'Tis the season when publicly traded companies hold their annual meetings. So, in my Yahoo email account I receive notices from the few companies we own that it's time to vote my shares in preparation of the shareholder's meeting. I employ the same ethic to voting for boards of directors and shareholder proposals as I do for voting for candidates, which means I spend more time than I should researching who the various board members are and what the shareholder proposals mean.
(Before you jump to the conclusion that college professors get paid too much if I have money to play the stock market, let me be clear: the play money came from a lovely and lucky windfall my husband and I received for being in the right place at the right time in the real estate market in Philadelphia. That whole buy low, sell high moto works.)
Here's what I learned from my research this weekend: If you want to be rich, become a CEO.
Of the companies I researched this weekend, only one CEO made less than $1 million in total compensation in 2005, and that was Charles Schwab, the namesake and CEO of the financial company. He made $911,000 in compensation. And that figure was so low becuase he refused the bonus that his Board of Directors Compensation Committee had allocated for him. His peers in the same market sector made on average $4.7 million in 2005.
By contrast, the CEO who made the most money of CEOs in my portfolio was the Chair and Executive of a mega-conglomerate called Cendant. Henry R. Silverman raked in $24 million last year. (Cendant is a company that owns everything for Coldwell Banker to Orbitz, to Cheaptickets, to Wyndham, to Budget. It's breaking into four companies over the next few years.)
Now, you might think that perhaps that's just what CEOs of companies of his type make. No. The average compensation is $3 million.
Well, maybe you'd think that he must really deserve it. This must be a company that's stock is soring, that is gaining ground in its many business ventures, that is outcompeting its competition. No.
Of all the stock I own, it's the one of two companies that's sucking ass. I've lost 26% of my money on the company since I bought into it over a year ago.
So, why does this guy deserve to make 800% more than his rivals? Beats me. It's counterintuitive that somebody who is the CEO of a conglomerate can make money while the company is losing it.
What's really aggravating is there isn't much I or any of the shareholders can do about it. Executive compensation is generally not voted on by shareholders but is decided by a sub-committee of board members who chair a compensation committee.
Here's the rub: All those &$*%ers are CEOs themselves. So, it's a beautiful club to join. I join your Board of Directors and give you a nice fat salary, bonuses, and stock options. In return you join my Board and do the same for me.
Meanwhile, the federal Minimum Wage of $5.15 hasn't increased in 9 years, and the rising costs of fuel, food, and life's essentials have increased more than the 2% cost of living raises the rest of us working schmucks get per year.
Where's the justice?