Tag: investing

Are CEO’s Paid Too Much?

On By southwerkIn Business Ethics, Capitalism

There appears to a be a considerable consensus on various web sites that indeed they are.

(That does look like corporate leadership, a daunting path, indeed!)

Let’s begin with the Guardian in an article by Michael Sainato talks about his pay.

https://www.theguardian.com/us-news/2025/jul/24/trump-bill-ceo-pay-starbucks

Starbucks’ CEO, Brian Niccol, made 6,666 times more than his average worker last year, according to a report on the growing gap between top executives and their workers.

The inequality gap between CEOs’ pay and that of their median workers rose in 2024 to 285 to 1 from 268 to 1 in 2023, according to a report released this week by the largest federation of labor unions in the US, the AFL-CIO.

I will freely disclose that I find the CEO in question, Brian Niccol, reptilian and repulsive, and that is beside the fact that he is paid way too much.

But there’s more. Here’s an article from 2023 By Nik Popli. He writes about an investor advocacy group that calls out CEO’s who get generous pay packages while their companies suffer losses particularly in shareholder returns. I recommend you read the entire article.

https://time.com/6256076/most-overpaid-ceos-2022/

The typical CEO of a company listed on the S&P 500—a stock market index with 500 large publicly traded corporations—earned $18.8 million last year. That’s up roughly 21% from 2021, even though the S&P 500 index was down 20%. Company boards gave particularly big grants of stock to reward those in charge of navigating their companies through high inflation, continued supply chain problems, and rising wages—as well as meeting performance metrics.

But an investor advocacy group says some of the nation’s most well-known companies overpaid their chief executives. A new report from As You Sow listed 100 “overpaid” CEOs who received high compensation in 2022 despite mixed shareholder returns for their companies.

At the top of the list: Warner Bros. Discovery’s David Zaslav, who received $246 million in 2022 even though the company’s stock fell 60% in the same year and roughly 40% of shares voted against his pay package. The second most overpaid CEO was Estée Lauder’s Fabrizio Freda, who earned $66 million in 2022 while the company’s stock fell 33%. Penn National Gaming’s Jay Snowden, who was paid $65.9 million, comes in at no. 3 on the list; his company’s stock fell 42.7%.

And for the year before, we have the magazine Fortune in an article by Chris Morris, Maria Aspan entitled rather directly These are the 10 most overpaid CEOs in the 2022 Fortune 500. Once again, I liked the article and recommend you read it in full.

https://finance.yahoo.com/news/10-most-overpaid-ceos-2022-175248791.html

Overall hourly U.S. wages fell 2.4% on average last year (after adjusting for inflation), but the median total compensation of CEOs Fortune studied as part of this year’s Fortune 500 ranking jumped 30% from a year earlier to $15.9 million.

That made us curious. Did those CEOs deserve the compensation packages they received? Fortune’s Maria Aspan and Scott DeCarlo analyzed the compensation and stock performance of the 280 Fortune 500 CEOs who have held their jobs for at least three years, ranking them on pay vs. performance.

Apparently factual analysis based on the statistics of market performance does not paint an appealing picture of CEO pay. I am not surprised. The media celebrates these figures as fearless leaders and innovative entrepreneurs with little actual examination of the facts. And the way corporate power is structured, an obedient board of directors is just a matter of time for an aggressive CEO.

The Progressive Shopper posts the “Overpaid CEO Score Card.”

Overpaid CEO Score Card

The list identifies the 100 Most Overpaid CEOs from the S&P 500 index, highlighting those CEOs deemed excessively compensated based on their performance. It specifically focuses on CEOs who were addressed at annual meetings held between July 1, 2022, and June 30, 2023. This year’s findings also incorporate insights from annual voting patterns and regression analysis conducted by HIP Investor.

Mentioned previously was the Shareholder Advocacy Group, “As You Sow.” This is a ten year study they published about CEO compensation entitled 10 Years of Study Shows Overpaid CEOs Underperform.

Listed below the link are its most damning conclusions.

https://www.asyousow.org/press-releases/2023/11/15-ten-year-study-overpaid-ceo-underperform

Key findings: 

  • Companies with the most overpaid CEOs have had lower returns to shareholders than the average S&P 500 company. The typical S&P 500 firm made 8.5% per year annualized from February 2015 to September 2023, the 100 Most Overpaid CEOs’ annual returns lagged at 7.9%, the worst 25 dragged at 6.0%, and the ten worst were behind at 6.5% per year.  As a group, over a decade, overpaid CEOs underperformed.
  • Total pay for the most overpaid CEOs continues to grow. When As You Sow compiled its first overpaid CEO list ten years ago, the average pay of the 10 Most Overpaid was $56 million. This year, the average of the top ten was $88 million, an increase over that time period of 59%. 

