Monday, January 2, 2012
Monday Rule: Corporate Accountability
When corporations break the law, those in charge of the company should go to jail. It makes no sense that executives only get credit for success, in the form of immense wealth, but they never get punished for crimes. Either you have control over your company and you deserve both the good and the bad that comes with it, or you need to acknowledge that people at the top are little more than figureheads, usually people related to the founder, who add nothing to the company, and whose job is largely composed of collecting a check.
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http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing-shareholder-value-the-dumbest-idea-in-the-world/
ReplyDeleteI liked the article (I think I read someone's comments on it a while ago, because I remember reading something about what lessons the NFL could teach us regarding shareholder value as a measure of success). One thing, though:
ReplyDeleteHe sort of glosses over the fact that CEO compensation skyrocketed after 1980 (doubling in the 80s and then quadrupling in the 90s). This is more a function of the marked lowering of the marginal tax rate on high income earners under Reagan. It simply became much easier for those at the top to not only keep more of their income, but also to justify larger salaries, bonuses and stock options (it's hard to give yourself a billion dollar bonus if 70% of it is going to the government). This has been further exacerbated by changes in capital gains taxes (which are laughably low).