Kathy M. Kristof wrote an intriguing column in the Los Angeles Times this week. She asserted that CEOs need to cut their pay to save capitalism. The reason? Stockholder trust is eroding.
Kristof offered James D. Sinegal as the model example. As the CEO to Costco, Sinegal earns a salary of $350,000 and a bonus of no more than $200,000. Sinegal has refused raises, and Costco's board feels Sinegal is underpaid.
As investors lose trust in the management of publicly traded companies, investor capital will shift from stocks that pay a share of the profits (and losses) to company bonds that carry a contractual rate of return.
Recent Comments