Top CEOs leave 99% in the dust

[captain morgan]

I'm not sure if Bar Sinister was referring to non-profit organizations as they operate differently than for profit corporations.

Not on an organizational level.

Every BOD has a Compensation Committee that sets the policy for the company. More often than not, the BOD will set the pace for Executive compensation and/or salaries above a certain level... Management will set the compensation for all others below that level.

In the end, the message is this: A CEO cannot set their own salary unilaterally or arbitrarily... The only opportunity wherein that might occur is when the CEO is a majority shareholder (and controls the BOD) or they are the only shareholder.

 

[Cannuck]

Not on an organizational level.

Yes, on an organizational level. I sit on the board of a few non-profit organizations and one that is a regulated charity. They are not managed like for profit corporations. Just for starters, here in Alberta, anybody over the age of 18 can join a non-profit organization and have a vote on who is on the BOD.

 

[captain morgan]

Yes, on an organizational level. I sit on the board of a few non-profit organizations and one that is a regulated charity. They are not managed like for profit corporations.

Have you ever sat on the Board of a public or private corp? Does your NP issue salaries or spend funds? If so, is that not dealt with at the board level?

 

[Cannuck]

Have you ever sat on the Board of a public or private corp? Does your NP issue salaries or spend funds? If so, is that not dealt with at the board level?

The board approves budgets.

 

[captain morgan]

The board approves budgets.

... And within those budgets are?....

 

[petros]

Salaries?

 

[captain morgan]

Salaries?

Wow - Excellent job!... All I was hoping for was 'expenditures'

 

[Cannuck]

Wow - Excellent job!... All I was hoping for was 'expenditures'

I think you are missing my point. I doubt anybody is disagreeing that the shareholders or the membership (whichever the case may be) have the final say as to who sits on the board and ultimately, the final decisions of the board. The difference for me is in the level of involvement of these people. I own shares in a number of companies. These are strictly financial dealings and all I care about is a healthy return on my investment (generally speaking). I do not go to shareholders meeting. I do not vote and I do not involve myself in the day to day operations of the organizations. My involvement with non-profits is an entirely different ball game as it probably is with most people that become volunteers with them. Even if I were to choose not to be on the BoD, I would still be involved in the process at some level as I care about the services these non-profits provide (hence, my reason for involving myself with them in the first place).

The point is that, in the real world, for profit corporation BoDs operate in a vacuum that does not exist in the non-profit world. Shareholders simply do not hold the Directors accountable in the same way that members of non-profits do. Then, of course, we can get into the whole concept of directors duties and how they differ between profit and non-profit organizations. Two that spring immediately to mind would be the duty of loyalty that non-profit Directors must uphold as well as the idea that charitable organizations are required to represent the interests of their constituencies as well.

 

[captain morgan]

I think you are missing my point. I doubt anybody is disagreeing that the shareholders or the membership (whichever the case may be) have the final say as to who sits on the board and ultimately, the final decisions of the board. The difference for me is in the level of involvement of these people. I own shares in a number of companies. These are strictly financial dealings and all I care about is a healthy return on my investment (generally speaking). I do not go to shareholders meeting. I do not vote and I do not involve myself in the day to day operations of the organizations. My involvement with non-profits is an entirely different ball game as it probably is with most people that become volunteers with them. Even if I were to choose not to be on the BoD, I would still be involved in the process at some level as I care about the services these non-profits provide (hence, my reason for involving myself with them in the first place).

The point is that, in the real world, for profit corporation BoDs operate in a vacuum that does not exist in the non-profit world. Shareholders simply do not hold the Directors accountable in the same way that members of non-profits do. Then, of course, we can get into the whole concept of directors duties and how they differ between profit and non-profit organizations. Two that spring immediately to mind would be the duty of loyalty that non-profit Directors must uphold as well as the idea that charitable organizations are required to represent the interests of their constituencies as well.

Your comments are fair.

The machinations and inter-company politics aside, my point is that there is no way that a CEO (COO, CFO, etc) can unilaterally dictate their compensation plan (both salary and/or option agreements). Excepting extreme examples (ie sole shareholder is the CEO), the BOD dictates the compensation.

One last point, each share represents a vote for the make up of the BOD. As a small shareholder, it may seem to be an exercise in futility to vote at the AGM's but the mechanism does exist and is really not that different from voting in a provincial/federal election.

 

[Cannuck]

Your comments are fair.

The machinations and inter-company politics aside, my point is that there is no way that a CEO (COO, CFO, etc) can unilaterally dictate their compensation plan (both salary and/or option agreements).

Sure there is. The membership can simply allow it by their indifference. My point is that that is far more likely to happen in a for profit situation, especially if the profits are good.

 

[captain morgan]

Sure there is. The membership can simply allow it by their indifference. My point is that that is far more likely to happen in a for profit situation, especially if the profits are good.

You're making a specious argument.

This doesn't change the fact that the BOD still makes the decision - if they are poor, inexperienced or indifferent, they still have to sign-off on it.

 

[Cannuck]

You're making a specious argument.

This doesn't change the fact that the BOD still makes the decision - if they are poor, inexperienced or indifferent, they still have to sign-off on it.

Clearly you do not understand what specious means.

 

[captain morgan]

Clearly you do not understand what specious means.

Your argument looked good to start, but was ultimately founded on a false pretenses.

How's that?

 

[taxslave]

I don't have to tell you how modern corporations are run. My point was that CEOs control their own reward system. You prove that they don't

You BS reamark was typical of your sort of analysis of an issue - there nerver is any. Once again you resort to playground vocabulary because you simply don't have any valid or well-thought-out response. And I note it took you only a simple post to resort to your usual tactic of character assassination. You weep for the future - well you certainly should if you are what passes for right wing intelligentsia. Or sorry I forgot - right wing intelligentsia is an oxymoron - at least it certainly appears to be in your case.

BTW I am still waiting for that intelligent well-thought-out comment from you. But then again making flippant non-substantive remarks is so much easier isn't it?

I'll respond to your next post only if you actually make an intelligent point. I am not expecting that I will have to worry about that though will I?

We have already proved that CEOs do not control their own reward system. You simply chose to ignore it.

 

[Cannuck]

Your argument looked good to start, but was ultimately founded on a false pretenses.

How's that?

..and those false pretenses would be?

 

[TenPenny]

In the latest 'Linux Pro' magazine, there is a column about HP, and one of the comments reminded me of this thread; they mention the current trend to 'itinerant CEOs', and point out that the successful corps, Microsoft, Apple, etc, have someone in charge who knows, believes in, and loves the product, not just some MBA who is a professional CEO of whatever company hires him this week.