One of my stocks is tanking. It’s dropped by about 90% from when I bought.
Actually, more than one is tanking but fortunately I have a limit on more speculative investments and it’s not very high – I think of it like a roulette wheel sometimes. Hmm… almost ALL my more speculative stocks are tanking. Maybe I shouldn’t do that anymore.
Out of the 33 pages of blah blah in this management proxy circular, over 50% of it is related to executive and director compensation. The company even paid a couple hundred grand to a consulting company to figure out what the compensation scheme should be for 5 people (hint – about 10% of net income and 100% of last year’s cashflow). I’d like to get a job doing that but they might not like the results.
My son bought a very interesting economics book (not an oxymoron) that I read recently:
23 Things They Don’t Tell You About Capitalism
Thing 14 is: U.S. managers are over-priced.
From the book…
“In relative terms (that is, as a proportion of average worker compensation), American CEOs today are paid around ten times more than their predecessors of the 1960s, despite the fact that the latter ran companies that were much more successful, in relative terms, than today’s American companies.”
“The average CEO compensation (salaries, bonuses, pensions and stock options) in the US is 300-400 times the average worker compensation (wages and benefits).
A multiple of 300 to 400 TIMES!!! That’s a lot.
Here’s some articles on excessive CEO pay that are making me even more pissed off:
There’s also a not-so-secret union of CEO’s and board directors – who at this particular tanking company made $80k/year apiece for just showing up to 15 meetings.
Management guru Peter Drucker said years ago that top management compensation should generally not be a multiple of over 20 times the average worker compensation. And look at that article he wrote back in the ’70′s – he saw it as a problem then, and would probably be shocked at how bad it’s gotten since.
That multiple of 20 seems about right depending on the industry. Unfortunately, that also means that the CEO in my tanking company isn’t really that over-paid since he’s making just over $1.4 Million and the average salary for the company employees is probably around $60k or so.
Maybe I’m just pissy because I’ve lost a few thousand bucks, which in the grand scheme of things is a pretty minor lesson – to be more wary of junior O&G companies that might have good properties but are carrying too much debt.
Note and reminder to self: debt is bad, even corporate debt.
To be honest, I feel kind of overpaid when I work. When I look at my kid going off to work, working much harder than I do sitting on my butt all day playing on computers – yet earning less than 20% of what I do, it does seem like something really is broken with the system.
For further reading and lots of cool graphs, charts and discussion, check out the Washington Post report:
And Ritholz has a post on it today too – which reminded me that I wrote this post a few months ago and never finished it. The stock price has fallen even more since then. Here’s his (much better) post: