Directors' pay rose 50% in past year, says IDS report

[dikkertjedap]

Obscene in my view

Google "Calpers" and "corruption" and you'll get quite a few hits

Here's some highlights

"Among the new report's findings:

? While CEO of the system between 2002 and 2008, Mr. Buenrostro pressed the system's investment staff to pursue particular investments without regard for their financial merits.

? Mr. Buenrostro signed dubious statements claiming CalPERS knew of Mr. Villalobos' fees as a placement agent representing investment clients who won contracts with CalPERS. Otherwise, the report said, Mr. Villalobos would have been denied $20 million in fees by his top client, Apollo Global Management.

? Mr. Buenrostro tried to pressure investment staff to direct investments to Mr. Villalobos' clients who became known around CalPERS as ?friends of Fred.?

? Some investment firms doing business with CalPERS likely inflated their fees to make up for money they were secretly paying Mr. Villalobos. Mr. Villalobos had received $50 million in placement fees helping his clients win CalPERS contracts.

? Mr. Buenrostro, along with former pension fund board members Charles Valdes and Kurato Shimada, strong-armed benefits firm Medco Health Benefits to pay more than $4 million in fees to Mr. Villalobos, who had become a consultant and placement agent after leaving the CalPERS board. The SEC and the California Attorney General's Office are investigating the deal between CalPERS and Medco to provide drug benefits for CalPERS members.

In a statement Monday night, Rob Feckner, CalPERS board president, said, ?Let this episode in our history never be forgotten.?

Efforts to reach Messrs. Villalobos, Buenrostro, Valdes and Shimada were unsuccessful.

The CalPERS board has scheduled a special meeting Tuesday afternoon to discuss the report's findings."

I'm glad to see the crook has been caught.

Just to check, are you asserting that shareholder democracy is a bad thing because there was a crook at one of the companies that suppports it?

Nope, I was just so shocked that CalPERS was being set up as an example. The article you linked to is later than the corruption scandal (which is just about to go to trial).

shareholders should definitely exercise their rights - that's what they're there for. The problem is that most people don't know what they can do, or just can't be bothered.

however, I also strongly believe that the exchanges themselves and the regulators should enforce more - there are so many tools available (legally speaking), that they're just not utilising. for some things I've seen, the UKLA wasn't just asleep on the job, they were practically comatose.

The issue is that 50% pay rises - or 14% pay rises - are entirely unjustified when profits and sharedholder value have not climbed by 50%, or 14% or whatever figure you choose. It is 'greed' because it is unjusified. If a chief exec was responsible for a 50% increase in profits, he or she might have a case. Although you'd expect other employees to share in the gains, as the chief exec hasn't actually done it all on his or her own.

As for directors working hard, so do lots of people. Often on minimum wage desperately trying to make ends meet. I doubt a company director works 'harder' than a nurse, tbh.

edam, my sisters are nurses . They work very hard in their shfts but they don't work 80 hour weeks or fly halfway across the world to do back to back meetings or take calls at 3 am, 5 am or midnight when not on call and at home.

What isn't clear from the BBC article is whether or not the rise was paid in cash, or shares. It could be that a lot of the rise is because of an increase in share value. E.g. a director is granted 100 shares as a bonus, and because of performance the value goes from £150 to £100. I know someone who's a director of an LSE listed firm. He gets a basic salary, and then shares as bonus - he looks on paper as if he's worth say, £1.5mn but most of his pay was in shares, and when the company's value dropped, so did his "paper" wealth.

I thought non-executive directors were there to represent small shareholders interests? I think there is certainly a case for saying your salary needs to reflect the added value you have given to the company, as a director.

On the subject of pay and social inequality being linked. Which causes which? Some societies are more collectivist (cohesive) to start with, due to culture, history, education etc. Perhaps this sort of society rejects the model of winner take all, by putting in checks and balances through taxation etc to keep earnings differentials flatter.

By the same reasoning, individualistic societies (less socially cohesive) make it easier for individuals to pursue wealth without any feelings of social disapproval, so making it more likely that earning disparities will widen.

In other words, Britain was already an individualistic society and that has made it inevitable that the rich will get richer making the poor poorer by comparison.

lashingsofbingeinghere

the wikipedia article discusses changes in inequality and social cohesion below. I think we ignore the widening pay gap at our own peril.

'Community and equality are mutually reinforcing? Social capital and economic inequality moved in tandem through most of the twentieth century. In terms of the distribution of wealth and income, America in the 1950s and 1960s was more egalitarian than it had been in more than a century? [T]hose same decades were also the high point of social connectedness and civic engagement. Record highs in equality and social capital coincided. Conversely, the last third of the twentieth century was a time of growing inequality and eroding social capital? The timing of the two trends is striking: somewhere around 1965-70 America reversed course and started becoming both less just economically and less well connected socially and politically.'

I think that provided the shareholders of the companies do not have a problem with the pay rises that directors are receiving then nobody else should care.

and if the ownership passes through intermediaries, so that the ultimate owners have no say, and the decision is taken by an bunch of trough-snouters who have given themselves and their buddies a free hand, should anyone care?

I do.

lashings - but things haven't always been this way. The UK hasn't always been a horribly unequal society. It has become one. We need to look at why, at who gained and who lost (research seems to show it's the average and lower paid who have lost - basically the very rich have stayed very rich, the well-off have become far richer but most people have lost out - not just the poor but Mr and Mrs Average) and what effect that is having now. The world economy and the UK are up shit creek - this is exactly the right time to have a debate about what we want to put in place of the cruddy system that got us into this trouble in the first place.