Be careful that you don't become too successful

[Stan Shannon]

Than it remains a simple matter of shareholders refusing to comply. In this modern age, it should not be so daunting a challange to create a system where all the share holders can take down a given compensation package at will. I just can not comprehend how the shareholders are not ultimately the ones calling the shots if there is any honesty left anywhere in the system at all. Without them, there would be no compensation at all. It should be the most immediate form of democracy imaginable. What we have here is a failure to communiate.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Lost User]

Stan Shannon wrote:

What we have here is a failure to communiate

Then find out from the company you hold shares in what the rules are for holding an "Extraordinary General Meeting".

[Stan Shannon]

Why should it require any meeting at all? Why not have an online townhall where people invested for any amount in company X can discuss the conditions of that company. If company X changes its compenstation package, a general alert goes out and all the stockholders make a decision. They can't stop people from selling their shares. No investors, no compensation.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Rob Graham]

Stan Shannon wrote:

company X changes its compenstation package, a general alert goes out and all the stockholders make a decision. They can't stop people from selling their shares. No investors, no compensation.

Unfortunately, the vast majority of shareholders are too greedy to just dump their shares at a huge loss; that's what it would take - selling requires buyers. In the end, all that is impacted is the market cap of the company, and there is nothing to prevent the comp from being awarded anyway. Look carefully at what happened with Merrill Lynch. it reflects exactly what you propose; shareholders dumped the stock, the companies market cap plunged, resulting ultimately in a fire sale to B of A. Yet the Merrill Lynch execs got ungodly comp packages after the fact, comp packages awarded by the board as the company was in it's final death spasm. ML was looted by it's own board, plain and simple, and BofA did nothing about it after purchasing ML.

[Lost User]

Stan Shannon wrote:

Why should it require any meeting at all?

Because if you want to influence the company or even to sack the board then you have to go about it in the correct, proper and time honoured way. This could be at the Company's Annual General Meeting or by the execution of a proper supported request as defined by the company's published rules, to hold an EGM with a special resolution. Even if the resolution from an AGM or EGM is passed it may not have the required weighting for the resolution to become mandated. Anything else from a shareholders point of view is a no go. Nobody is saying that they can't stop people selling their shares, well there are known legal restraints, but you as an individual shareholder holds very little influence compared to, for instance, corporate holdings of those shares.

[Stan Shannon]

Rob Graham wrote:

Unfortunately, the vast majority of shareholders are too greedy to just dump their shares at a huge loss; that's what it would take - selling requires buyers.

Yes, but, obviously money going out in bonuses means less payback for investors if the company is not actually successfully earning profits. So it remains very odd to me that poorly managed companies would not almost immediately begin declining in the stock market as investors took their lumps and moved their money elsewhere. Even I'm smart enough to keep my investments well diversified. I could afford a loss on stocks invested with a single company if I knew for certain it had inordinate compensation packages. It just seems to me that greed would actually result in completely different behavior.

Rob Graham wrote:

Look carefully at what happened with Merrill Lynch. it reflects exactly what you propose; shareholders dumped the stock, the companies market cap plunged, resulting ultimately in a fire sale to B of A. Yet the Merrill Lynch execs got ungodly comp packages after the fact, comp packages awarded by the board as the company was in it's final death spasm. ML was looted by it's own board, plain and simple, and BofA did nothing about it after purchasing ML.

But where did the money they were looting come from? Was it share holder investments? Are you telling me that its not overtly illegal for these companies just to pocket money that has been invested in their stocks? They can just take it anytime they like and spend it as they please? If it is profits they made off those investments than so what? That is their money isn't it?

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Stan Shannon]

Richard A. Abbott wrote:

you as an individual shareholder holds very little influence compared to, for instance, corporate holdings of those shares.

But to me that brings us back to my original question - why don't those who do have influence, exercise it? They should certainly be able to say "hey, enough with the bonuses already!" and expect it to be heard.

Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.

[Lost User]

I agree with the points you have made. But I know that disruptive behaviour has spread from the schools to F Ed., by kids who have no interest in obtaining qualifications. We both want children to be educated, and all obstacles to their reaching their potential to be removed. For me, that includes removing disruptive pupils, and a system that continues to pay them £30 pw is nonsensical. Shall we draw the line there? :) (Not that I want to have the last word. ;) )

Bob Emmett

[Lost User]

Those individual corporate holdings may not be enough by themselves to effect such an influence, in other words they will need to be in co-operation with others which might include a number of their own competitors (or business enemies) in order to make the count actually count. And consider this, many of those corporate businesses may themselves have their own skeletons. So they might not wish to live in a house made from glass.

[Lost User]

Bob Emmett wrote:

Shall we draw the line there?

OK

[Rob Graham]

Stan Shannon wrote:

But where did the money they were looting come from? Was it share holder investments?

