Hi Doc,
Seems to work for HP doesn't it
I have no idea how HP's compensation system works.....perhaps the stockholders may vote on the CEO/CFO/COO salary and bonus structure, but in large companies there are literally thousands of bonus-eligible managers and executives. The stockholders can't possibly vote on all of them without the annual proxy statement looking like the New York telephone book.
Further, I'm not impressed with HP's market performance over the past few years, I wouldn't hold them up as an example......so they might want to look at a different method.
I understand and support capitalism totally. At the same time the competition was created by board of directors for many corporations being out of control and bidding up the wages unnecessarily. Take it out of their hands and you still have competition in the labor market and savvy stockholders will be smart enough to reward executives who look after their interests.
The boards of Directors ARE elected by the stockholders.....if they are "out of control", the stockholders can fire them........look at it this way........you and I don't go to Washington DC, and vote on every matter personally that impacts us, we elect our representatives to do that.........essentially the same with a corporate board.
That said, corporations are NOT democratic organizations.....their mission IS NOT to follow an agenda set by every mooch that owns a share of stock. Their mission is to return a PROFIT. If it takes paying rather large salaries and bonuses to attract the talent to accomplish that, it's just a cost of doing business.
I've personally known a number of highly-paid CEO's, some of which I'm certain you would recognize their names.......by and large, they are
brilliant businesspeople, and they EARN what they make. If they are good enough to run a large organization, and strategically plan for its future products and services, I don't begrudge them their pay.
At the same time, while I agree competition has a factor in determining compensation, it is the owners of the business who should decide the compensation of all employees. At one time I believe all 13 of George Halas' grandchildren worked for the Chicago Bears. Why do I suspect competition had little to any effect on their compensation, and the owner of the company made those decisions?
If George Halas owned the Chicago Bears as either the sole (or majority) stockholder, or as a sole proprietor, it's frankly,
none of your business who he employs.....he's the boss, and he can do what he wants with it. Don't like it, don't watch their games. As I said above, companies are not democratic organizations, they are pretty much "benevolent dictatorships". That's the way they work. If you are an employee, and don't like how the company is run, you are free to leave. If you are a stockholder, and don't like it, you can sell your shares......
When I ran a division of a large corporation with approximately 2,800 employees, I had BOTH of my sons working for me at one time.......one was sweeping floors and painting the buildings, and the other was driving a forklift. Both are now executives in their own right (with other companies), and universally value the experience of starting at the bottom. Had either of them failed to perform their duties up to expectations, I had instructed their supervisors to fire them........It was my job to staff my division, and I didn't give a crap what the stockholders (or the public at large) thought about it. I cared about what my boss, the COO's opinion, but his daughter worked for me as well......under the same job security caveats.....
doc
