[quote=threadkiller]Yes. I don’t fault the CEO for taking the money. The board that elects him is probably only listening to the more/most important stock holders who have the clout in stocks and actually vote for board members. [/quote]
In the vast majority of corporations – large and small – the CEO picks the board members. Sure, the shareholders vote… but they’re almost always voting for someone hand-picked by the CEO to appear on the proxy. Yes, many companies engage executive recruiters to find board members, but… often the CEO’s candidates are put at the front of the line and… surprise, surprise… they’re the ones that end up being nominated. Not all companies operate in this manner, but probably 80%+ do. I know… I sit on two boards and was hand-picked by the CEO in each case, albeit largely because I represent large blocks of shareholders – but that’s an anomaly.
Unless something goes egregiously wrong, most institutional shareholders vote with management because (1) they don’t want to get cut out of the flow of information, and (2) they don’t want other companies to view them as hostile (and possibly get cut out of the information flow with them). Institutional shareholders – particularly pension and mutual funds – are notoriously lazy and ineffective where corporate governance is concerned. Which is why I view publicly-traded companies as, very generally, places I don’t want to be invested. It’s a big club where folks are reluctant to rock the boat because everyone’s getting paid too much… even when it’s obvious that something’s rotten in Denmark.
[quote=threadkiller]
I know a lot of Piggs here own stock but how many of you have ever voted for a board member? [/quote]
Personally and on behalf of my partnership, I always vote my proxy. 100% of the time.
[quote=threadkiller]
Everybody(ok maybe not everybody) thinks they are over paid and yet no one does anything about it.[/quote]
This has been discussed here before. Ultimately the problem lies with the board. But there’s a whole circle jerk of enablers with misaligned incentives – not the least of which is compensation consultants (a total racket) – that keep the CEOs living high on the hog without any real checks and balances. Every so often a Carl Icahn or Dan Loeb comes along and rocks someone’s boat… but it’s such a rare occurrence that it fails completely as a policing mechanism.
