The following speaks for itself.
From Fortune:
The retirement assets of 100 Fortune 500 CEOs are worth more than the entire nest eggs of 41% of American families, a new study shows.
That means the 100 largest CEO retirement accounts—which totaled $4.9 billion last year—would equal the total saved by 50 million U.S. families, according to a report that was jointly published by the Institute for Policy Studies and the Center for Effective Government.
Now here’s the truly egregious part of all this…
“The CEOs’ extraordinary nest eggs are not the result of extraordinary performance,” said Scott Klinger, director of Revenue and Spending Policies at the Center for Effective Government, in a statement. “They are the result of rules intentionally tipped to reward those already on the highest rungs of the ladder.”
In fact, CEOs will quite often still receive enormous payouts even after wrecking their own companies, or engaging in highly questionable, if not criminal, behavior. Here are a coupled of recent examples:
United Airlines CEO Walks Away with $21 Million Exit Package After Resigning Due to Corruption Probe
Rewarding Failure – Volkswagen CEO to Receive $32 Million Pension
And let’s not forget the golden parachute received by Presidential candidate Carly Fiorina after cratering Hewlett Packard. See: Carly Fiorina’s Business Record Is At Least As Bad As Donald Trump’s.
In Liberty,
Michael Krieger
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hopefully the ceo’s are heavily invested in hedge funds…
PEU Run on Carlyle’s Claren Road
WSJ reported:
A struggling hedge-fund firm owned by Carlyle Group LP won’t immediately pay back about two-thirds of the nearly $2 billion that investors recently asked to withdraw, according to people familiar with the matter.
Investors badly want out of Carlyle owned hedge fund Claren Road. Here’s how Carlyle co-founder David Rubenstein characterized fleeing investors in the Q3 earnings call:
Well, I’d say first of all, over the last year — it hadn’t been a couple years, over the last year, the performance of hedge funds hasn’t been what we hoped it would be, in either our emerging markets funds or in Claren Road — that capital in the hedge fund business is not sticky capital. It depends usually on performance. A year or year and a half ago in Claren Road, they were turning money away, we were turning money away. And you get down and have a couple bad quarters and some people want their money back and that’s part of the model. You given them their money back as best you can when that happens.
The last time Carlyle rolled up a hedge fund was July 2008. That was four months after Carlyle stiffed a large number of investors with Carlyle Capital Corporation’s ban
kruptcy.
It looks and smells like a PEU hedge fund run. It’s a dangerous time when the big money boys don’t trust each other to pay back their debts. That’s when they turn to the little guy to make them whole.
http://peureport.blogspot.com/2015/10/peu-run-on-carlyles-claren-road.html
OK, now we know that it is “unfair” that some CEOs have big retirement accounts.
So… if it was 31% would that be fair? 21%? 11%? 1%? And, more importantly, who decides what the number should be?
And how exactly does that affect me? Do I get more in my account if we reduce theirs?
I’m quite disappointed that you failed to understand the point of the post, particularly if you have been a long time reader.
This kind of thing doesn’t happen in free markets with competition. It happens in centralized, crony capitalist oligarchies.
Nothing to do with “fairness,” did I use the word fair? Has to do with people rigging the economy to get outsized gains while adding zero value. Again, this isn’t freedom or free markets. It’s fraud.
Fraud: wrongful or criminal deception intended to result in financial or personal gain. Since everything these folks did is out in the open I guess I don’t see the deception. If you give me a pile of money for doing nothing, am I guilty of fraud?
I would bet that the retirement clause of the employment contracts for these folks are written so that they get paid without regard to performance. If I get fired from my job do I lose my pension/retirement benefits? I don’t think so. If you don’t want to pay someone for poor performance then put it in the contract.
The problem (at least for public companies) is that the “owners” (shareholders) are not exercising their responsibility for good governance of the company. If the majority of shareholders vote for a BOD that approves such contracts then who is to blame?
The morality of CEOs is no better than the average person (perhaps even less), so don’t expect them to do the “right” thing. If a CEO gets away with a pile of money for doing nothing (or outright harm) based on a legal contract how is that fraud? If there is demonstrable fraud then the BOD/Shareholders are to blame for not pursuing redress.
The morality of CEOs of large corporations is mostly non-existent; they are psychopaths. Psychopaths are drawn to positions of power, and they are more successful at getting to the top because they don’t let morals get in their way. And don’t expect BODs to reign them in. Large corporations and their BODs are rather incestuous back scratchers.
“This kind of thing doesn’t happen in free markets with competition. It happens in centralized, crony capitalist oligarchies.”
mike , i’m with you on being liberty minded, but sometimes i think where die hard libertarians make the same mistake as die hard communists is in thinking there is some platonic ideal of a system of ‘competition’ in the so called free market ( or for ‘leadership’ of the communist government respectively in the die hard commy example) – where things work magically without some measure of corruption.
i think the thing that defines our last 30 years of ever ratcheting corruption is that NOW it is worse than ever and building up to a tipping point.
the idea that ‘now’ it is different because ‘before’ there was a ‘better’ system that is more iddylic ignores the reality that the ‘difference’ is a matter of how close we are to approaching the tipping point due to MORE corruption ratther than the presence of it to begin with.
there are no perfect ‘capitalist’ systems anymore than there are perfect ‘communist’ systems.
in fact, i don’t really believe either ‘capitalism’ or ‘communism’ is a system and i think they are just examples of weaponized language that miss the mark on describing two facets of behavioral patterns that can be observed in most human social aggregates to some degree or another.
the issue is ——how do you solve corruption?
most people would say ‘with good leadership’. but this is maybe a nice thought but it really sidesteps the issue about what precisely IS human behavior and why is certain behavior systemically embedded in populations of people regardless of what any one single leader could possibly do to influence his peers with sincere good will alone.
all ‘systems’ have a tremendous amount of corruption, and i think the first step to a helpful dialogue honestly acknlowedged we should be seeking to stop all corruption, but to mitigate the worst corruption, at least some of it. perhaps this won’t change our fate, but it will possibly delay our fate [ approaching the political singularity ?] and in life and politics, it is as with markets——-TIMING is everything.
in any case.
CONGRATS on the baby. very very nice. sounds like you will enjoy being a dad and your kid is lucky to have you as a father………
Thank you very much for both the congrats and the very thought provoking comment.