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Limiting Executive Compensation: the Swiss Example

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Obtaining perspective with respect to the issue of “executive compensation” requires little effort. One simply compares historical norms with the outrageous excesses of the 21st century.

Go back a century ago; when our governments were solvent, our economies were prosperous, and everyone had jobs, and the pay ratio between senior management and the average worker ranged from roughly 3:1 to 10:1. Flash ahead to the 21st century; when our governments are bankrupt (from a massive revenue crisis), our economies are mired in permanent depressions, and structural unemployment is at all-time highs, and we now often see this ratio exceeding 1,000:1.

CEO’s (allowed to run amok) are awarding themselves compensation hundreds of times more than what they are earning. Let me quantify this more precisely for the mathematically-challenged majority. Being paid 1,000 times more than the median wage rather than 10 times more (the norm) equates to being paid 100 times more than one earns.

But understand that “100 times” doesn’t mean being overpaid by 100%. It equates to being overpaid by 10,000%. Put another way, the “compensation” being stolen by these corporate thieves would have to be reduced by more than 99% to lower it to what these executives actually earn.

Conveniently, Bloomberg has provided us with a corporate Hall of Shame, taken just from corporations listed on the U.S. S&P 500 Index, a (partial) list of the most overpaid CEO’s in an era of the most grossly excessive executive compensation in history:

JC Penny Co. 1,795:1  ($53.3 million)

(Ronald Johnson)

Abercrombie & Fitch Co. 1,640:1  ($48.1 million)

(Michael Jeffries)

Simon Property Group Inc. 1,594:1  ($137.2 million)

(David Simon)

Oracle Corp. 1,287:1  ($96.2 million)

(Lawrence Ellison)

Starbucks Corp. 1,135:1  ($28.9 million)

(Howard Schultz)

Even if we take the high end of the historical norm (a 10:1 compensation ratio); every one of these corporate thieves would have to have their criminally-inflated “compensation” reduced by more than 99% to bring it down to what they actually earned. And understand that a crime is being committed here.

It’s called “misappropriation of funds” (i.e. embezzlement, i.e. theft). Taking more than 100 times more than one earns, and calling it “compensation” is no more legal than a CEO announcing he was using corporate funds to buy separate palaces for a harum of mistresses. The fact that corrupt/complicit boards of directors of these corporations allow this theft-in-broad-daylight to take place again and again and again does not make it legal – it only makes them accessories to these crimes.

Finally, the citizens of one nation are taking action. Put another way; the only nation which still has “citizens” is taking action: Switzerland. The people of that nation proposed limiting executive compensation to a hard cap of no more than 12 times the wage of the lowest paid worker (not the average pay). Thus this Swiss proposal would do nothing more than mandate compensation limits which are in line with historical norms, when our nations were solvent and prosperous.

It is ironic – but in no way surprising – that the workers/citizens standing up and saying “enough is enough” in Switzerland are already the highest paid workers in Europe. But even with the (relatively) high average wages in that nation; the corporate thieves of Swiss corporations would still see their own compensation reduced by 90% or more to bring it down to what they actually earned.

 

Why did Swiss citizens force a national referendum on this issue, while the docile doormats of other Western nations do nothing, despite even more obscenely inequitable wage-differentials? Because they are not citizens. They are Serfs.

Serf n. – A person in bondage or servitude.

The serfs of the feudalistic Middle Ages were bound to their land. The Serfs of the 21st century are bound to their jobs.

Because our (corrupt) governments collectively choose to create and maintain massive structural unemployment – the worst unemployment in history – meek and fearful Serfs of other Western nations cling to their jobs in silence. As explained/demonstrated in a recent commentary; if the U.S. government chose to create an honest (and even partially comprehensive) definition of “unemployed”; there would be more than 50 million unemployed, in the U.S. alone.

More than 50 million Serfs in Europe are also permanently never allowed to work by the corrupt governments of those nations (along with millions more permanently unemployed in Canada). Altogether, our Traitor Governments have now created a pool of more than 100 million permanently unemployed pawns throughout the West.

Modern Serfs are thus “bound” to their jobs just as completely and desperately as the serfs of previous eras were bound to their land, knowing that if they ever lose their current position of servitude that the chances of getting any other job (even at further reduced pay) are slim-to-nil.

