Something at TCS. The huge rise in executive salaries in the US is a result of the fad for poison pill defenses against hostile bids. Those complaining about increasing inequality might therefore want to abolish those defenses.
Timmy Elsewhere
2 responses
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Tim,
I would believe there’s some mileage in that theory if there were a significant amount of contentious M & A activity taking place all the time.
However, unless ignorance is bliss I really can’t recall the really last big hostile takeover.
Although what you suggest might form part of the big picture, I would have to say I think that the above inflation rises in executive pay in recent years are much more likely to be due to corporate governance issues such as reciprocal board membership and also factors such as the globalisation labour arbitrage.
Or just plain old greed.
There used to be an ornery old accountant called Martin Simon who did the round of AGM’s, challenging executive pay. Wonder if he’s still around… -
How about a few more possibilities?
– It seems that all top performers are getting more money these days than they were in 1980. (Movie stars, footballers, investment bankers, lawyers, etc.) Has the rate of increase in executive pay been greater than in any of these areas?
– Do corporate boards feel under more pressure than in the past to hire recruit & retain top performers? Perhaps due to some takeover threat but also perhaps due to a higher level of scrutiny from investors than existed in the past. (The higher level of scrutiny perhaps from the expansion of professional and amateur investor classes, investment focussed media, etc.)
– Has the decline in the top marginal tax rates made cash compensation more valuable and thus led to its increase over other, non-disclosed forms of compensation?
– Has there been a decline in self-restraint of CEO’s as the WWII generation (and their disciples) has faded away?
It’s a fun topic to think about.
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