Dec 5, 2011|
Paul Hodgson, Chief Communications Officer and Senior Research Associate with Governance Matrics Inc. joins th ThinkTank to talk about capitalism and college football.
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Automatically Generated Transcript (may not be 100% accurate)
Are we started all this hour thinking -- do. Coaches for. Crucial as well. Nick Saban Alabama. Both going to be serious national title in coach miles. Situation that there were reports are correct. Makes it about four million a year -- no. Three wins the UB CS championship. Could be worth at least six point five million. In bonuses and future. 500000 dollars and post season incentive bonuses. He's already gonna get the -- because of issues campaign. Could get another 200000 dollar bonus to -- -- team academic performance we're gonna take -- -- sports. Put back into the national forum at this point. Because. I guarantee you if I open up -- -- secure when determining the majority calls against detect -- guarantee. Jose -- -- and they in pursuit of artsy euros -- about. Corporate executives. Everytime your big sell reached too much. I'm older and I guess Brad totally new country capitalism was -- was supply and demand that and some made a lot of money and most didn't and that was pretty much capitalism. A gross oversimplification. But still I think these simple basis of what. I've always called capitalism what. But here's civilian Bloomberg. Their biggest front page story. Rich poor divide widens. The gap between the rich and poor is widening across most developed economies. As skilled workers read more awards and top executives. Bankers benefit from the global. Job market. And no one of these experts quoted says is so true contract. You're starting doing rubble in any country which the study dispels the assumption. That the benefits of economic growth tool automatically trickle down. To the disadvantaged. And that the greater inequality fosters greater social mobility. Arrived with -- all that thought we're bringing in an expert to. Because some of the art is in question will have -- -- vote poll Hudson. Senior research associate good governor its matrix in over Paul welcome to the show. The -- and what what is. Governments and matrix being. Government -- take its international actually where a governance ratings firm so we'd look at the way it -- companies are run. And we determine how much risk is involved for investors and other interested parties in investing or. I'm doing business -- those firms and the way that we do that is they have won a number of different ways we we look at the weight of the border structured. Who's on the board what kinds of decisions are being made by the board. -- primarily those decisions the most public are those related to executive compensation so that as a very large part of our announces. All kinds of decisions that they make. We also look at the accounting practices at the company you know all -- Recognizing expenses properly are they recognizing assets property and valuing them properly. And then we look at the structure of the company in terms off. The shareholder structure so you know to they have dual class position hasn't told shareholders at the highest vote percentage and I have a number of votes available to them for one -- them honest and then I think humble musical -- special attention as where the public shareholders have absolutely no voting power at all. And the coaching Paris. -- all the special class of stock that is largely owned by the -- of family. So those are the kinds of things that we take into account that we cover. Over the 4000 company globally and this way and and we analyze them. All of those companies and I don't get to make racing basically. Okay here's the push and boom -- what are reviewed about society's. Anger at the 99%. Votes is 1%. What I read in the media console we large numbers -- CUs -- over period. My question -- news. He had all our senior notes or. Actors or athletes overpaid. And if they are. How much is too much. Well I can only speak to the CEO aspect that is so that's that's why we -- And you know they're. Probably out of the smoke more than 3000. USC has that we look at. I would say that. 18% of them are probably receiving a fair. -- for the job that they're doing. The problem is that there is a fairly large proportion of CEOs outside that 8% to where. Competition is simply got -- It's it's difficult to put an exact amount on how much is too much. One of my men -- -- Robert Monks who's been working in the government's field. For. -- I think can -- he's basically invented governments. As say. As a way of analyzing risk accompanies. -- feels that anybody who earns more than twenty million dollars in the single year. Has probably received enough compensation. That the steady radical. A point of view. But you know there are the numbers out then that we see on every year. Not always to the same CEO but these are different CEOs come up here and enter our political time there DOT come up with them. You know many times in ten in the then the period that we been analyzing competition in the US. For example Larry Ellison all about oracle has been in our top ten highest paid CEOs. Well at least four times. Last. Eight years or so. Or when we kinda unsure of when we -- to get thick -- when we come back a little let's talk about that in particular. Alert take a look at the whole fruits and don't know if you guys monitor them but. I read any number of times and