Wednesday, January 01, 2014

Current Crop of Kleptocrat CEOs

My comment on Reddit: Professor Explains Economic Illiteracy He makes some decent points. Then he makes crazy claims about overpaid executives being good but non-economists failing to understand value of paying for success.

People that criticize executives taking huge amounts from corporate treasuries are not failing to understand paying for value. They just understand executives taking what they don't deserve is not what apologists claim. Executives treating corporations like a kleptocrat treats a country has nothing to do with economics and everything to do with some people taking whatever they can when they have power (and a whole slew of people willing to help them do so for a slice of the plunder).

Related: Executives Again Treating Corporate Treasuries as Their Money - Don't Excuse Immoral Looters - Massively Unjust Executive Compensation Damages Companies and Investments - Losses Covered Up to Protect Bonuses - Obscene CEO Pay (level of pay reached kleptocrat levels in the executive suite at the turn of the century - Warren Buffett "Too often, executive compensation in the U.S. is ridiculously out of line with performance."

Senior executive pay is 30, 60, 100... times what it should be today because:

  • the conspiracy of collaborators splitting up the spoils (boards, other executives, compensation apologists getting huge checks for making excuses for ludicrous pay packages, professors getting funding for making ludicrous excuses for pay packages...)
  • paying for failure - golden parachutes etc.
  • paying for failure with "repriced" options, new share giveaways, etc. when results are poor
  • paying for good markets - when every single too-big-to-fail bank gets gifts worth tens of billions in profit it is pretty hard to fail to make huge profits no matter how poorly you are managed, but what happens for market performance at these kleptocrat run companies? Millions in bonuses all around.
  • taking huge risks (including excessive leverage), when they work, claim leadership credit and take a huge paycheck (if they don't make other excuses or take your golden parachute)
Senior executives should be paid well. Doing so would require cutting pay by over 40% for many senior executives and 80% for many CEOs at companies that have been overrun by kleptocrats the last 15 years.

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