By James Kwak
Over on Twitter, Matt O’Brien wrote:
“Why are people mad at Wall Street, & not Silicon Valley, pay?” is a piece that doesn’t include the word “bailout” http://t.co/kqmWH276Gi
— Matt O’Brien (@ObsoleteDogma) February 19, 2014
That inspired me to take a look at the article O’Brien referred to: a column by Steven Davidoff asking why JPMorgan gets pilloried for giving CEO Jamie Dimon $20 million while Google can give Chairman Eric Schmidt $106 million without incurring the wrath of the public.
I went into it thinking I would agree with O’Brien—that there is something worse about lavish Wall Street pay packages than lavish Silicon Valley pay packages. Part of that was home team bias: I spent most of my business career working for companies based in Mountain View, Sunnyvale, Menlo Park, San Mateo, and Foster City (that’s two companies and five office moves). But I ended up mainly agreeing with Davidoff.
I think O’Brien is right on the narrow question of why people are mad: JPMorgan has done a lot of bad things in recent years, while Google’s role in the world is more ambiguous. But at the end of the day, voting the chairman of the board enough money to buy a Gulfstream 650 and an entourage of 550s is not a good use of shareholder money. And it’s shockingly tone-deaf in this age of rising inequality and cuts to food stamps. That’s the topic of my latest Atlantic column.
5 thoughts on “$100M for Eric Schmidt?”
Well, it may seem to the board to be a good use of shareholder money. It isn’t as if the shareholders are entitled to a dividend or anything, something companies seem to have forgotten how to do, relying instead on people trying to make money on share values in the market.
Dean Baker in Loser Liberalism is very good on corporate governance . The CEO appoints the board , the board top assignment is to approve the CEOs salary request. The board members get a very nice gig in return. Baker refers to Blogoyavich who as a governor of a big size state figured he too could get a very nice gig after he left office . Rod “the smoking gun” Blagoyavich .Someone should research how often CEO salary requests get rejected by their boards. It’s probably very rare. It’s like a pitcher (the CEO) pitching a no hitter for almost every team because the a ump is a board member and the pitcher can throw “pitch outs” all game but the umps calls them strikes.Imagine if almost every game in the Majors on any given night resulted in no hitters throughout the league The corruption starts with the governance structure. Maybe the solution is co-determination like in Germany where they still seem to produce quality products yet CEOs make much less.
Avoiding – as you O’Brien, Davidoff and others obviously do the glairing fact that it is the unholy machinations of the CEO’s of Morgans Stanley, Citi, Bank of America, Goldman Sachs, et all the price these Silicon Valley oligarchs into imponderable valuations – there is the other glaring fact that the finance oligarchs create and leave NOTHING, as in ZERO – for the rest of society while the Silicon Valley oligarchs create search engine used globally, innovative and useful software and hardware, and ways for most of the 99% to connect and communicate instantly and globally. Silicon Valley oligarchs – though hardly sinless – are not singularly responsible for hurling the entire globe into economic catastrophe as a direct result of systemic criminal activity and Ponzi schemes and then beg the socalled government for bailouts and heap all the costs and burdens on the taxpayer.
But this question is even more insidious, when you and all the Wall Street defenders and shielders bother to recognize that it is the predatorclass (and yes the finance oligarchs are arch abusers) – but all the 1%, or more accurately – the .05% that are the peoples enemy, regardless of the industry . What does the CEO of Lockheed Martin, or SAIC, or Monsanto, the Rendon Group, or XE, or Halliburton, Exxon make? Do you imagine their illgotten gains whatever they may be a just, worthy, and fair! Think again brother. The predatorclass – all of them are equally reviled! All those who disdain, and imagine they are supreme over the 99% are the peoples enemies – all of them. The CEO’s of the den of vipers and thieves are just more glaring in their systemic criminality and endemic psychopathology and their direct manifold injury to the 99%, but all the predatorclass are responsible and culpable and guilty of wanton abuse and monstrous thievery! You twist and deceptively distract from the glaring abuses and criminality by trivializing this epic issue with such a shady question.
The predatorclass – all of them – are the people’s dire enemy and mortal threat. Banksters, Silicon Valley, defense, intelligence, media, pharmaceutical, insurance oligarchs as well as private defense, private intelligence, and private prison industrial oligarchs are all predatorclass shaitans, and fiends seeking and prosecuting in sundry ways the enslavement, impoverishment, incarceration, or extermination of the 99%, and so they are all our dire enemies, and mortal threats!
Burn it all down! Reset!!! It’s the only option for the 99%!!!
It’s not “shareholder money.” It is company money.
In a competitive capitalist market functioning according to the rules taught in Econ 101, that money would have gone to consumers in the form of lower prices.
In the actual world we have, the company could have spent it on ordinary employees in the form of higher wages, to finance innovation or product development or increased hiring, or to taxes to pay a fair share of the costs of running the system that makes the company’s profits possible. Or it could have gone to ameliorating the negative externalities of the company’s products,
On the other hand, it is hard to see why it should or would have gone to shareholders. Shareholders are a sunk cost, and in any event merely the successors in interest to fungible providers of a perfectly fungible commodity (money). Sunk costs earn no return in competitive markets, and sellers of fungible goods should have neither right nor power to demand extra returns. The money ought to have gone to far more deserving claimants.
What does Google pay in taxes? About 2.4%. Forget the Google New-Age mantra of “Do no evil”; they are parasitic to both the shareholders and the public-at-large.
Comments are closed.