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View Diary: CEOs average $12.3 million in 2012, 354 times the average worker (34 comments)

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  •  Board Members... (1+ / 0-)
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    JerryNA

    One contributing factor to this inequality is the ability of "outside directors" who make reciprocal agreements.  

    Company A's CEO sits on the board of Company B and votes to give Company B's CEO a raise.  Then Company B's CEO, who sits on Company A's board, responds by convincing the other board members to give Company A's CEO a raise, because $10 million (or whatever the number) is now considered the going rate.  

    And the non-CEO board members also look to their own self-interests rather than to the concerns of the company.  So if Company C's board members vote to give themselves a raise and Company D's board members hear of it, they will vote to give themselves a similar raise.  

    Because many of these outside board members sit on a half-dozen or more different boards -- it would be enlightening to count the number of boards someone like Jill Kerr Conway or Doris Kearns Goodwin, for instance, sits on simultaneously -- they can make certain that each board raises its consulting fees.  

    Thus, for attending maybe eight board meetings a year for a particular company, much of each meeting spent in schmoozing over large on-the-house lunches, these board members pull in $250,000-$500,000 from the company.  Multiply those "earnings" by the number of boards they sit on, say five, and they "earn" themselves quite a comfortable annual income, even though they contribute less to any of these individual companies than the janitors who work there 40 hours a week, 50 days a year.

    But these Very Serious People -- a/k/a Professional Grifters -- have convinced one another that they are providing something of value, and they continue to get away with it.  All they are required to do is to vote for more generous compensation packages for the CEOs and for one another, and they will be providing a "service" to the complicit companies.    

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