Elon Musk Pay Package at Tesla - no surprise there!

The normous pay package for Elon Musk is no surprise for anyone who is watching the (fruitless)  debate about the correct level of executive pay.
So far there has not been an agreement what approriate pay for senior executives, especially CEO's should be.
And I always argued that ANY level of pay could be justified under the current regime. If, say, a company earns 100 million and next year it earns 150 million, why no award the reigning CEO half of that increase? of even half of the total? (as some Hedge Funds do).
14-June-2024

C.E.O.s Are Qualified to Make Profits, Not Lead Society

The self-appointed Governance activists in business and finance should take note. They stray from the original purpose of good Corporate Governance (how companies should be governed in the insterests of the shareholders). Other stakeholder interests can be guarded by proper laws after they have been determined in a democractic process.
(26-July-2020)

Interesting Contribution from Gregory Mankiv

2017: A wasted Year in Corporate Governance

When stories such as these feature prominently in the very first days of the New Year one can only despair about the ineffectiveness of the Corporate Governance Crowd - be it in the Media, Academia, Politics or the Investment Community.
The CEO of Intel clears out most of his share holdings when supposedly he should already be aware of a security flaw in his flagship product.
Some (and I guess a large percentage) of British CEO's earn more in three days than the average worker.
Call it lack of moral fibre, lack of shame, failure of Capitalism or whatever, I go for the collective abrogation of responsibility by our fiduciaries in the Investment Industry, including useless free-riders in the so-called 'consulting world'.
Will 2018 be any better? I would not bet on it - but in the UK at least the wolf is at the door. Apres nous le deluge? seems to be the motto for many.

Deutsche Boerse pays fine for supposed Insider Trades by CEO

Is this the proper way to handle this investigation? Is it just hush money? And who approves of these payments? Are the regulators complicit in a cover-up? And is there really no other person fit to run what was until not so long ago a quasi-public institution run for the benefit of its users? (Reuters)
(14-Sept-2017)

Morgan Stanley CEO Pay nicked through

A $22 Mio pay package for the CEO while ROE is stuck at 8pct - need one say more? Amd how can Morgan Stanley be a 'fiduciary' for billions of investors' funds? Put the fox in charge of the henhouse?
(23-May-2017)

CEO Pay Depends on Board's Independence

This study (paywall) may well be one useful contribution to explain (excessive) CEO pay. There is too much circularity in the appointment of board members, who in turn appoint the CEO. So they scratch each other's backs. But that leads to the question: how to find and appoint board members that ARE independent. And even if that problem is solved: what is the appropriate compensation for the CEO? The pay for performance mantra can be manipulated to justify ANY number
(14 March 2016)

McDonald's CEO Pay: Charge of the Governance Brigade

Nothing demonstrates the state of the debate about 'Executive' (or better: CEO) Pay better than this quote from Aeisha Mastagni, a CalSTRS Investment Officer, who stated  that "The compensation at McDonald's, in the grand scheme of things, it's quite reasonable".
Opinions may differ about the correct level of compensation for senior and top management but it would be helpful if clear yardsticks are set by investment fiduciaries and their paid advisers in the proxy industry. Constant ad-hoc battles on a case-by-case basis are a losing proposition that will regularly be won by incumbent management and their tame supervisors in the boards (they are by nature beholden to those who appoint and feed them).
(21 May 2014)

Board Pay - less Understanding and more Action

The highly detailed and interesting report by Hedley May gives useful insights into the fact that (UK) shareholders and company directors hold diametrically opposed views on executive pay and board-room performance.

This should be no surprise to anyone who is following the (endless?) discussions about how to improve corporate governance and (top) executive compensation.

What is somewhat dispiriting is the glacial progress that is being made towards keeping a lid on the ever-growing pay packages that are awarded to CEO's.

Reference to the need for companies and investors to come to a 'greater understanding' on this issue already point to a major obstacle. It is a misconception that CEO's and boards (that are basically at their beck and call) and shareholders are in opposing camps. This overlooks the basic fact that ALL executives are the hired employees of the shareholders.

It is up to shareholders to set the rules. As the top 50-100 investment institutions hold a de-facto blocking minority in all major listed companies it should be easy to agree on some basic and simple rules with respect to executive pay levels. There should not be need for compensation schedules for the favored few at the top that run to dozens, sometimes even 100+ pages.
More and more reports on this problem (which is just the tip of the global inequality iceberg) will be useless if institutions do not face up to the challenge. Any number of politicians are ready to impose (often counterproductive) regulations if no concerted action is taken.
To rely on remuneration consultants to lead the way on this endeavor is tantamount to letting the fox guard the chickens.

I look forward to read your suggestions - please post them on the Blogsite. Alternatively I will post any comments that reach me by email.
12-Nov-2013

Peer Groups not solution to CEO problem

A Better Way to Compare C.E.O. Pay (New York Times)

The article does not give any hint how peer group comparisons could be used to keep a lid on CEO compensation, let alone help to reduce it.
(24-Sept-2013)

Dell Buy-out (or Snatch-out?)

The only lesson that transactions like the proposed buy-out of Dell shareholders orchestrated by it's CEO Michael Dell can give is that investing in equity is only for short-term speculators.

Time to end the time of the 'Imperial' CEO

That some employees at Citigroup may be in shock (Financial Times) about the sudden departure of the CEO speaks volumes about the fact that the role of the CEO in today's corporation is vastly exaggerated. While no one would deny that the decision of the leader is critical it does not mean that this is necessarily a good thing as many examples in business (and history) show. Relying on the judgement and predelictions of a single person creates risks that would be mitigated in a more collegial system of leadership.
(20/10/2012)

Dual CEO'S - if anything a formula to be promoted

The recent troubles at Blackberry manufacturer Research in Motion seem to suggest that dual leadership can be damaging for an organisation (FT). But Rome had two consuls during its rise to dominance, and they were limited in their power to a tenure of one year. Goldman Sachs in the late 1970s and early 1980s had co-chiefs - and that was when the firm laid the foundation to its rise to dominance. The challenge for boards and shareholders is to make sure there is a deep bench of talent - a thing that is sorely missing in many companies, why else would a company ever look for an external candidate for any of its top positions?
(31/01/2012)

'Imperial' CEO - too dangerous to tolerate much longer

News that warnings by a senior manager at MF Global over the bets that Chairman and CEO Joe Corzine made in the bond markets were brushed aside lend support to our demand that no excessive powers should be vested in any one individual at the top of a company. Quite apart from the overdue reform to separate the roles of Chairman and CEO there should also be less emphasis on the CEO. A collegial system with more equal authority (and pay) would be useful to ensure that decisions are taken on the basis of a more rounded thought-process. Succession planning should make sure that every individual can be replaced at short notice. The CEO should also have less authority to 'cleanse' lower-level management and get rid of potential candidates that could endanger his position. No one at the two management levels below CEO should be removed unless fully discussed with the board.
(06/12/2011)

Why are CEOs rarely fired? - Study of Board behavior

An interesting study looks at reasons why only 2% of American CEOs are dismissed in a year.
(10/02/2011)