The smallest minds<\/a> will focus on the smallest numbers, what we call the $10,000 questions:\u00a0 Did the firm pay for the CEO’s tax preparation?\u00a0 Will it pay for their home security?\u00a0 Will it pay for their umbrella stand or shower curtains?<\/p>\nMany critics justify their obsession with the small numbers with what may be called the “window theory” of disclosure, claiming that the little things the boards gives away is a window on how they govern the firm.\u00a0 Are they tough with the CEO?\u00a0 Do they know how to say “No” when he asks to use the corporate jet to ferry his pets?<\/p>\n
There is no evidence at all in the literature that the level of perks is correlated with how well the shareholders fare.\u00a0 In fact, perks may be a very cost effective form of compensation.\u00a0 Manhattan has a long history of people being able to be bought with trinkets.<\/p>\n
Certain wealthy people will value a company-provided car and driver much more than they might an extra hundred thousand dollars.\u00a0 Key executives may ascribe a much higher value to perks for the same reason that ordinary people are pissed off by them.<\/p>\n
Also, corporate expenditures that have a plausible benefit to the firm but can also enhance the life of their executives can be very tax-advantaged form of compensation, especially given the tax penalties imposed on firms for paying their top executives.<\/p>\n
Like everyone else, the populist in me wonders why someone making $6.2 million a year can’t pay for their own damn country club membership.\u00a0 But the shareholder advisor in me doesn’t look forward to the day when it’s just all about the bucks because we can no longer bribe talented executives with trinkets.\u00a0 These people will usually win on the pure dollars argument.<\/p>\n","protected":false},"excerpt":{"rendered":"
With proxy season just a few weeks away, all eyes will be on executive compensation.\u00a0 Different people look for different things from these disclosures. People like me, shareholder advisors and analysts, care about materiality and incentives.\u00a0 Are we attracting the right people?\u00a0 Are corporate funds being arbitrarily siphoned off by the management?\u00a0 Based on the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-643","post","type-post","status-publish","format-standard","hentry","category-executive-compensation"],"_links":{"self":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/643","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/comments?post=643"}],"version-history":[{"count":8,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/643\/revisions"}],"predecessor-version":[{"id":647,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/643\/revisions\/647"}],"wp:attachment":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/media?parent=643"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/categories?post=643"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/tags?post=643"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}