Class Warfare Blog

December 28, 2016

If You Think The System is Not Rigged … Read This

We will have Mr. Trump as our next president precisely because voters thought that the economic and political systems are rigged against them. That this “feeling” is based in fact should give pause to those currently excoriating Trump voters for voting against their own financial interests.

A Financial Times (London) report on a Lancaster University Management School study, said in part:

The correlation between high executive pay and good performance is “negligible”, a new academic study has found, providing reformers with fresh evidence that a shake-up of Britain’s corporate remuneration systems is overdue.

Although big company bosses enjoyed pay rises of more than 80 per cent in a decade, performance as measured by economic returns on invested capital was less than 1 per cent over the period, the paper by Lancaster University Management School says.

Our findings suggest a material disconnect between pay and fundamental value generation for, and returns to, capital providers,” the authors of the report said.

In a study of more than a decade of data on the pay and performance of Britain’s 350 biggest listed companies, Weijia Li and Steven Young found that remuneration had increased 82 per cent in real terms over the 11 years to 2014.

Much of the increase was the result of performance-based pay. But, the report’s authors say, the metrics used to assess performance — such as total shareholder return and earnings per share growth — are unsophisticated and short-termist, acting against the interests of long-term investors. The research found that the median economic return on invested capital, a preferable measure, was less than 1 per cent over the same period.

What is true in the UK is more than true in the U.S. as we are the leaders of this “the CEO is King/Emperor” movement. Like all of the other propaganda, black is white (and vice-versa). CEOs claim their compensation is “performance-based,” which it clearly is not as they have rigged the system by defining “performance” in a way that results in raises for themselves but no one else. When people hear that CEO salaries are “performance-based,” they assume the huge salaries and retirement programs CEOs “earn” are warranted because they don’t think to ask for the details. Well, the details are now out in the open and “the King/Emperor has no clothes” or any other kind of protective cover.

I am declaring that it is not open season on CEOs (no, not the Second amendment kind), but let’s see how many we can take down.

Since the CEO’s aren’t doing much for those gaudy salaries, one approach would be to fire them and ask the First Vice-CEO if he would like the job at half of the current CEO’s salary. I suggest no one will hear the word “no” to these offers. If the performance of that CEO is as abysmal as the one’s now, then fire that replacement and ask his second in command if he would like the job at half of his superior’s salary. If this doesn’t result in superior performance, it will certainly reduce overpayment of the CEO.

And, this is just a manifestation of the “disruption” all of the business experts say is so good for the growth of companies, just applied to top management … for once.



  1. I have no doubt that this is true. Just thinking back to the graphic(I’ll have to find it somewhere) that shows CEO pay vs. everyone else’s pay. It’s ridiculous. But I didn’t hear Donald Trump saying he planned to do anything about this inequity. He only promised to bring those “everyone else” type jobs back, but not at any increased pay. I did hear Bernie Sanders talk about this inequity. He talked precisely about this system rigging. What did that get him?

    Comment by Ruth — December 28, 2016 @ 10:34 am | Reply

    • Well, it got him my vote … twice. You have to start somewhere.

      Comment by Steve Ruis — December 28, 2016 @ 10:46 am | Reply

      • Twice?

        Comment by john zande — December 28, 2016 @ 11:48 am | Reply

        • Once in the primary election, once in the general election. You were thinking about that aspect of The Chicago Way–Vote Early, Vote Often–weren’t you?

          Comment by Steve Ruis — December 28, 2016 @ 12:22 pm | Reply

          • And more often if you are one of the Chicago dead!

            Comment by Zachary — December 28, 2016 @ 12:24 pm | Reply

            • Spoken like a true New Yorker!

              On Wed, Dec 28, 2016 at 12:24 PM, Class Warfare Blog wrote:


              Comment by Steve Ruis — December 28, 2016 @ 12:28 pm | Reply

          • Hehehe. But Bernie wasn’t on the ballot in the general.

            Comment by john zande — December 28, 2016 @ 12:28 pm | Reply

            • Dude, it is called a “write-In” candidate vote. Every election votes are cast for Mickey Mouse, Jack Chick, Joe the Plumber, etc. through the write-in vote process.

              Write-in votes are futile, just me wanting to keep faith with my desire to only vote for candidates, rather than against candidates. Since I thought Illinois was firmly against Trump (It was.) I felt such a vote would do no harm. (It didn’t.)

