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July 7, 2011 at 8:20 PM #708874July 7, 2011 at 9:11 PM #709409
davelj
Participant[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.
July 7, 2011 at 9:11 PM #709047Participant[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.
July 7, 2011 at 9:11 PM #708895Participant[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.
July 7, 2011 at 9:11 PM #708199Participant[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.
July 7, 2011 at 9:11 PM #708295Participant[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.
July 8, 2011 at 7:07 AM #708950
CoronitaParticipant[quote=threadkiller]CEO pay. When is it too much? http://www.aflcio.org/corporatewatch/paywatch/ceou/database.cfm#C
Notice one of the best CEO’s is also the lowest paid. Steve jobs $1. Did not find my company here but inquiring minds want to know. Am not endorsing the union but it is a very interesting lineup.
For the last several years rates have gone down and so have prices. Could it be possible for rates to go up and home prices too? I’m not seeing the demand myself but stranger things have happened.[/quote]Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….
July 8, 2011 at 7:07 AM #709464CoronitaParticipant[quote=threadkiller]CEO pay. When is it too much? http://www.aflcio.org/corporatewatch/paywatch/ceou/database.cfm#C
Notice one of the best CEO’s is also the lowest paid. Steve jobs $1. Did not find my company here but inquiring minds want to know. Am not endorsing the union but it is a very interesting lineup.
For the last several years rates have gone down and so have prices. Could it be possible for rates to go up and home prices too? I’m not seeing the demand myself but stranger things have happened.[/quote]Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….
July 8, 2011 at 7:07 AM #708352CoronitaParticipant[quote=threadkiller]CEO pay. When is it too much? http://www.aflcio.org/corporatewatch/paywatch/ceou/database.cfm#C
Notice one of the best CEO’s is also the lowest paid. Steve jobs $1. Did not find my company here but inquiring minds want to know. Am not endorsing the union but it is a very interesting lineup.
For the last several years rates have gone down and so have prices. Could it be possible for rates to go up and home prices too? I’m not seeing the demand myself but stranger things have happened.[/quote]Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….
July 8, 2011 at 7:07 AM #709102CoronitaParticipant[quote=threadkiller]CEO pay. When is it too much? http://www.aflcio.org/corporatewatch/paywatch/ceou/database.cfm#C
Notice one of the best CEO’s is also the lowest paid. Steve jobs $1. Did not find my company here but inquiring minds want to know. Am not endorsing the union but it is a very interesting lineup.
For the last several years rates have gone down and so have prices. Could it be possible for rates to go up and home prices too? I’m not seeing the demand myself but stranger things have happened.[/quote]Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….
July 8, 2011 at 7:07 AM #708254CoronitaParticipant[quote=threadkiller]CEO pay. When is it too much? http://www.aflcio.org/corporatewatch/paywatch/ceou/database.cfm#C
Notice one of the best CEO’s is also the lowest paid. Steve jobs $1. Did not find my company here but inquiring minds want to know. Am not endorsing the union but it is a very interesting lineup.
For the last several years rates have gone down and so have prices. Could it be possible for rates to go up and home prices too? I’m not seeing the demand myself but stranger things have happened.[/quote]Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….
July 8, 2011 at 9:47 AM #708377Participant[quote=flu]
Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.[/quote]
Option gains are all ordinary income unless they are exercised and not sold (very rare), in which case a portion can qualify as long-term capital gains (if there is appreciation post-exercise). For restricted stock, the value at grant date is ordinary income, but the appreciation is long-term capital gain if the stock is held longer than a year. Anyhow, most – but not all – equity compensation ends up getting taxed at ordinary income rates. The clever CEOs, however, put a clause in their employment agreements that requires the company to pay any excess income taxes related to the exercise of equity compensation in the case of a change of control.
[quote=flu]
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….[/quote]Well, the management fee income is ordinary income. No way around that. It’s the “carried interest” that gets taxed at a long-term rate if the gain is long term (which for most hedge fund managers, it’s not – most hedge funds generate mostly short-term gains/losses). Really you’re talking about private equity fund managers where the gains are long-term. So, a thought experiment. Let’s say that a 20% carried interest results in a $100 million gain for the PE fund’s general partners which will be taxed at the long-term rate. Now, let’s use the same fund but let’s assume that the carried interest amounts to just 10%, or $50 million, while the other $50 million goes to the fund’s limited partners. Again, all long-term gains. In each scenario, the Uncle Sam gets the same amount, all you’re doing is dividing the tax (and gain) pie between the LPs and the GPs. But the government gets that same amount no matter what the carried interest percentage is. My point is that it’s a complicated issue. The vast majority of hedge and PE funds don’t even generate a carried interest, so most of the income (in the form of management fees) paid to the managers is taxed at normal income rates, but… there are some large PE funds that do have large carried interests.
