing! You really got me there. Your well thought and deep contribution to the discussion is appreciated.[/quote]
Alright, you think I’m being pointlessly rude. Try this.
If CEO pay is a problem that the free market can’t solve, where are all the companies failing because their CEO’s are taking all of their assets? It should be easy to do if it’s a systemic problem worthy of gov’t intervention.
How many companies are paying their executives’ king’s ransoms while laying off or otherwise mistreating employees? Can you name specifics? The company of your #1 CEO is routinely listed on “X Best Companies to Work for in America” lists. I have extended family working for them, and can vouch that their salaries, benefits, and perks are “outrageous” all the way down to rank and file.
Are the other companies on your list abusing their rank-and-file’s to pay their executives? Are their share prices stumbling because they’re spending too much on their executives?
If you can’t answer these questions, what exactly was your point of posting this, and why on God’s green Earth would you want the gov’t getting involved?
A large population means a large salary. It’s a fact of modern life.
If it was just you and the neighborhood back in the Stone Age what constitutes riches? (No doubt there are pinkos who yearn for such an idyllic life, the problem is that we would really be back in the Stone Age. And the flower power kids would all get killed by the cavemen and lions and exposure)
[quote]tGunslinger wrote:
Alright, you think I’m being pointlessly rude. Try this.
[/quote]
Be as rude as you feel the need to be, it’s no skin off my back. Others more erudite than yourself have joined the discussion, so I don’t really feel the need to engage any of your questions (especially since they were already answered previously)
Just to quickly clarify, I didn’t say I wanted the government involved, my joke about voting for more democrats was simply a heuristic.
[quote]LankyMofo wrote:
Most of these CEO’s earnings are given to them in stock bonuses which typically take (at least) 5 years or so to be vested, which don’t actually cost the company anything. If the shares are already authorized, they can simply give them to the CEO for hitting certain performance targets and it doesn’t cost the company any real money, it just dilutes the ownership of the company a little more. [/quote]
This is the same thing but by a different mechanism, but a difference that makes no difference to the stockholders.
Cash being paid means money not available for dividends or capital investment. Which means the stockholders not getting the money, either now or later.
Stocks being given means, as you said, dilution of value of the stock, costing the stockholders just exactly the same amount.
As nice as it is to imagine that somehow millions of dollars could be generated for free costing no one else anything, it ain’t so.
If the stockholders suffer stock dilution on account of the CEO getting tens of millions for doing a bad job, according to a deal that was never in their best interest (if such is the case), it costs them just as much whether it is from issuing stock, stock options, or paying straight cash.
[quote]Bill Roberts wrote:
LankyMofo wrote:
Most of these CEO’s earnings are given to them in stock bonuses which typically take (at least) 5 years or so to be vested, which don’t actually cost the company anything. If the shares are already authorized, they can simply give them to the CEO for hitting certain performance targets and it doesn’t cost the company any real money, it just dilutes the ownership of the company a little more.
This is the same thing but by a different mechanism, but a difference that makes no difference to the stockholders.
Cash being paid means money not available for dividends or capital investment. Which means the stockholders not getting the money, either now or later.
Stocks being given means, as you said, dilution of value of the stock, costing the stockholders just exactly the same amount.
As nice as it is to imagine that somehow millions of dollars could be generated for free costing no one else anything, it ain’t so.
If the stockholders suffer stock dilution on account of the CEO getting tens of millions for doing a bad job, according to a deal that was never in their best interest (if such is the case), it costs them just as much whether it is from issuing stock, stock options, or paying straight cash.[/quote]
If a company pays with treasury stock, the company will get the triple whammy of paying their executive, increasing their book value equity, and having little-to-no effect on the share price of their stock.
However, the effect on the share price of paying the executive through newly issued stock is usually immaterial to most investors, because of the large number of shares already outstanding. Further, it can often be recouped because of increased demand in shares of company stock due to the increased health and book value of the company.
This does depend on how many outstanding shares a company has, and how many they’re paying to the employee. Not all companies are in a position to do this, but I’m not aware of any company that drove itself into oblivion through stock-based compensation.
As long the stock price of a company is generally moving up, paying employees through stock is “free” from the perspective of the company, and of little concern to the shareholders.
If executive pay ever did get out of whack, market forces would push the share price down, thus capping the pay of executives. If the executives do a bad job, the share price goes down, thus forcing a pay cut on executives.
Isn’t that neat?
I think it should be obvious that any analysis that concludes that a company’s actions which result in an individual receiving tens of millions of dollars in fact costs it and the shareholders nothing or even a penny less than what was received, has to be a flawed analysis.
Your theory is “neat” but cannot remotely be correct.
In 2008, CHK, who has the highest paid CEO according to the list in OP, paid out $196M in stock based compensation.
They have approximately 624,480,000 shares outstanding.
Taking all of that $196M out of their market capitalization knocks their share price down $0.31, to $20.09 from $20.40.
CHK’s stock price had an intraday range of $2.06 yesterday, May 5th.
Not a wholly negligible difference, but immaterial to most investors. But the benefits to the company itself are quite large.
That’s why stock-based compensation is so popular.
