[Vision2020] I thought you might be interested in this article

[Jeff Harkins]

Granted - but you miss the point again.

The Board of Directors is elected by the shareholders - to whom the 
BOD members are directly accountable.  Some BOD's may own stock in 
the corporation, but it is not a defacto standard.

Also, although there are a few exceptions, the compensation of the 
BOD is determined by a vote of the shareholders.

The company is indeed managed by the owners and duplicity is often 
dealt with harshly by the owners.

You see, corporations (owners or shareholders) find it in their best 
interest to attract the very best top executives they can afford - 
and that action must meet a market test.  If golden parachutes are a 
standard clause for competitors, it is likely that a corporation must 
match or exceed a package offered to a candidate being courted by the 
competition.

There is another subtlety that I hope you recognize.  If you are an 
owner in a corporation and you do not agree with the BOD or the 
management or both (it strikes me that this is the situation you find 
yourself in), you can participate in the strategic decisions related 
to the hiring of management and the BOD by exercising the rights 
afforded to you as a shareholder - just don't exercise the proxy.

Of course, that would require an investment of your time and 
capital.  Fortunately, you have a fall back position - you can simply 
sell your shares and invest in a company that meets your standards 
for determination of executive compensation as well as BOD's that 
advance the long-term strategies consistent with your investment 
philosophy(ies).

Finally,  Title 4 of the Sarbanes Oxley Act provides additional 
assurance to shareholders that top executives and BOD's member will 
act prudently with regard to the management of a corporation 
(publicly traded firms only).


At 11:12 AM 8/31/2006, you wrote:
>On 8/31/06, Jeff Harkins <jeffh at moscow.com> wrote:
>>The compensation packages for CEO's and other top executives are
>>negotiated transactions in the marketplace.
>
>The compensation packages for CEOs and other top executives are
>determined by the board of directors' compensation committees, which,
>itself, is largely composed of other CEOs and top executives. There
>exists a significant conflict of interest between their interest in
>the corporation as stockholder and their interest as an executive
>whose compensation is likely to be later determined by exactly the
>same person whose compensation they are currently determining. Whether
>or not it's explicit, there exists a certain element of quid pro quo
>in executive compensation -- especially when you consider golden
>parachute clauses, which allow a CEO to fail out of their position
>several hundred million dollars richer than they would otherwise be.
>
>-- ACS
>