From: berenson@cookie.enet.dec.com (Hal Berenson)
Newsgroups: alt.politics.elections,soc.culture.usa
Subject: Re: How to fix the country
Date: 15 Apr 92 20:27:30 GMT
Followup-To: alt.politics.elections
Distribution: usa
Organization: Digital Equipment Corporation


In article <1992Apr10.172328.22215@dg-rtp.dg.com>, cole@farmhand.rtp.dg.com (Bill Cole) writes...

>-- all of which persist.  Many times the reaction to being embarassed is 
>not to fix the problem but fix the perception (manage our information into
>confusion).  How many of these overpaid managers have been embarassed 
>into homelessness?  Give me the name of a corporate president or CEO who
>has been embarassed into joblessness and destitution and I'll agree with
>you.
> 

The only people who have any right to complain about the compensation
afforded a CEO are the stockholders.  They own the company, and they can
(and should) reward the the CEO, officers, and employees as they see fit.
Most investors, of course, completely ignore the issue.  Most investors
do not go to annual meetings.  Most investors don't bother to read annual
reports, let alone the prospectus, 10-K, 10-Q etc. that disclose all this
information.  In other words, most owners of the company don't really
care and ASSUME THE GOVERNMENT IS LOOKING OUT FOR THEM.  There appears to
be this self-perpetuating problem:  The government wouldn't allow anyone
to do anything bad, so I don't have to pay attention.  When the
individuals get burned, they get pissed at the government for not doing
their homework for them.  Government comes up with more regulation, often
making the problem worse.

Example:  Only the rich have access to certain tax shelters.  Ever
try to invest in a real estate limited partnership?  Ahh, under government
regulation you need to have a certain income level and net assets (other
than your home) of some number of thousands of dollars before they can
let you into the limited partnership.  Of course only the rich (or at
least upper middle class) can invest in this tax shelter, THE GOVERNMENT
WON'T LET MOST OF THE POPULATION.  Just government reaction to small
investors whining when they failed to realize an investment was risky and
lost their money.  The governments answer is to prohibit such people from
investing at all.

People should be responsible for their own actions.  If they can't use
their brain, let them voluntarily contract with some private sector
social welfare organization to run their affairs.  I can use my brain,
and I'm willing to suffer for my mistakes rather than blame others.  I
shouldn't have to be forced into having my affairs run by the government
as is frequently the case today.

This same principle applies to executive compensation.

I'm an investor (not much mind you) in Cray Computer.  Read their
prospectus and annual report.  They are completely organized for one
purpose: to provide Seymour Cray the resources he needs to build the Cray
3 and future machines.  In fact, Seymour personally retains the rights to
the design!  Essentially, an investment in Cray Computer is just giving
money to Seymour to play with.  To an educated investor this makes
perfect sense.  Can you imagine how a farmer in Kansas who knows little
about computers would react?  No doubt they would invest in Cray Computer
based on a brokers recommendation, without any investigation of their
own.  If something happened to Seymour, or if Seymour left and built a
Cray 3 in direct competition with Cray Computer, then this very same
farmer would probably scream bloody murder over why the government
allowed him to invest in such a company.

Embarrasement isn't the point.  The point is that an executive earning
big bucks but delivering little should be fired by the company
shareholders.  And, the shareholders of another company should be very
leery about hiring that executive (or at least should be more critical of
the contract given him by the Board of Directors).  Shareholders who
don't care should get exactly what they deserve: shafted.
.............................................................................

Hal Berenson	

Home: 71640.3535@compuserve.com
Work: berenson@cookie.enet.dec.com

-- Disclaimer: Opinions expressed here are my own, not my employer's! If
I happen to communicate with you from work rather than home, its just
for convenience (just like asking for a "daytime phone number") and should
not be construed as representing the views of my employer or its
employees, officers, directors, or stockholders. --