Excessive Executive Compensation

By: ispeculatornew
Date posted: 01.10.2007 (12:00 am) | Write a Comment  (1 Comment)

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One of the reasons I created this website was to write about the problems I see on Wall Street that need to be addressed and fixed. One of these problems is the excessive compensation given to CEOs and other high level executives.

This overcompensation has been a problem for years and people just tend to overlook it. CEOs make millions of dollars in base pay and are given stock options worth tens of millions even when their companies and their stocks underperform. To add insult to injury it has been disclosed in the last year that they have been backdating their options (changing the date of their options to coincide with the lowest price during the year). This should be illegal and in my opinion a lot of CEOs should be going to jail for this. Furthermore, CEOs are given lavish perks and “golden parachutes” when they retire. Some of these CEOs get a retirement package worth millions of dollars a year for life. This is a fleecing of shareholders and is simply unacceptable.

Shareholders and regulators need to stop being apathetic and something needs to be done about this.

One thing we shareholders can do to combat this is to keep the board of directors for these companies more accountable. If they approve these excessive pay packages vote them at. It’s as simple as that.

Another option for shareholders is to try to pass shareholder resolutions that will tie a CEOs pay to the performance of the company (not the share price but the fundamentals of the company: revenues and earnings). Why should a CEO or any other high level executive receive millions of dollars of stock options when their company is performing poorly? It just doesn’t make sense. Good performance should be rewarded, not just any performance at all.

Finally, shareholders need to make their feelings known to the SEC. If enough shareholders make their voices known to the SEC they will be more inclined to enact change and do something about this egregious problem.

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1 Comment

  1. […] governance to become a bigger problem as no one has the power to change how things are done. Executive compensation has been publicly despised in recent months but the truth is that in theory, the shareholders did […]

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