There were more articles and many opinion pieces. All these sources saying that CEO’s are over paid — and, yet, they continue to be overpaid!

But it seems likely that AI and an increasingly darkening economic horizon under our current regime’s bizarre decision making may very well diminish these payouts.

We can hope!

James Alan Pilant

Why Isn’t This a Crime??

On By southwerkIn business ethics

https://finance.yahoo.com/news/home-depot-pay-2-million-133019838.html

Home Depot is paying a settlement of around two million dollars for “scanner violations.”

Here is a direct quote from the article referenced at the top:

The complaint filed in San Diego Superior Court said that when people at Home Depot brought an item to checkout, they would be charged more money than was written on the shelf tag or on the item itself. Such violations are called “scanner violations,” the Los Angeles County District Attorney’s office said in a press release Thursday.

Why isn’t this a crime? These customers were charged more than the listed price. Is there anyone, anywhere who believes this was just a mistake?

And missing from the article is the most important piece of information of all — how much did Home Depot profit from this nefarious scheme? I suspect that the two million dollars penalty is but a tiny fraction of the amount taken from consumers.

Apparently living as we do in the declining and predatory phase of capitalism this is regarded as a success ful business decision. It is also, evil, morally bankrupt, and a profound insult to the duty of honesty and fair dealing. Jack Welch and Milton Friedman would undoubtedly be impressed by the business skills here displayed by Home Depot.

Do we want morality and ethics in our business dealings in the United States? Apparently not very much or hardly at all. A fine which appears to be but a small fraction of the amount stolen by scanner violations is not going to discourage the company from stealing again.

What are we becoming as a nation, as a people and as a civilization where we routinize simple theft as just part of doing business? It is not too much to demand that businesses abide by the listed prices. It is not too much to demand that businesses abstain from theft. It is not too much to expect that businesses treat their customers as guests and assets rather than easy marks.

We do what is right because it is right, not because it is profitable, or that people might like us. We have duties as Americans to our fellow citizens and the nation as a whole. And if I may speak frankly, a duty to Almighty God to live as just human beings.

James Pilant

Ethics and the Personal Finance Industry

On By southwerkIn Business Ethics

 

Seemed like a good idea at the time.
Seemed like a good idea at the time.

Ethics and the Personal Finance Industry

The personal finance industry can’t save us – Salon.com

How does the industry prey on our fears about our inability to save and plan for the future?

We can’t articulate that for all too many of us our problem is not an inability to manage and invest money effectively; it’s that we’re expected to do more and more with less and less. So we think we are individually messing up, that we lack the financial skills and smarts to get ahead. The financial services industry presents itself as our savior. But by doing that, it has to confirm our cultural bias that we are alone responsible for our financial fates.

You see this dynamic especially in personal finance and investment initiatives aimed at women, which contain an almost odd mix of the language of empowerment and infantalization. They tell us we are women, we are so strong because we do so much more around the home and work than men, but yet we are financial illiterates who have no clue. In fact, both sexes have low financial knowledge. Men have more money than women for the most obvious of reasons: they earn more.

You mention the work of economist Teresa Ghilarducci, “the most dangerous woman in America.” Who is afraid of her and why?

It became very clear to me while reporting this book that Teresa Ghilarducci had hit a nerve in the financial services sector that no one else had. The reason, to me, was obvious. Most other people discussing retirement reform schemes (Auto IRAs, Save More Tomorrow and the like) were talking about expanding the role – or at least the bottom line of — the current dominant players on the retirement scene. I mean the retail brokerages, the 401(k) plan providers, the dominant mutual fund companies and the like. Ghilarducci’s Guaranteed Retirement Accounts calls BS on this model. First, she points out how much money the current retirement is making on what we think is our money. Second, her model would bring new players in, and I mean new, powerful players – state pension funds, institutional investors, and hedge funds – into the game.

The personal finance industry can’t save us – Salon.com

Ethics and the Personal Finance Industry

Personal responsibility. I believe in it. I recognize the power of it, the usefulness of it. But circumstances have to be taken into consideration. We do get injured, become ill and suffer accidents. We can be killed by natural disaster or more mercifully, have homes or businesses destroyed. Choice and environment interact to produce our reality.

