The Richest of the Rich, Proud of a New Gilded Age - New York Times:
"The new tycoons oppose raising taxes on their fortunes. Unlike Mr. Crandall, neither Mr. Weill nor Mr. Griffin nor most of the dozen others who were interviewed favor tax rates higher than they are today, although a few would go along with a return to the levels of the Clinton administration. The marginal tax on income then was 39.6 percent, and on capital gains, 20 percent. That was still far below the 70 percent and 39 percent in the late 1970s. Those top rates, in the Bush years, are now 35 percent and 15 percent, respectively.
“The income distribution has to stand,” Mr. Griffin said, adding that by trying to alter it with a more progressive income tax, “you end up in problematic circumstances. In the current world, there will be people who will move from one tax area to another. I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard.”"
Yes, I know I will NOT drag my ass out of bed for less than 100 Large a day!
[Mr. Griffin made a billion dollars last year.]
This is an astounding article, however and well worth the read. One more bit:
In contrast to many of his peers in corporate America, Mr. Sinegal, 70, the Costco chief executive, argues that the nation’s business leaders would exercise their “unique skills” just as vigorously for “$10 million instead of $200 million, if that were the standard.”
As a co-founder of Costco, which now has 132,000 employees, Mr. Sinegal still holds $150 million in company stock. He is certainly wealthy. But he distinguishes between a founder’s wealth and the current practice of paying a chief executive’s salary in stock options that balloon into enormous amounts. His own salary as chief executive was $349,000 last year, incredibly modest by current standards.
“I think that most of the people running companies today are motivated and pay is a small portion of the motivation,” Mr. Sinegal said. So why so much pressure for ever higher pay?
“Because everyone else is getting it,” he said. “It is as simple as that. If somehow a proclamation were made that C.E.O.’s could only make a maximum of $300,000 a year, you would not have any shortage of very qualified men and women seeking the jobs.”
Cheers,
Wednesday, August 27, 2008
The Richest of the Rich, Proud of a New Gilded Age - New York Times
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2 comments:
Executive wealth should be tied to the success of a company, just as the founder's wealth was.
That means, if the company goes kah-putz, then the executive shouldn't expect to see too much for his work.
Here's an idea.
Start a CEO at 500K a year, which diminishes by 100K a year as their options are vested.
By the end of 5 years, they'll either have done something with the company such that their stock ownership is worth something, and its dividends continues to pay handsomely.
Or, the company is not doing well...and now the CEO is only making $1 a year. The exec will have incentive to leave on his own, rather than trying to stick around long enough to strap himself up in a golden parachute.
I think there should be some connection between how well the company does and executive pay, but look at FannieMae and FreddieMac - CEOs leaving with many millions after leaving the company in a ditch?
Your idea may be a good one. I am not savvy enough to know how it would work. How about tying it to some calculation based on the total amount of money payed to rank and file employees? So if you grow payroll in both numbers of employees and their salaries, execs get rewarded. You'd obviously have to tie margins or some measure of profits, too, but my benchmark would be a good estimate of the growth of the entire company. Just a thought.
May I ask how you found my blog?
Cheers,
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