Nine Pictures of the Extreme Income/Wealth Gap

[LnGrrrR]

I don't think its fair.

Wonderful! Now explain why. If your argument is "Everyone should pay the same amount in taxation", then justify the reasoning. For bonus points, you can try to rebut arguments that will be generated by your statement.

[vy65]

Do you think it's fair to tax a CEO making 20mil at a 25-30% rate?

I don't know the answer to that. My gut tells me no - just because a corporation decides to compensate its CEO in a certain way does not mean its right to tax said CEO at a particular rate. Like I've said earlier, I think tax burdens should be gauged by how many governmental services one avails his or herself of. I think the CEO should pay a rate proportional to the amount of benefit he receives from the government (like police/fire protection, etc.). I'm speaking only to local/state/federal governmental functions and not like "society let you make all that money . . ."

You have to admit that someone who makes roughly 160k and loses over 1/4 of that salary while trying to support a family has a much better argument against wealth redistribution that the CEO does. Correct me if I'm wrong. Also correct me if I'm wrong, but I'm sure that there are far more 160k-earning doctors with families than there are 20mil earning CEOs.

[vy65]

Wonderful! Now explain why. If your argument is "Everyone should pay the same amount in taxation", then justify the reasoning. For bonus points, you can try to rebut arguments that will be generated by your statement.

see above. Now explain why its fair to treat said dr. more like the CEO than someone who makes 45k/year.

[TeyshaBlue]

I'd also like to know what the 2011 updates were to that article? I've seen a lot of literature that says that, post-recession, shareholders are holding corporate board's feet to the fire re: executive compensation.

Also, if that article's characterization of BOD-compensation committee-CEO relations is correct, nearly any shareholder could and probably would sue - and probably would be successful.

No, because the trading houses own large blocks of shares rendering any action by individual shareholders moot. The houses don't give a what the CEO makes as long as the numbers meet expectations.

[TeyshaBlue]

That's a much easier case, and my answer is maybe - it would depend on what the CEO has done for that company. Has its market cap increased? Has the CEO killed the stock price? Has the CEO just maintained the status quo? What type of business is this? What type of corporation is this? How many other CEOs could do that particular job?

These are great questions to ask. Too bad nobody's asking them when determining CEO salaries/Bonuses.

[vy65]

No, because the trading houses own large blocks of shares rendering any action by individual shareholders moot. The houses don't give a what the CEO makes as long as the numbers meet expectations.

Incorrect. As long as you own a share of a corporation at the time the facts underlying your lawsuit took place, you can sue. Trading houses are irrelevant to the question of standing for a derivative suit.

[TeyshaBlue]

Incorrect. As long as you own a share of a corporation at the time the facts underlying your lawsuit took place, you can sue. Trading houses are irrelevant to the question of standing for a derivative suit.

There is no gain for a shareholder in a derivative suit. Any compensation gained goes back to the corporation, if I understand that correctly.

[vy65]

There is no gain for a shareholder in a derivative suit. Any compensation gained goes back to the corporation, if I understand that correctly.

What's your point? Excessive executive comp is considered corporate waste - a harm to the corporation, and secondarily to the shareholder. If the harm was to the corporation, then any recovery should go back to the corporation.

[TeyshaBlue]

What's your point? Excessive executive comp is considered corporate waste - a harm to the corporation, and secondarily to the shareholder. If the harm was to the corporation, then any recovery should go back to the corporation.

Completely depends upon how the suit is structured. Replacing salary with stock options aint exactly a win. If the corporation viewed the comp as waste, a lawsuit would not have been needed in the first place.

[vy65]

Srsly tho guise, will anyone defend that article's depiction of how corporations work?

[TeyshaBlue]

End result: Nothing changes for the individual stockholder.

[TeyshaBlue]

Srsly tho guise, will anyone defend that article's depiction of how corporations work?

Yeah. Me. I've seen it from the inside via my last gig.

[vy65]

Completely depends upon how the suit is structured. Replacing salary with stock options aint exactly a win. If the corporation viewed the comp as waste, a lawsuit would not have been needed in the first place.

SO is way better than salary.

But I don't get your point. Are you saying that a derivative suit would not change the way executives are compensated? There might not be a direct benefit to the shareholder, but that wasn't the question.

[TeyshaBlue]

SO is way better than salary.

But I don't get your point. Are you saying that a derivative suit would not change the way executives are compensated? There might not be a direct benefit to the shareholder, but that wasn't the question.

For the shareholder to undertake a suit, he'd need to see some benefit. Otherwise, why go to the considerable trouble to do so? The action is almost predicated upon return.

[vy65]

Yeah. Me. I've seen it from the inside via my last gig.

Am I supposed to just trust you on that?