Understand that Swiss citizens receive higher wages not because their salaries have risen, but simply because their wages haven’t fallen as far/as fast (in real dollars) as in other Western nations. Again using U.S. data (since this is all that is available); Western serfs have seen their wages (and standard of living) decline by more than 50% over the past 40 years -- at the same time that these executive corporate thieves steal fortunes for themselves, and call it “compensation”.

Sadly, but not surprisingly; the Swiss referendum was defeated. Swiss mega-corporations used massive quantities of advertising dollars to sell the lie that only paying Swiss executives what they actually earned would make Swiss companies “uncompetitive”, because they could no longer (supposedly) obtain “the best people” to run their companies.

Let’s examine this completely unsubstantiated assertion. Understand that unique in the entire realm of human commerce; large corporations often (usually?) choose CEO’s who were just fired from their last job. “CEO” isn’t an occupation; it’s a club.

It’s a corporate revolving-door; where after failing at the helm of one corporation, these (over-paid) Failures are handed a gigantic Golden Parachute, and then immediately given a job running another corporation – often at even higher pay, with an even larger Golden Parachute.

How is it that CEO’s of 21st corporations have managed to become overpaid by 10,000% (or more)? Because 21st centiry corporations only hire Failures (from Club CEO), and they always reward failure – more richly than any successful people have ever been paid in all of history.

How can we conclude unequivocally that the criminally overpaid buffoons of Club CEO are failures? Simply look at the collective carnage they have wrought as the members of Club CEO have mismanaged our corporations for the past quarter century: they have destroyed all of their own best markets.

Look at the balance sheets of any of these mega-corporations. The only profits they produce now come from their Emerging Market operations. In the dead-and-decaying economies of the West (killed by their own handiwork); any paper “profits” they report only come via the $100’s of billions in Corporate Welfare (“subsidies”) which Club CEO now mooches from our Traitor Governments every year.

Governments who tell their own citizens (again and again) that they have “no money” to simply maintain services (or wages) at previous, minimal levels hand out $billions and $billions in welfare payments to these mega-corporations every year, like “sugar plums” – which the Thieves at the top misappropriate, in order to pay themselves 10,000% more than they earn.

Nothing about this process is legal. It is merely organized crime, aka government by Crime Syndicate, more commonly known by the label fascism. The cabal of Cronies at the top who become fabulously wealthy don’t “earn” any of their fortunes. They simply loot these economies, these nations, just as ruthlessly as any Mafia crime family loots its own “territory”.

The Crime Syndicate won another “battle” today, in Switzerland. The Thieves at the top will continue to be allowed to steal 10,000% more than they earn each year – directly out of corporate coffers – and call it “compensation”. But the party is almost over.

Bankrupt Western nations are collectively on the verge of debt-default, only able to delay default by conjuring paper out of thin air (“quantitative easing”) which is backed by nothing, pretending that this paper is “money”, and then using this “money” to buy their own (worthless) bonds.

It is a Ponzi-scheme far more clumsy and blatant than that of Bernie Madoff, and it’s all that separates Western nations from immediate bankruptcy. But as with the Madoff Ponzi-scheme; (even in societies of Serfs) such Ponzi-schemes inevitably implode – when there is nothing left to steal.

 

[Readers are encouraged to join me for my daily discussion of precious metals markets, and the events which drive these markets, on The Daily Grind]

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Comments (6)Add Comment
Jeff Nielson
...
written by Jeff Nielson, December 01, 2013
Those CEOs are paid peanuts compared to Hedge Fund Managers

Daniel Loeb
Earnings: $380 million
Firm: Third Point LLC

David Shaw
Earnings: $530 million
Firm: D.E. Shaw...



A very good point, and a very good list. Indeed; it's these obscene, unimaginably huge numbers which skew the INCOME scale so radically for the top-1%.

Of course the numbers we SHOULD be looking at are the "highest wealth" numbers, and not the completely phony "world's richest" lists passed around by the Corporate Media.

One of the interesting facets of my commentary "The One Bank" (http://www.bullionbullscanada....e-one-bank) is that an entity the size of "the One Bank" requires financiers an ORDER OF MAGNITUDE larger than the B-list Billionaires who are called "world's richest".