wow this. John McKee million Hebrew and to -- place is all all executive salaries only fourteen times higher than average worker's pay. Obviously you're insulting me 436000. Dollars every trip for the workers at all through June 30 2000. Globe after I read that story numerous articles. I looked up -- There -- their numbers and then that's my point true welcome back and talk more about it. -- In any category how much is too much Garland -- that we called the think tank and this is a bit -- In light of son Nick Saban and the court source miles -- It -- resembles. Sending senators can pick -- by Wendy's you have championship. -- we spent a handful we're talking about or coaches paid too much and so much is too much now -- in -- CEOs in the business world in general we're talking to Paul Hogan who's a senior research associate with governance -- troops incorporated. Of -- before we get into oh hole proved I think you mentioned. These so you'll oracle. End and morneau Buell. Yeah it's it's again it's a blanket it's not just the salary it's it's competition from all sources so it's from shares and share options and bonuses and and including the base salary. -- remember that brings -- to questions from my mind. If I was going to invest. In new. Upon who's gonna invest in oracle. What I call or your company and take a look at so you don't -- me and incentives and the whole thing. Wouldn't I determined before Ryan and bested that if his salary bothered me. Wouldn't. Find slumping some -- Not to be using. That that stock because on that and the second question news of twenty million Wright figured. Why not 151 not ten not five and if so who would determine what that number may be. Well I. You know that I mean they're there have been and there are still are I think a couple of bills before compress that would seek to limit CO competition to -- Multiple all. And employees and aboriginal police -- the company. You know he brought up a whole foods. Just before the break it. And you're right there is a policy that which limits the salary and bonus. But it doesn't place a limit on the profits from stock. Option that I didn't know they gonna close gunman there. For a -- -- 136000. But he really animated four point four million. Exactly exactly and then you know that's I mean you know I've I've I've written a couple of studies in this and we looked at this very carefully to try and find a third of the companies where. CO try to limit what content competition they have done. And typically they do bought their are other CEOs have that. I want you add in the stock options. Then typically that exceeds. Whatever kind of -- they put on their pay. You know there there's this field Costco on the other hand doesn't doesn't receive any stock options. His -- is pretty limited and I would -- said you know although they don't put a hard cap on it. There probably is a fairly limited multiple between ten established compensation and average competition employees. Don't -- you know sort -- do you see you a time were our congress who say okay Costco that's how much is true almost right. And we're gonna go implement this across the board but you really see that happen. How well I can't see it happening because there's two ways that would can you imagine the lobbying explosions -- they tried to bring legislation like that. And then there would be. -- I guess I can come I keep coming back to everybody thinks athletes and actors and see -- make too much money but I don't see maybe you do in the formula that says how much is too much and how do we get. To the point where enough is enough. Ranked UC though -- -- Alienware. Yet no there there is well there are a couple of economists out -- wanna commit Peter Drucker who have come up with a formula. That would limit the amount of pain and the extent of average people at a multiple of the average feel they average -- compensation to. And I think that that top limit their is around twenty times the average pay of the company. One of the things that want to build the went through congress. Two years ago the Dodd-Frank bill which had a lot of a lot of legislation surrounding paying actually introduced a shareholder votes. On executive compensation act every company in America are above a certain size. One of these pieces of legislation that they were trying to introduce -- was the companies to disclose. What the multiple was. You know -- at Beaumont oracle and IBM between the CEO's compensation and the average worker pay. And I cannot conceive that because that would allow me to determine how much is too much exactly if your company does that -- -- We look we look at. We look at a number of different issues about competition and cook and it and they keys there are. You know ones we look at the other companies in the industry and we determine whether that CO is overpaying themselves compared to those companies. And we also look at with the link between pay and performance of competent if we think the fact is broken then will they will get a bad grade promised. All I would like to have you back and literally when we have a little bit more time because you're the first wounded at least give a modicum of an answer and -- Begin to roll out more detailed. Words somebody's selects. Times. The average paid worker. That it seemed like that may be a potential entered sure logo and know more about her appreciate the timely information during my trip today. A problem might take a break in Garland -- them we call a good thing tech.