Tuesday, October 21, 2008

Public Corporations

Posted as submitted on 10-17-08 by Ombudsman

The days when the CEO built up the corporation so that he could hand over a larger and more prosperous one to his children are over.

The CEOs of today are trained to worry over this year's bottom line, not future ones, because the current one affects his bonus and ability to skim the corporate coffers. His contract won't cover following years.

Thanks to a variation of what Mario Puzo said in The Godfather; Wall Street has a new program:
  • Steal $50 -- petty larceny.
  • Steal $50, 000 -- grand larceny.
  • Steal $500, 000,000 -- an astute financial manipulation.
Now that the background has been established we can proceed to changes. No commission is needed for this problem: unbridled greed and avarice.

The total compensation for the top person at any public corporation shall be limited to 30 times1 the average compensation of salaried non-management personnel.

Under our system, the feds cannot dictate to the Board of Directors what to pay the top dog. However, the feds do have the authority to tax. Any compensation above the threshold shall be taxed at the rate of 95%. For computing total compensation, anything of value shall be included. This includes, but is not limited to event tickets, vacations, bonuses, golden parachutes, private use of corporate jets at charged cost of jet, not cost for public ticket for the same flight, etc.

It is the intent of this proposal to force the Board of Directors to say to themselves, "we will not pay these taxes to the feds. We will take these funds and:
  • Modernize the plant.
  • Establish sinking funds to pay for future modernizations.
  • Reduce the price of the product.
  • Increase the pay and/or benefits for the employees.
  • Or -- horror of horrors -- increase the dividends to the stockholder.
The 95% tax rate is no doubt onerous. This is not unprecedented as they have been this high before. However, this time there is a difference. This time there is a way out. When the corporation pays these taxes -- shareholders take note -- it is because The Board of Directors chose to pay them.
1 30 is subject to review and study; used here to demonstrate philosophy being suggested

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