Many years ago we heard of someone who held a chair at a major brokerage firm for six months while “the board” searched for a full-time candidate. After attending only a handful of meetings, this individual pulled the rope on a $ 360 million dollar golden parachute. Needless to say, the blue and white collar workers who had mutual fund retirement accounts run by said brokerage firm immediately burst into tears. The brokerage firm brushed aside complaints from the little men and inquiries from government officials. They knew more than such small minds. Of course, after the recession that Garter Group created, that brokerage firm no longer exists. So much for knowing better.
Back then I had a different blog site and different computers. Somehow during the entire migration my “Income Ethics Law” was lost. There were many references to him in other blog posts, but I couldn’t find a copy anywhere. Sorry for the repetition, but it’s starting to look like this act needs to be approved now more than ever.
Many of you will refer to this as the “100 point rule” as executives and board members cannot be paid directly or indirectly more than 100 times the amount paid to the lowest employee or hired worker. . The law only affects publicly traded companies, and despite all the gnashing of teeth and tearing of garments from having to pay for better management, this law really does seek the interest of shareholders.
The interesting thing is that during the 60s and 70s the proportion never reached more than 78 times the minimum wage and, speaking as someone who lived through that time, we were all quite good in terms of employment and wages. (Yes, you should skip the Vietnam and Korean wars as they are separate discussions.) In 2005, the ratio was more than 820 times that of the minimum wage. I think I can speak for most of us when I say that 2005 was not as good a time as the 60s and 70s for the average rigid job. We were in a big rush to offshore everything except the board of directors and executive management so that both groups could make more money. The price of health insurance was out of reach for most people, and a bottom-fed 4-door family sedan had a median price of $ 20,000, while a fully loaded 4-door family sedan was $ 4-6,000 during the 60s and 70s. For those of you who are too young to remember this, please read the following:
In its May 1971 issue, Motor Trend magazine published a comparative road test that included a Caprice Coupe and a Cadillac Sedan de Ville. The Caprice tested was powered by the 454 V8 and loaded with virtually every available option to provide a more equitable test of the two cars and to match the Cadillac’s trim level and opulence. Although M / T noted that the Cadillac had a higher level of quality than the Chevrolet along with a much more luxurious interior (the DeVille was upholstered in leather while the Caprice had the standard cloth trim), the magazine eventually considered the Chevy. as the best. value in its loaded form at $ 5,550.35 (base price $ 3,740) compared to the $ 9,081 price of the Cadillac mainly due to the price difference of the two cars tested and the fact that the price difference of $ 3,500 bought only one little more quality and a few fancy options with more tricks.
Yes, executives have a duty to make shareholders money, but as history has shown us, little or none of that money gets into the hands of shareholders. The graph I found only lists the dramatic increase in salary for CEOs, not all top executives or board members. Every time the federal government’s minimum wage increase is mentioned, there is a huge outpouring of family-owned stores claiming that they will close the week the wage increases and, for the most part, they are not really lying. . However, we can increase the minimum wage without increasing the minimum wage. We can also lower prices AND get more health care coverage for the few remaining American workers in this country with one simple act.
Here’s a link that has a really nice graph showing how the relationship between the CEO and the minimum wage has skyrocketed into the stratosphere.
The Income Ethics Law.
No executive, consultant or board member who works or provides services to a publicly traded company will receive a payment, either directly or indirectly through such publicly traded company, more than 100 times the amount paid directly and indirectly to the lowest employee or to the employee with the lowest salary. (regardless of which country said employee resides) or the lowest paid employee or contractor of a subcontractor (regardless of which country said employee or contractor resides).
The IRS will be fully in charge of enforcing this regulation and will enforce it as follows.
First violation – upon discovery, the defendant has the option to simply pay the overpayment plus penalty to the IRS as determined by the IRS, or to challenge the IRS’s discovery. If the defendant chooses to contest and loses, he will not only have to pay the money owed as determined by the IRS, but also 30 days in a medium security federal prison without advance release or parole.
