Thursday, May 8, 2008

Shareholders Rebelling Against Insane CEO Compensation

In an interview with Lawrence R. Velvel, Dean of the Massachusetts School of Law conducted last August, former Vanguard CEO John Bogle points out that CEO compensation has increased by 800% since 1980 while worker compenssation has only increase by 7%.

For years CEO Compensation was one of the best kept secrets in America.

Last April Cenk Uygur discussed how a change in the law brought a new light to the CEO's salaries and hidden perks.

Now shareholders are saying "enough is enough"

excerpt from:

Too Much: A Commentary on Excess and Inequality

Shareholders A Boo Birds

By Sam Pizzigati

Last month, at a Hilton Hotel ballroom in New York, things turned ugly for some of Wall Street's most eminent power suits. The occasion: the annual meeting of Citigroup, the financial colossus that last year wrote off $20.4 billion in subprime-related losses — and has so far this year lost another $9.1 billion.

On hand for the annual meeting: over a thousand angry Citi shareholders. They packed the ballroom. And they wanted answers — about the remarkably cushy rewards that continue to flow to Citigroup's top executives.

How cushy? In January, just a month after Citi's CEO through the worst of the mortgage mess left the company with an exit package worth $42 million, Citigroup's board of directors awarded that CEO's chief financial officer, Gary Crittenden, a $12 million "retention bonus."

The company's current CEO, Vikram Pandit, did his best at the Citi annual meeting to justify this sublimely generous board gesture. Citigroup, he noted, was operating in a "competitive" environment and needed to pay well to "retain" staff.

The shareholders didn't buy that explanation — or much of anything else Citigroup executives had to say. They jeered. They booed. They laughed sarcastically. And they cheered shareholders who lined up at the ballroom microphones to vent their outrage.

"Where can you get a job where you do nothing to earn your money and get paid in advance?" asked one irate shareholder. "Citigroup!"

Added another: "There is something wrong in this company."

But that shareholder didn't quite have it right. There's something deeply wrong in all of Corporate America, not just Citigroup.

Senator Barack Obama held a press conference in Indianapolis, IN on April 11, 2008 calling for swift passage of his legislation to require corporations to hold a nonbinding shareholders vote on compensation packages offered to executives.

Enough is Enough!

Related articles:

Obama Calls for Checks on Executive Pay

Obama To Take On McCain Over Bloated CEO Salaries

Related posts:

Bad Luck, Incompetence, Lack of Regulation or Simple Avarice

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