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Ailing Banks Favor Salaries Over Shareholders
[Quote:]
At some banks, the relationship between pay and profit is a bit tenuous. In 2005, for instance, Morgan Stanley made a pretax profit of $7.4 billion. That year, compensation at the bank averaged $212,000 for each employee. Last year, Morgan Stanley made about $857 million before taxes. But compensation averaged $235,000 for each employee.
In other words, Morgan Stanley employees collected roughly 61 cents out of every dollar the bank made in 2005, and about 94 cents of every dollar last year.
[..]
“If the shareholders would wake up, executive compensation would not be what it is,” he said.
The problem is that the larger shareholders, who could presumably do something about this, are usually big institutions themselves, like pension funds. The people running those have no personal interest in curbing executive pay, so they won’t. Meanwhile the small shareholder, and the owner of a pension fund, is getting royally screwed.
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I have to say, if EACH Morgan Stanley employee got $235,000 as their salary, I’d be much less unhappy. Sadly, it’s the old joke about Bill Gates walking into a pub and everyone’s average salary jumping up by a couple of mil.
The office staff etc. are certainly paid a LOT less than that and the selfish barstewards at the top are getting much, much more.
The idea of passing legislation so that the top-earner cannot earn more than 5x what the lowest earner gets sounds better and better every day…