Need Before Greed

There is a huge disconnect between corporate performance for the shareholders and the compensation given to the management team, especially the CEO. During 2011, 301 CEOs took home $3.9 billion averaging $10 million a piece.. The CEO of Citigroup Vikram Pandit took home a whopping $43 million in 2011 while the stock price fell 44% in 2011 and over the last four and a half  years of his watch the stock price fell more than 95%.  Of course many of the problems haunting Citigroup were inherited by him. Citigroup shares were selling at $480 (on a  reverse split basis) 5 years ago which are now worth $26 each. Under these circumstances is such a high compensation for the CEO warranted? What is the board which sanctions such huge pay packages thinking in justifying such a remuneration for a failing CEO? The problem is that the shareholders who actually own the company are an amorphous lot helpless in having a say in how to run the company. There are vested interests, short term traders, vulture capitalists and others who make money trading the stock in the short term and they vote in favor of the management proposals. Otherwise how can one justify 80-90% of shares voting in favor of the compensation given to the CEOs? What about the long term investor who has lost 80-90% of his investment over several years? The chief investment officer of JP Morgan who "retired" recently in response to $2 billion trading/hedging loss had a compensation of $15.5 million in 2011 ($31.4 million in 2 years) while her boss James Dimon cleared $23 million. Should these two not make restitution to the shareholders for losing $2 billion in a blink? These are just the tip of the iceberg that is waiting to crash a titanic. Any amount of vociferous opposition to such greed on Wall Street does not seem to affect the practices of the corporate boards. They are acting like Louis XV of France who said "apres moi le deluge" (after me the deluge). These corporate titans want to grab as much money as possible during their stay at the top whether they make money or lose money for the shareholders. Is there another financial meltdown in the offing? Who knows? There are so many other corporations who have lost 50 to 96 % of shareholders' investment over the last 10 years or so. Some examples: Alcatel-Lucent, Bank of America, Cisco, Citigroup, Dell, GE, Hewlett-Packard, Interactive Brokers, International Paper, LSI logic, Lilly, Merck, Pfizer, Sears, and many other companies. The list goes on and on. All the while the failed CEOs are raking in millions of dollars in remuneration year after year. This is capitalism of the worst kind. Will the "Occupy Wall Street" movement have any effect on such injustice? It appears not. But something tells me that we are not heading to a better future. Prior to the French Revolution in the 19th century such extravagance on the part of a few was very evident.

Regarding the activist investor Dan Loeb’s digging the resume misstatement of  Scott Thompson Yahoo’s former CEO, it does not matter what Loeb's intentions were and it does not matter what his ruse was to get to overhaul the Yahoo board. The first point is too many resume padders are out there in the management ranks. All they want to do is to get ahead by passing others to the head of the line to land the top job. Secondly if Loeb is looking for short to medium term gain so be it. Who is not looking for short term gains in Wall Street? The so-called “investors” in Wall Street are all traders who make the quickest buck. There are no more long-term investors except the individuals who buy stock on their own. The CEOs write their job contracts to get salary, bonus, stock options, and stock awards amounting to several millions of dollars per year and then work to manipulate the results. Many CEOs are drawing mega millions in compensation even though their company stock has into the nether world. One example: GE. When Jeff Immelt took over the helm more than 10 years ago the stock price was in the 40s. Look at the stock price now (18). In these 10 years can someone total the entire compensation that Jeff Immelt pulled and can anyone justify his loot of shareholders’ investment vis-a-vis the GE stock price under his watch? There are umpteen other cases like GE. I am fed up with the corporate greed at the top while their performance is abysmal. How is it going on like this? Where is pay for performance slogan now? We need more Loebs to shake up the corporate boards and to rein in the compensation balloon.