Here we have a situation which the personal finance industry proclaims loudly and persistently that if you only change your decision making and be tough on yourself, that you can attain financial stability and even possible eventual wealth. I would prefer that industry to look at this situation from a business ethics stand point and promise less because personal choice is only part of the equation. If a great majority of the American people had shared in the profits of the increased production and financialization of the last thirty years, I think most financial suffering might be attributable to poor planning. But here again, we have circumstances, downward wage pressure, very high unemployment, a replacement of stable pension with the disastrous 401K’s, the changes in the bankruptcy act, the plague of student loans, etc.

Americans of the middle class suffer from real wage pressure and for many, no amount of planning will fix those problems. Americans of the lower class are simply in the midst on an ongoing week to week, day to day, financial disaster.

Financial planning can be useful but only in proportion to the amount of disposable income in the individual cases. If the disposable income is inadequate, no amount of planning can fix it. Promising magical fixes from non-existent resources is not ethical. Financial planning is not for everybody.

James Pilant

From around the web –

From the web site, Personal Finance for Beginners:

Your questions in personal finance would revolve around the following:

How much money will be needed by you at various points in the future?
Where will this money come from (e.g. savings or borrowing)?
How can you protect yourself against unforeseen events in your lives, and risk in financial markets?
How can family assets be best transferred across generations (bequests and inheritance)?
How do taxes (tax subsidies or penalties) affect personal financial decisions?
Your Personal financial decisions will involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement. Personal financial decisions may also involve paying for a loan.

From the web site, Finance for Youth: The Blog:

A couple of days ago, a young student approached me and asked me for some career advice. The student wanted to understand a little more about what banking and finance is about, and how it measures up in terms of their “dream job“. I was very impressed with this young student, because unlike many of their peers, they were actually trying to look at their future and start planning. This student, to be fair, is part of an advanced group of students. They get tutoring as part of their regular school day, they have additional instruction in note-taking and other study skills, and they are in advanced Math and English classes. They have a leg up over many students already. This young person seemed to have a leg up on even this group.

And from the web site, Nancyeewing:

You need to make a plan of what you really want in life that money can buy. Then you must find out how to get the money it takes to finance it and finally start to implement this plan. This is the long term part of your financial life – the process of personal financial development from the state you are in right now – to the state you want to be in. This journey toward financial freedom is in my opinion the most interesting and exciting part of personal financing you can have.

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The Web Site, Striking Thoughts, has a Tough Opinion Concerning the Facebook Investment Debacle!

On By southwerkIn Business Ethics

Wall Street Bitch-slaps us (again) | Striking Thoughts

This mess will be interesting to watch as it plays out. At this point I will go as far as agreeing with Business Insider:

“In one of the biggest IPOs in history, in which a huge amount of stock was sold to small investors, privileged Wall Street insiders once again got top-notch information…and individuals got the shaft.”

Wall Street Bitch-slaps us (again) | Striking Thoughts

Striking Thoughts is right on target and I recommend you read his thoughts.

To my colleague at “Striking Thoughts” I give a hearty thumbs up!”

James Pilant

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Japan considers stress tests for nuclear reactors (via Financial Post | Business)

On By southwerkIn business ethics1 Comment

This is certainly a classic case of closing the barn door after the animal has fled. Yet, the measure is probably no going to pass, even in the face of solid evidence that the plant was already in partial meltdown from the earthquake before the tsunami hit.

James Pilant

TOKYO – Japan’s government is considering conducting stress tests on nuclear reactors to ease safety concerns which have blocked the restart of idled reactors since the March quake and tsunami, including several that have completed maintenance and complied with new, stiffer safety standards. Japan is struggling with a drawn-out crisis after meltdowns at the crippled Fukushima Daiichi atomic plant, site of the world’s worst nuclear incident in 25 … Read More

via Financial Post | Business

#Sustainability of Values alone would esnure profits. My reply (via Jayaribcm’s Blog)

On By southwerkIn business ethics

This is a post from one of web buddies. I am pleased to have the opportunity to put up his blog posts.

James Pilant

What’s “New” About Creating Shared Value?  05 Apr 2011 – by Michael Sadowski: This is an interesting post http://bit.ly/h5z2YL on Sustainability I give below my reply to the nice article from Michael that raises a number of basic issues. Michael, very valid points raised. Thanks. I would like to take you back to the days before ISO 9000 was introduced. In arriving at the harmonization of standards the Cecchini Committee had deliberated in detail … Read More

via Jayaribcm’s Blog