I don't think there is government control of CEO's salaries in Europe ( I might be wrong), but their average salaries is a good 1/10 of the American counterparts. How do they do it?
Well obviously they must be miserable, only pulling in, say, $10 million a year. You realize a newspaper and cup of coffee there are twice there what they are here? How far you think $10 million a year is gonna go there?
A discussion of those three things would take this thread way off topic. So I'll just revise my comments to say that government should not impose ANY controls in the economy. They ALWAYS F' it up.
Do you think we'd be better off if government was not responsible for roads, bridges and tunnels and we had a toll booth on every street? Would you feel more comfortable getting on a plane if the FAA did not require a very specific and strict level of service and maintenance. Would you sleep well if your hard earned money was in a bank that is not FDIC insured, if your broker was not regulated by the SEC and could just disappear with your money (like Refco), if your bank or insurance company were not required by law to have certain (quite significant) amount of cash on hand before they are allowed to do business. Would you feel comfortable flying if airline dispatchers were unregulated competing businesses obsessed with profits only and allowed to cut corners? Would you be willing to swim in a river or a lake if a chemical plant was built in the neighborhood and there was no EPA making sure that they don't dump their waste in that river? Do you think we'd be able to reach the outer space and travel to other planets if it was not for governments of this country and Russia? Do you think the private sector was or is willing to invest trillions of dollars in space exploration? If government did not have anti-trust laws do you believe ESignal and QCharts would compete with each other on price and quality or they would rather merge and hike prices?
I'm not claiming federal regulation of CEO compensation is good economic policy. I'm just saying it's better than the current situation of apparently unrestricted theft of shareholder resources. Economic efficiency is not the last word in every situation. Clearly coroprate governance has broken down badly on this and other issues. i blame the SEC for its lax supervision of mutual funds and other institutional investors. The institutions are under obvious conflicts of interest that lead them to rubberstamp management rather than protect the interests of their investors. This is an issue that goes beyond the managements and their shareholders. It affects the entire workforce, and it brings the capitalist system into disrepute. Someone has to get a handle on it.
Sulong, I agree 100% Doodoo, you must of been one of those kids who were never picked to play in any sports. You obviously do not understand competition and how it provides incentive to do good things. Government has only two incentives, to justify its existence and to grow larger. AAA, you said it yourself when you blame the SEC for lax supervision. You say government has failed so there should be more government to fix the failure. The problem is that govenrment takes responsibility away from the individual and when that happens bad stuff follows. Most small shareholders don't really pay attention because they figure the SEC is watching out for them. If it wasn't there people would look at the details themselves a little closer and be able to decide for themselves if they agree with a compensation plan or not. Notice that the media focus only on the headline $ amount without ever giving the details of how it was calculated. If anyone could find the formula it would be an interesting addition to this discussion.
AAA - you are considering the downsides of free-market pay for CEOs. Have you also considered the downsides of government regulation of people's wages, before coming to your conclusion to support intervention? Isn't this a case of a problem where the cure would be even worse than the disease? It'll end in 20 years with people on $50k a year having some government bureaucrat telling them they are earning too much and applying a "modifier" so their pay is more in line with the janitor. If you don't believe me, have a look at the history of the US income tax - started at 2% I believe, what is it now? People made the slippery slope argument and it was pooh-pooed at the time, but even income tax proponents of that era would be horrified at how high it eventually climbed. Remember the law is there to prevent *criminal* behaviour, not simply things that you don't like. There are many non-coercive ways to oppose this kind of thing - social opprobrium, media condemenation, shareholder protest etc. Why not turn up to the Exxon shareholder meeting and/or organise a shareholder activist group to complain? But how dare you suggest that other people's tax dollars should go to fund your personal preferences?
I agree with you. That's one reason I find the issue so annoying. These greedy pricks are going to create the conditions that undermine our whole system. Every liberal congressman is going to make the argument that the government should control gasoline prices, because look what this bastard made off consumers. Since they can't control themselves, i look at controlling their pay as a small price to pay to preserve the health of our system. The SEC enforces a lot of stupid rules. One more won't hurt.