Whenever I see Bernie Sanders on TV and hear his proposals for income equality, all I can think is ‘This is what we are going to get if we don’t put something effective in place soon.’
If all I have posited in the Skim and Partial Ponzi is correct, then the road to reform comes through executive compensation. While this has long been mentioned as a solution, the overwhelming focus has been on purely reducing/cutting it, and/or nebulously tying it to some performance formula. So far any such changes have clearly not worked, as their has been a huge and continuing wealth transfer in corporate America from the 99.99% to the .01%.
So let’s take a very small step by starting with the people who determine executive pay: The Board of Directors (BOD). Being a director on a corporate board should be viewed as quasi-volunteer work. Back in the old days (pre-1980 for a number), serving on a corporate board was viewed as an honor and a responsibility. It was something a person did for altruistic purposes, to give back to the capitalist system that had served us so well.
Nowadays it is first and foremost a form of remuneration. As highlighted recently in the show ‘Billions,’ the female board member (aka Evelyn Benson) who gets ‘Axed’ from Yumtime’s board, cares most about losing her $200,000 annuity when she’s voted off the board. It was a completely offhand comment, and that’s because it’s become so ingrained in our system. Of course $200k is probably a lowball number, cut in half from the average director compensation once all the committee fees and other perks are added in. Multiply it by 3-4 boards, and I’d say that’s a pretty good way of making a million a year, especially for only 4-6 weeks of work!
Well guess what, there’s still an enormous amount of value in being on the BOD of a major corporation, net of any compensation. Continue reading