Second offense – Upon discovery of a second instance, the defendant has the option of serving 60 days in a medium security federal prison in addition to paying the fines and penalties determined by the IRS. If the amount is very small, the Internal Revenue Service (Internal Revenue Service) may choose to postpone the jail time for an additional penalty payment. All members of the board of directors are subject to pay the same amount agreed to by the defendant, as they are ultimately responsible for ensuring that this type of thing never happens. IF THE DEFENDANT CHOOSES TO CHALLENGE THE OUTCOME AND LOSE, ALL PARTIES WILL PAY MONEY AND FINE AS DETERMINED BY THE IRS AND THE SERVER 6 MONTHS IN MEDIUM SECURITY FEDERAL PRISON WITHOUT PAROLE OR HOPE FOR EARLY RELEASE. NO WAIVER OF PRISON TIME IS ALLOWED IF THE CHALLENGE IS ISSUED.
Third offense – Again, if the IRS determines that the amount was too small (less than $ 5K and an honest money conversion or math error), the defendant may be allowed to pay the money and penalties owed as determined by the IRS without serve a sentence. If the IRS determines that the act was deliberate, the defendant and all members of the board of directors will have to pay the money determined by the IRS and serve one year in a medium security prison without parole, clemency or option of commuted sentence. IF THE DEFENDANT CHOOSES TO CHALLENGE THE RESULT AND LOSE IT AND THE BOARD OF DIRECTORS WILL NOT ONLY PAY THE MONEY AS DETERMINED BY THE IRS, BUT IT WILL BE REQUIRED TO SERVE SEVEN (7) YEARS IN FEDERAL PRISON FOR MEDIUM SECURITY, OR HAPPENING FOR RELEVANT LOSS .
Any subsequent violation results in a life prison sentence for everyone involved. Violations do not have to occur in the same company that is listed on the stock market. All four violations can occur at different publicly traded companies.
The definition of “directly or indirectly” is quite simple. It is directly defined as payment through salaries, bonuses, stock options, non-cash benefits such as travel and trinkets. Indirectly it is defined as payment through a second or third party doing business with the publicly traded company and in some way, although not limited to paying through salaries, bonuses, stock options, non-monetary benefits such as travel and trinkets, or in their own right. bribes whether in cash, bonds, stocks, rented cars, houses, hotels, boats, yachts or other items. The IRS adds up the value of all of these things when determining whether the executive or board member violated the law.
The lowest paid employee, subcontractor, or subcontractor employee is fairly straightforward to determine. These people do not need to be in the United States of America or even a country legally to be counted. All that is required is that they be paid. If your company opens an IT office or joint venture in India and field workers there $ 10 / day US The maximum combined total pay any executive or board of directors can receive would be $ 1000 / day US to outsource cleaning work to one or more companies using illegal aliens who are paid $ 1.50 / hour, then the maximum combined total pay that an executive or board member can receive is $ 150 / hour for a 2000 hour standard year.
This law does not say that an executive of a publicly traded company cannot earn $ 360 million in one year. It says that in order for them to do that, the employee with the lowest salary (direct or indirect) must earn $ 3.6 million for them to do it. Instead of walking on the backs and heads of the lower social classes, if you reach into the limitless piggy bank known as the US Stock Exchange, you are required to bring the bottom up and allow them to share equally. your success. This law does not govern companies that are not listed on the stock market.
Once this law is implemented, it will begin to improve the wages of those who work everywhere. Too many manual workers were laid off or suffered pay cuts that top management never shared. When you search hard enough, you will even discover that the grain elevator in Podunk USA (population 138) is owned by Cargill or Con-Agra or some other publicly traded agricultural company. In order for the CEO to earn $ 10 million in combined compensation, the lowest paid worker he has anywhere in the world has to earn $ 100K. I don’t know if you have verified the cost of living in Podunk USA, but $ 100K is a lot of money there.