There are TRILLIONAIRES in the world (or very close to it), and most likely their names start with the letter "R"...
TheHobbsEndMartian
...
written by TheHobbsEndMartian, December 01, 2013
Those CEOs are paid peanuts compared to Hedge Fund Managers

Daniel Loeb
Earnings: $380 million
Firm: Third Point LLC

David Shaw
Earnings: $530 million
Firm: D.E. Shaw

Leon Cooperman
Earnings: $560 million
Firm: Omega Advisors

Stephen Mandel, Jr.
Earnings: $580 million
Firm: Lone Pine Capital

Eddie Lampert
Earnings: $750 million
Firm: ESL Investments

Ken Griffin
Earnings: $900 million
Firm: Citadel

James Simons
Earnings: $1.1 billion
Firm: Renaissance Technologies

Steve Cohen
Earnings: $1.4 billion
Firm: S.A.C. Capital Advisors

Ray Dalio
Earnings: $1.7 billion
Firm: Bridgewater Associate

David Tepper
Earnings: $2.2 billion
Firm: Appaloosa


http://www.businessinsider.com...12-2013-4#
Jeff Nielson
...
written by Jeff Nielson, November 29, 2013
I've read a statistic that says that a CEO of one of these Mega Corporations makes more in 1 minute than their average (which includes executive pay) employee makes in 1 month.

Productive very, they must be. smilies/wink.gif


For those who don't regularly visit the Forum; there was a wonderful clip there which quickly illustrates in graphical terms how monstrous this inequality has become -- to compliment the numerical depiction contained in this commentary:

http://www.youtube.com/watch?v=slTF_XXoKAQ
rroush
...
written by rroush, November 28, 2013
I've read a statistic that says that a CEO of one of these Mega Corporations makes more in 1 minute than their average (which includes executive pay) employee makes in 1 month.

Productive very, they must be. smilies/wink.gif
Jeff Nielson
...
written by Jeff Nielson, November 28, 2013
...But I also note a change in our favourite bullion bank. ScotiaMocatta - according to Harvey Organ...I don't know which branch of the bank, To, Ottawa, or Vancouver this story springs from but SM is beginning to refuse transactions based on a currency control format. The excuse for not serving up (in this case) a $50,000.00 gold buy was that the currency offered had not been deposited in a bank for six months or more. What this effectively does (I believe) is the B.B.delays these buys from people who have cashed out, inherited, sold or otherwise acquired new funds recently and although deposited in a bank, it was not acceptable unless it was in the system for longer than 6 months. Suggest anything?



Interesting, Galearis.

Yes, the Master Plan is implemented in baby-steps...in order to make sure the Sheep don't wake up. smilies/sad.gif
Galearis
...
written by Galearis, November 27, 2013
Yes, it is deplorable what our CEOs can get away with...[removed]void(0);

But I also note a change in our favourite bullion bank. ScotiaMocatta - according to Harvey Organ...I don't know which branch of the bank, To, Ottawa, or Vancouver this story springs from but SM is beginning to refuse transactions based on a currency control format. The excuse for not serving up (in this case) a $50,000.00 gold buy was that the currency offered had not been deposited in a bank for six months or more. What this effectively does (I believe) is the B.B.delays these buys from people who have cashed out, inherited, sold or otherwise acquired new funds recently and although deposited in a bank, it was not acceptable unless it was in the system for longer than 6 months. Suggest anything?

Answer (and there are at least three): currency controls are being implemented in Canada around gold buys and (2)the early set up for defaults or refusals to deliver OTC product to the public...and (3)an understanding by the bank and early policy changes that will see product sales ended to the public and soon...It begins with the larger orders, of course.

I queried the bank about this policy and they forwarded my request to another party there... I would not have received an answer I am sure.

And incidentally, I also queried someone there about why their scotia kilo bars of gold, silver and platinum made by Solar Applied Metals was unknown to Google and, of course, the LBMA good delivery bar list? She didn't give me an answer except to say that the bank did not recognize and had no association with the LBMA...So I sent her a link showing that SM is involved in the London "fix" gold price....About that time she stopped talking to me. I wonder why?

FWIW,
L.

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