Corporate CEOs in America Should Be Paid Less

I will lead with a reminder, more arguments, and rebut CON's allegations.- Sources con't from Round #2, #3- CON's statement's in quoted italicsWhy is this issue important?I want to remind voters that performance in corporate America is of paramount importance. If a burger flipper does not perform, then your burger tastes bad, and you expect the burger flipper to get fired eventually. If CEOs do not perform, THE AMERICAN ECONOMY SINKS INTO RECESSION, IF NOT DEPRESSION, and you expect shareholders to fire CEOs - you certainly WOULD NOT EXPECT THEIR SALARIES TO CONTINUE TO RISE. [15], [16] If Wall Street CEOs specificially (many of which are S&P 500 companies) do not perform, IT RESULTS IN AN APOCALYPSE, TALK ABOUT THE END OF DAYS, A COST OF UP TO $12.8 TRILLION IN LOST PRODUCTIVITY IN AMERICA, TO SAY NOTHING ABOUT GLOBAL LOST PRODUCTION, [20] AND A CRIPPLING RECESSION/DEPRESSION IN WHICH AFTER OVER 4 YEARS WE ARE STILL MIRED.Compare this to Goizueta, a CEO/steward who got it right. He came to America with $40 and 100 shares of Coca Cola stock (KO), and became a billionaire. KO is now known around the world - every time I pop a can open it brings a smile to my face. :D[13] (video)http://www.youtube.com...KO has not suffered from the 2008 financial catastrophe - it has continued to grow. [21] The foundation Goizueta laid was THAT STRONG.The difference is HOW Goizueta was PAID TO PERFORM.Bottom line - at the CEO level, PERFORMANCE IS EVERYTHING, not only to the shareholder but to America at large as well.This point coincidentally answers CON's cynical question: "Let us say that most CEOs get paid “too much money”... So what?"ArgumentsRecall from round #2: Why is a CEO paid so much?...top talent is expensive...in an environment where performance is everything, you must pay for that performance. Therefore, what the market will bear for CEOs is very high. 2) What the Market Will Bear (WtMWB) for CEOs is BrokenBriefly, but powerfully:USC's Prof. Lawler:a) "CEOs rarely move from one company to another, and when they do, they are usually less successful than internal candidates." [17] This is an issue of lack of Mastery.b) "Some members of corporate boards have an even greater self-interest in making sure that the compensation of the CEO continues to go up, up, and up. They are the CEOs of other companies." [17]CEOs DETERMINE WtMWB FOR CEOs - THEY ARE DETERMINING THEIR OWN PAY. THIS IS THE DEFINITION OF DYSFUNCTIONALITY. NO WONDER THEY ARE PAID SO MUCH. To the extent that this happens AT ALL, is another non-trivial extent that CEOs are overpaid, and should be paid less.THE WOLVES ARE SHEPHERDING THE SHEEP. This is easily "STRONG" enough for CON.Does the POTUS set his own pay? No, Congress does. [1]The solution to this is simple. It requires legislation. Simply forbid anyone in the C-suite from sitting on compensation committees of any publicly traded company. Then the problem will solve itself.I have demonstrated that competition, i.e. a market for CEOs, is a myth. I have further demonstrated that corporate boards suffer from chronic dysfunctionality regarding CEO pay, and that this requires a legislative solution.RebuttalThankfully CON's statements are not substantive, leaving me more room to further my argument.1. I have addressed ALL of CON's framework - shareholder freedoms are paramount, REALITY CONFIRMS THAT CEOs ARE OVERPAID (uncontested by CON), and my proposal is seeped in a real-world scenario.2. What is more unfair to me is that CON has not presented a case, but only UandU allegations and opinions. CON continues to fail to realize he has BURDEN OF PROOF (BoP).3. My proposal IS real world and FULLY LEGAL. It is as realistic and LEGAL for shareholders to make a plan for CEO pay and then implement it, as it is for a customer to plan to drive up to McDonald's (MCD), and then order a Big Mac. 4. CON alleges that "Pro's plan is a pay restructuring NOT a pay cut," and quotes me (my emphasis) "this kind of package MAY far outweigh total compensation currently received."It IS a pay cut. Allow me to demonstrate with our MCD CEO:PROPOSAL EXAMPLEInstead of $8.75 mil, reduce to roughly $6 million (2000 level plus 29.4%)Initial stock package of $50 mil, 20 year amortization - given to CEO after 20 years.Assume generous 5% dividend: $2.5 mil cash. (adjust for inflation annually)Yearly stock amortization: $2.5 mil.