The root problem is corporate boards that approve this nonsense. If you were a CEO, wouldn’t you try to negotiate the highest possible compensation for yourself? Sure you would. But when a corporate board routinely rubber-stamps a $10 million salary, a $200 million severence package, a private jet, $25 million options grant, etc, with little to no accountability for performance, they are not representing the shareholders correctly, and frankly, unlike the CEO, the board is simply not doing their job in compensation negotiations.

I am not exactly the first to articulate this position. Marty Whitman has been railing for years about how corporate boards are very, very weak in this country.

The statistic that is more dubious to me is the “average CEO vs average worker” comparison. According to the Census Bureau, in 2006 the median income per household member was $23,535. Four hundred times this amount is $9,414,000. According to the IRS, there were only 13,776 tax returns filed in 2005 with an adjusted gross income of $10 million or more, out of 134,372,678 total returns filed. That’s .01%. The Department of Labor estimates there were about 300,000 Chief Executives as of May 2006, not including self employed people. For all of them to *average* $9.4million, when only maybe 15,000 of them filed tax returns for that amount…strains credibility.

Other points to ponder: More and more of the rich are self made, either entrepreneurs or executives. Particularly for the entrepreneurs, how could/would you try to limit their income and wealth?

Or, why do people always use income as a standard for wealth and economic stability? If you make $10 million but spend $11 million and have millions in debt, how are you really better off than me if I make $50,000 save 20% and retire at 45?