July 8, 2011 at 9:47 AM #709490Participant[quote=flu]
Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.[/quote]
Option gains are all ordinary income unless they are exercised and not sold (very rare), in which case a portion can qualify as long-term capital gains (if there is appreciation post-exercise). For restricted stock, the value at grant date is ordinary income, but the appreciation is long-term capital gain if the stock is held longer than a year. Anyhow, most – but not all – equity compensation ends up getting taxed at ordinary income rates. The clever CEOs, however, put a clause in their employment agreements that requires the company to pay any excess income taxes related to the exercise of equity compensation in the case of a change of control.
[quote=flu]
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….[/quote]Well, the management fee income is ordinary income. No way around that. It’s the “carried interest” that gets taxed at a long-term rate if the gain is long term (which for most hedge fund managers, it’s not – most hedge funds generate mostly short-term gains/losses). Really you’re talking about private equity fund managers where the gains are long-term. So, a thought experiment. Let’s say that a 20% carried interest results in a $100 million gain for the PE fund’s general partners which will be taxed at the long-term rate. Now, let’s use the same fund but let’s assume that the carried interest amounts to just 10%, or $50 million, while the other $50 million goes to the fund’s limited partners. Again, all long-term gains. In each scenario, the Uncle Sam gets the same amount, all you’re doing is dividing the tax (and gain) pie between the LPs and the GPs. But the government gets that same amount no matter what the carried interest percentage is. My point is that it’s a complicated issue. The vast majority of hedge and PE funds don’t even generate a carried interest, so most of the income (in the form of management fees) paid to the managers is taxed at normal income rates, but… there are some large PE funds that do have large carried interests.
July 8, 2011 at 9:47 AM #708279Participant[quote=flu]
Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.[/quote]
Option gains are all ordinary income unless they are exercised and not sold (very rare), in which case a portion can qualify as long-term capital gains (if there is appreciation post-exercise). For restricted stock, the value at grant date is ordinary income, but the appreciation is long-term capital gain if the stock is held longer than a year. Anyhow, most – but not all – equity compensation ends up getting taxed at ordinary income rates. The clever CEOs, however, put a clause in their employment agreements that requires the company to pay any excess income taxes related to the exercise of equity compensation in the case of a change of control.
[quote=flu]
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….[/quote]Well, the management fee income is ordinary income. No way around that. It’s the “carried interest” that gets taxed at a long-term rate if the gain is long term (which for most hedge fund managers, it’s not – most hedge funds generate mostly short-term gains/losses). Really you’re talking about private equity fund managers where the gains are long-term. So, a thought experiment. Let’s say that a 20% carried interest results in a $100 million gain for the PE fund’s general partners which will be taxed at the long-term rate. Now, let’s use the same fund but let’s assume that the carried interest amounts to just 10%, or $50 million, while the other $50 million goes to the fund’s limited partners. Again, all long-term gains. In each scenario, the Uncle Sam gets the same amount, all you’re doing is dividing the tax (and gain) pie between the LPs and the GPs. But the government gets that same amount no matter what the carried interest percentage is. My point is that it’s a complicated issue. The vast majority of hedge and PE funds don’t even generate a carried interest, so most of the income (in the form of management fees) paid to the managers is taxed at normal income rates, but… there are some large PE funds that do have large carried interests.
July 8, 2011 at 9:47 AM #709127Participant[quote=flu]
Dude. Might want to check the fine print.
Steve Jobs might take home a $1 salary, but he takes home a boatload of stock/stock options…The other thing is that, if those equity grants were structured correctly (which normally is the case for exec’s), I wonder if it’s capital gains and versus ordinary income…and conversely wonder if social secuirty/sdi/etc taxes are even paid on that too.[/quote]
Option gains are all ordinary income unless they are exercised and not sold (very rare), in which case a portion can qualify as long-term capital gains (if there is appreciation post-exercise). For restricted stock, the value at grant date is ordinary income, but the appreciation is long-term capital gain if the stock is held longer than a year. Anyhow, most – but not all – equity compensation ends up getting taxed at ordinary income rates. The clever CEOs, however, put a clause in their employment agreements that requires the company to pay any excess income taxes related to the exercise of equity compensation in the case of a change of control.
[quote=flu]
…And don’t get me started on hedge fund managers who don’t pay ordinary income taxes….[/quote]Well, the management fee income is ordinary income. No way around that. It’s the “carried interest” that gets taxed at a long-term rate if the gain is long term (which for most hedge fund managers, it’s not – most hedge funds generate mostly short-term gains/losses). Really you’re talking about private equity fund managers where the gains are long-term. So, a thought experiment. Let’s say that a 20% carried interest results in a $100 million gain for the PE fund’s general partners which will be taxed at the long-term rate. Now, let’s use the same fund but let’s assume that the carried interest amounts to just 10%, or $50 million, while the other $50 million goes to the fund’s limited partners. Again, all long-term gains. In each scenario, the Uncle Sam gets the same amount, all you’re doing is dividing the tax (and gain) pie between the LPs and the GPs. But the government gets that same amount no matter what the carried interest percentage is. My point is that it’s a complicated issue. The vast majority of hedge and PE funds don’t even generate a carried interest, so most of the income (in the form of management fees) paid to the managers is taxed at normal income rates, but… there are some large PE funds that do have large carried interests.
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