$1 mil in perks, etc..Keep in mind that this is still a very large sum of money for any one person, yet is still a substantial pay cut.This proposal fixes this issue of overpaying CEOs for underperformance. If the CEO achieves the anemic 2.5% S&P 500 TSR since 2000 over 20 years, the $50 mil would be worth $81.93 mil. At the 9.2% S&P 500 historical TSR, the $50 mil would be worth $290.68 mil. If he achieves Jobs' 19.87% TSR, the $50 mil would be worth $1.876 BILLION, well above the status quo. This does not include cash payouts. Regardless, the total cost to the company would be $50 mil, amortized over 20 years, plus cash payouts. Most importantly, shareholders would also benefit from the stock's rise. Agency theory succeeds. P4P is fixed. This is how Buffett, Jobs, and Goizueta did it. Why deviate from such a path, unless the CEO is determining his/her own pay.Again, PERFORMANCE IS EVERYTHING.If instead of this plan we continue with the status quo, the CEO would continue to receive AT LEAST 8.3% pay increases on their $8.75 mil over 20 years - they would pocket $415.50 mil, even if they ran the company to the ground (assuming all cash). They would receive $40 mil on the last year ALONE.5) I will now address CON's UandU "case" (which is nothing more than a rebuttal, i.e. zero BoP) and thereby expand on my proposal:- CON is correct that my plan "is just another form of P4P." It FIXES current P4P, which is currently BROKEN.- "If a CEO leaves a company, does she keep the full stock package?" This is the power behind the amortization. The CEO will receive ONLY the amortized stock upon departure. If the CEO left on bad terms and performed poorly, so will the stock. This fixes P4P, which currently rewards CEOs for failure.- There is no flexibility for retention in Pro's plan." The flexibility is inherent in the stock's price. - "Pro's plan makes being a CEO extremely risky." “Risk comes from not knowing what you're doing" - Warren Buffett. [22] Better to get these "risky" CEOs out now before they wreck the company.- "Free Markets are only way to determine CEO salary." My proposal is a free market solution.- "...the thread he links...is full of [plans] he himself suggested." Blatant falsehood. CON is destroying his own credibility here. - "Even if P4P is broken, it still makes sense to talk about pay in terms of COMPETITION." NO IT DOES NOT. Competition for CEOs is a MYTH. [17] There is no substitute for high-performance - the rewards are THAT SUBSTANTIAL. No competitor can offer stock belonging to a high-performance company. For example, Pepsi could not offer KO to Goizueta. PALM could not offer AAPL to Steve Jobs. The initial package is substantial - it fully links the CEO's PURPOSE to that of the shareholder. If the stock is not enough to entice a CEO to stay, then most likely the CEO does not know how to perform at the company (missing Mastery, possibly Autonomy), and should be let go regardless. What if the POTUS thought about leaving America for a leading position in another country? Absolutely ridiculous - he doesn't speak Austrian (2nd video). The POTUS is appointed by voters just like how the CEO is appointed by shareholders. http://www.youtube.com...There is MUCH more but I am out of room.P4P is broken. WtMWB is broken. CEOs SHOULD BE PAID LESS.(sources [18], [19] unused)[20] http://finance.yahoo.com...[21] http://finviz.com...[22] http://www.goodreads.com...