Thursday, January 18, 2007

executive pay realtive to average wages / economist

on top of this you have thinks like backdating of options. just look at this $1.5 billion restatement from broadcom, golden parachutes like the 210 mio$ for nardelli / home depot. this guy has underperformed the overall market and his competitor (despite spending b 13.3 billion on buybacks! and the greatest houisng run ever!, etc.

dazu kommen dann noch skandale wie das zurückdatieren von optionen. ihr könnt ja mal das beispiel von broadcom über 1,5 mrd$ durchlesen um vomglauben abzufallen. das ein ceo von homedepot der ne grotten performance hingelegt hat mit $210 mio abgefunden wird verschlägt einem die sprache.

thanks to charles hugh smith for the fantastic image

In a survey, Mr Kay discovered that fully 90% of institutional investors—ie, companies' owners—thought executives were “dramatically overpaid”. So did 60% of their directors. (fantastic. but the institutions do nothing to rain in this excess. amazing! / blöd nur das die institutionellen nichts machen um dem entgegenzutreten. )

Between 1993 and 2003 the total pay of the top five executives in the Standard & Poor's 1,500, which accounts for roughly 80% of listed American companies by value, amounted to some $350 billion, according to Lucian Bebchuk and Yaniv Grinstein, of Harvard and Cornell Universities. The share of earnings consumed by those people's pay rose from 5.2% in the first five years of that period to 8.1% in the second five. And this is without counting the value of pensions, which can boost the total by as much as a third.

Chart 1 above, from a different study, shows the average earnings of the top three executives all the way back to the 1930s. Whereas mean pay at the peak was 320 times average earnings, the median pay was “only” 120 times. In 2000-03 their mean annual pay was $8.5m and the median $4.1m. The median is a better measure than the mean because the mean for those top three is skewed by a few huge payments, often to company founders or family managers who are not standard executives.

sobering stuff......./ ziemlich ernüchternd......



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