[quote]Bill Roberts wrote:
I think it should be obvious that any analysis that concludes that a company’s actions which result in an individual receiving tens of millions of dollars in fact costs it and the shareholders nothing or even a penny less than what was received, has to be a flawed analysis.
Your theory is “neat” but cannot remotely be correct.[/quote]
I didn’t say it cost them “nothing”.
Look at my next post.
Exactly why, if you do, do you think there is a difference in dollar amount between the stockholders collectively not receiving the $196M via reduced dividends on account of it having been paid in cash, versus their both seeing their stock value reduced and also future dividends reduced due to being diluted?
How are the investors not ultimately having $196M less either way? In fact exactly the same amount less either way?
[quote]Bill Roberts wrote:
Exactly why, if you do, do you think there is a difference in dollar amount between the stockholders collectively not receiving the $196M via reduced dividends on account of it having been paid in cash, versus their both seeing their stock value reduced and also future dividends reduced due to being diluted?
How are the investors not ultimately having $196M less either way? In fact exactly the same amount less either way?
[/quote]
Yes, they have.
But there are usually so many thousands and thousands of investors, that their share of the $196M is so small that they often don’t care. Further, their small fraction of that $196M is often recouped from increased demand for company stock due to a healthier company profile.
CHK’s stock based compensation knocks $0.31 off their share price. That share price varied $2.06 over the course of yesterday’s trading, and had varied from $74.00 to $9.82 over the last 52 weeks. $0.31 is peanuts for most investors, and that’s for a company that, apparently, has the highest-paid CEO in America.
Like I said above, not every company can do this. Those that have enough demand for their stock, relative to the amount of compensation expense they’re pushing off on shareholders, can.
[quote]PB-Crawl wrote:
DoubleDuce wrote:
How about because it’s not your money and it doesn’t effect you (until the government steals your money and throws it in a hole created by one of these companies)
That’s the beauty of a free market, if you don’t like it you don’t have to participate in it
except when one or group of these companies build an enormous house of cards that entangles everything and everyone in it, regardless of participation or not, and comes crashing down on its self, and poof, half your retirement is gone. poof, your 401k is tanking.
so yes it effects you.
im not arguing against a free market economy, but to assume theres no problems that can arise, or that its all voluntary, is wrong. or at least if you want to live in society to any degree.
[/quote]
Your neighbor keeping a clean yard effects your property value. Does that give you the right to regulate how much he pays the lawn care guy?
Something indirectly effecting you doesn’t automatically give you rights over it.
Lazy people bring down the economy, maybe we should force them into work houses or sell them as slaves. The price of soap effects the economy, maybe we should get together and set prices. How you spend your money effects me in the end. I would appreciate submitting written requests to me for approval on all your spending. /sarcasm
Almost everything anyone does relates back to the economy. That doesn’t give you the right to control everything.
[quote]Loose Tool wrote:
jwillow wrote:
I can’t say about the others, but Jamie Dimon was worth every penny that JPMorgan paid him.
http://money.cnn.com/2008/08/29/news/companies/tully_dimon.fortune/
I note that that article published Sept 2, 2008 was prior to the October infusion of TARP funds. While JP Morgan took the funds at the government’s request, not because the needed it, the sooner they return the money the less I care what they pay their CEO.
[/quote]
Agreed.
And with perfect timing, today’s news reports that JPMorgan has passed the stress tests and has been deemed healthy enough to repay TARP funds without having to first raise additional capital.
[quote]DoubleDuce wrote:
Your neighbor keeping a clean yard effects your property value. Does that give you the right to regulate how much he pays the lawn care guy?
Something indirectly effecting you doesn’t automatically give you rights over it.
Lazy people bring down the economy, maybe we should force them into work houses or sell them as slaves. The price of soap effects the economy, maybe we should get together and set prices. How you spend your money effects me in the end. I would appreciate submitting written requests to me for approval on all your spending. /sarcasm
Almost everything anyone does relates back to the economy. That doesn’t give you the right to control everything.[/quote]
where did i say anything about assuming the right to control everything? or even ceo salaries?
i was simply arguing against the notion that participation in a fee market is completely voluntary and there fore none of your business.
and that we have “no right” to be concerned when companies engage in absurd economic behavior that WILL impact everyone. and ironically now we pay the salaries of some of these companies, yet still, should have no say.
a more appropriate analogy would have been: your neighbor doesn’t clean his yard and he lets lots of dead plants pile up everywhere, he also has a trashcan full of oily rags from when he works on his car sitting in the middle of this yard. you live in a santa ana region. he has a little bucket for cig butts that he tries to throw his smoldering cigs into but he misses a lot.
you have no right to be concerned since your participation in housing markets is voluntary.
Let’s exclude or at least separate out the situation where the monies on hand by the company include monies which were extracted from the taxpayers by force.
And rather consider the usual situation in which the company’s monies are those which it has obtained not by force or fraud, but by earning it. By providing goods and/or services for which people and/or other companies willingly chose to exchange their dollars and generally felt that they did well by doing so.
Now, there is exactly one group of people whose business it clearly is what happens to these profits:
The owners of or investors in the company.
If a huge payment is made to the CEO, absolutely no one else but these is out a penny.
So why the hell would it be anyone else’s business???
What do all of those corporations have in common? They’re all evil.