[vy65]

For the shareholder to undertake a suit, he'd need to see some benefit. Otherwise, why go to the considerable trouble to do so? The action is almost predicated upon return.

?

Because it might benefit the corporation overall to not overpay an underperforming CEO.

Because ins utional investors, other activists, and some regular shareholders are litigious and got their jollies from filing suit.

Because most of the time, the shareholder will get thier attorney's fees and costs as part of the judgment.

Because even the threat of a non-frivilous suit might prompt some executive-level change.

[TeyshaBlue]

?

Because it might benefit the corporation overall to not overpay an underperforming CEO.

Because ins utional investors, other activists, and some regular shareholders are litigious and got their jollies from filing suit.

Because most of the time, the shareholder will get thier attorney's fees and costs as part of the judgment.

Because even the threat of a non-frivilous suit might prompt some executive-level change.

I'll go with #1: ?

[TeyshaBlue]

Am I supposed to just trust you on that?

I couldn't conceivably care less. You asked a question. I answered it.

[vy65]

I couldn't conceivably care less. You asked a question. I answered it.

I'll take that as a no to my question

[TeyshaBlue]

I'll take that as a no to my question

Here's what I can tell you because I did get spanked for a bit of "shareholder activism" during my tenure. I worked for the world's largest pharmaceutical wholesale distributor. I also administered the contracts for the Vetrans Administration. As a result, I was privy to some inside info regarding negotiation tactics with pharmaceutical companies. It was quite a shock to see an ex-CFO from a pharma company we were negotiating with on our BOD. I was equally shocked to see one of our recently retired VP's on their BOD. I looked at other relationships between our BOD and our vendor BODs. It turns out, there was about a cross-pollination between the two populations for about 1/3 for our BOD.
My curiosity piqued, I called on others in my industry who were more or less in my shoes....high enough up to see some of this, but not high up enough to benefit from it. We weren't alone, it turns out.

[RandomGuy]

Oh and lol CEOs selecting BOD members.

Most CEO's just *happen* to be chairman of the board.

Most shareholders don't pay attention to who is actually on the BOD.

[RandomGuy]

What about a dr. who makes 160k? Should they lose 25-30% of thier salary in fed. taxes?

Yes. Easy question.

[LnGrrrR]

I don't know the answer to that. My gut tells me no - just because a corporation decides to compensate its CEO in a certain way does not mean its right to tax said CEO at a particular rate. Like I've said earlier, I think tax burdens should be gauged by how many governmental services one avails his or herself of.

Interesting. So how would you work taxes on, say, the military?

Also, do you think a "usage fee" format is actually possible, logistically?

What about "safety net" programs like welfare and the like? Do you agree with those?

I think the CEO should pay a rate proportional to the amount of benefit he receives from the government (like police/fire protection, etc.)."

Wouldn't that punish those who live in poorer communities? Poorer communities tend to have a higher crime rate, so now, the poor have to pay more in taxes.

You have to admit that someone who makes roughly 160k and loses over 1/4 of that salary while trying to support a family has a much better argument against wealth redistribution that the CEO does. Correct me if I'm wrong.

Sure they do. But that says nothing of your original argument that progressive taxation is fair does it? In fact, you seem to be arguing that there's more moral justification to tax the CEO than the doctor.

Also correct me if I'm wrong, but I'm sure that there are far more 160k-earning doctors with families than there are 20mil earning CEOs.

Then what you are arguing for is a different redistribution of taxes, NOT the unfairness of progressive taxation. Which is it?

[RandomGuy]

I'd also like to know what the 2011 updates were to that article? I've seen a lot of literature that says that, post-recession, shareholders are holding corporate board's feet to the fire re: executive compensation.

Also, if that article's characterization of BOD-compensation committee-CEO relations is correct, nearly any shareholder could and probably would sue - and probably would be successful.

Shareholders are starting to pay attention here and there, yes.

Sue? maybe.

Be successful? I would not say "probably".

Knowing something is shady as , and proving it in court to the degree that a jury of 12 average americans could understand it is something else entirely.

[LnGrrrR]

see above. Now explain why its fair to treat said dr. more like the CEO than someone who makes 45k/year.

I never said it was fair in comparison to multi-millionaires. I said I think 20-30% rate is fair. A 30% rate leaves a doctor who makes 150K a year with 105K a year after taxes. That's enough to live on. (And yes, I'm deliberately leaving out the costs doctors face in their practices for the purposes of clarity.)

After all, the person making 40k per year still gets taxed roughly 20%, right? So that leaves him with 32K per year. It is a big jump in overall difference (8k < 45k) but the doctor still is bringing home almost 3x the amount of the 40K per year person when all is said and done. It's not like he's living out of cardboard boxes. (Again, I'm leaving out skill/stress/etc etc for purposes of clarity.)