              On Wed, Dec 28, 2016 at 12:28 PM, Class Warfare Blog wrote:


              Comment by Steve Ruis — December 28, 2016 @ 12:35 pm | Reply

              • Ah, I see.

                Comment by john zande — December 28, 2016 @ 12:38 pm | Reply

              • I bet there were at least a few thousand people in WI, PA, and MI (probably not enough to swing these states) who made the same judgement and were unpleasantly surprised.

                Comment by List of X — December 28, 2016 @ 12:44 pm | Reply

              • Not sure if this applies everywhere, but I read that unless a “candidate” has registered (with their state, I guess), a write-in vote doesn’t count. So those “truly qualified” candidates you mentioned? No chance.

                Comment by Nan — December 28, 2016 @ 12:58 pm | Reply

    • Until we Americans, in mass, stop participating by voting for the oligarchy choices presented to us (Trump and Clinton this year) and demand, with our vote, new parties that represent people and justice, we are stuck in the mire. Of course, Bernie was “not allowed” to become President.

      Comment by Zachary — December 28, 2016 @ 10:52 am | Reply

      • If we Americans, in mass, had voted for Bernie he would have been the nominee. There was nothing stopping anyone from voting for him. Of course, the media was pushing a Hillary Clinton nom and he wasn’t given equal air time, but he was on the ballot. I voted for him. Steve voted for him. I can only guess that perhaps you voted for him.

        Comment by Ruth — December 28, 2016 @ 11:25 am | Reply

      • We Americans, en masse, already boycott elections of candidates presented to us by the oligarchy. At least 40-45% did this year. As many as 70% of us boycott midterm elections.
        Unfortunately, there are plenty of people who are satisfied with at least one choice and if we let them have the way, a boycott would be counterproductive. At least by picking the most acceptable choice in every election, we could slowly move in the right direction – kind of like Steve’s way of reducing the CEO pay.

        Comment by List of X — December 28, 2016 @ 12:53 pm | Reply

        • I like steve’s CEO idea as well. I think not voting out of apathy is quite different than an active boycott that has the companion work of building a new viable party. Voting for the ‘lesser of evils’ seems to be ‘less’ viable all the time to me. Clinton represented much the same ‘oligarchy’ evil … so it seems to me.

          Comment by Zachary — December 28, 2016 @ 1:01 pm | Reply

  2. I like this idea!!! Half of half until it’s (they) are gone. Problem is, I suspect that the CEO is just a pawn in the rigged system much as is the entry level clerk. They all do their due diligence for the system, albeit at levels of ridiculous income disparity. Until there is a mechanism to address ownership of wealth, not sure ridding the world of the existing CEO population does much other than giving us more of the same. That said, I do like the entertainment value of a televised undercutting salary bidding war amongst the vermin at the top. Might cut into the market share of the NFL.

    Comment by Zachary — December 28, 2016 @ 10:39 am | Reply

    • I think that CEOs are at the core. Whereas the American Wealthy Class used to be dominated by inherited money, it is now dominated by … wait for it … CEOs. (Yes, the Waltons are still around and the Koch brothers but the vast majority of the 0.1% are now CEOs.

      It was CEOs that gamed the system by agreeing to serve on each others Boards, defined “performance-based” pay on things they could manipulate, etc.

      They are not puppets, they are hands in the puppets.

      On Wed, Dec 28, 2016 at 10:39 AM, Class Warfare Blog wrote:


      Comment by Steve Ruis — December 28, 2016 @ 10:46 am | Reply

      • CEOs are a big part of the problem, I agree. But I am not sure they are the ‘hands in the puppets.’

        Comment by Zachary — December 28, 2016 @ 10:55 am | Reply

  3. The salaries can be obscene.

    Comment by john zande — December 28, 2016 @ 11:47 am | Reply

  4. There was evidence of this with some CEo’s whose names I can’t recall off hand but it’s good to see fact-based evidence backing it up and showing the degree to which it exists

    Comment by lbwoodgate — December 28, 2016 @ 8:29 pm | Reply

  5. Do you have a link to this research Steve?

    Comment by lbwoodgate — December 28, 2016 @ 8:30 pm | Reply

    • How’s this …

      On Wed, Dec 28, 2016 at 8:30 PM, Class Warfare Blog wrote:


      Comment by Steve Ruis — December 28, 2016 @ 10:06 pm | Reply

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