Most likely not shareholder investment per se (that was reinvested or spent shortly after the original stock was issued, current shareholders mostly bought their shares from someone else than the company). More likely retained earnings, company working capital, or cash intended to pay suppliers, etc.

Stan Shannon wrote:

Are you telling me that its not overtly illegal for these companies just to pocket money that has been invested in their stocks?

As far as I know anything short of outright fraud is ok. If they cast the payouts as duly authorized "retention pay", they can get away with it. In the case of ML it was the B of A shareholders that were left holding the bag, as the ML payouts reduced the actual value of what B of A bought.

[Synaptrik]

You're right. The proper role of government would be to let these companies fail. They should get no bailout. Privatized profits privatized risk. They shouldn't have gotten one penny. In fact at this point the Fed should be shut down. We should print our own money instead of borrowing it at interest from a printer. If they come crawling to the government for money, sorry, they asked for it. In this case if anyone argues for any kind of bailout, then arguing against reclaiming bonuses is empty rhetoric. Right now the American people own 80% of AIG.

This statement is false

[Synaptrik]

Oakman wrote:

- but should the government be the ones to control compensation?

If government is the ones paying it then yes. Arguing against government telling companies how to compensate is really arguing that they should be allowed to fail. As soon as we end up owning 80% of the company, then we'd better have a say. Yet, when people make overtures regarding forcing the auto companies into bankruptcy so they can bust the UAW, for honoring their contracts to support their retired workers from the last hundred years, then again, I say its empty rhetoric that suggests the government should only meddle with blue collar companies instead of white collar ones. So, if we believe so strongly that government has no right to meddle, why the big union busting campaigns? These are negotiated contracts.

This statement is false

[Oakman]

Synaptrik wrote:

If government is the ones paying it then yes.

And it already does. The proposal we're talking about now doesn't deal with the issues of partially nationalized companies, nor state run monopolies. We are talking about country-wide regulations that say that no-one in any company may receive compensation of more than X amount and that any bonuses that are paid must be based on the profitability of the company. Obviously these are still in the debating stage, so our mileage may vary, but that's what they boil down to. As someone who has received recruiting bonuses, and who has been paid retention bonuses because (whether the company made oodles of money or not) they thought I was either saving them money or making it possible to make more money than they would otherwise make, I would have resented being told that I couldn't be given X Grand to help me make up my mind about signing on, or Y Grand so I wouldn't go talk to headhunters about that sexy new job they were dangling in front of me.

Synaptrik wrote:

So, if we believe so strongly that government has no right to meddle, why the big union busting campaigns? These are negotiated contracts.

Got me, chief. AFAIK Ford is limping along, while honoring all of its contracts, so it can be done. I have ranted long and hard recently, here in the Back Room, about the need for contracts to be honored if capitalism is to exist. That certainly includes employment contracts. Bankruptcy, of any sort used to carry great social stigma with it. Now it's just another business model for the amoral, short-visioned, greedy !@#$#@!'s we have running the country and the major corporations.

Jon Smith & Wesson: The original point and click interface

[Mike Gaskey]

Oakman wrote:

Now it's just another business model for the amoral, short-visioned, greedy !@#$#@!'s we have running ruining the country and the major corporations.

FIFY

Mike - typical white guy. The USA does have universal healthcare, but you have to pay for it. D'oh. Thomas Mann - "Tolerance becomes a crime when applied to evil." The NYT - my leftist brochure. Calling an illegal alien an “undocumented immigrant” is like calling a drug dealer an “unlicensed pharmacist”. God doesn't believe in atheists, therefore they don't exist.

[Synaptrik]

Oakman wrote:

And it already does. The proposal we're talking about now doesn't deal with the issues of partially nationalized companies, nor state run monopolies. We are talking about country-wide regulations that say that no-one in any company may receive compensation of more than X amount and that any bonuses that are paid must be based on the profitability of the company. Obviously these are still in the debating stage, so our mileage may vary, but that's what they boil down to.

All of the language I've seen has referenced companies accepting more than 5 BILLION in bailout money. If they are discussing regulating bonuses for companies not accepting bailout money, then I agree, that's ludicrous. But not so in the case of Corporate Welfare.

This statement is false

[Oakman]

Synaptrik wrote:

All of the language I've seen has referenced companies accepting more than 5 BILLION in bailout money.

The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.[^]

Synaptrik wrote:

If they are discussing regulating bonuses for companies not accepting bailout money, then I agree, that's ludicrous.

We must be in agreement then - though I might choose stronger words. I thought the stimulus plan was "ludicrous;" these days I favor describing the financial schemes coming out of Washington as "nauseating"

Jon Smith & Wesson: The original point and click interface

[Synaptrik]

Yep, we're in agreement.

This statement is false