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Comment by anamax | Hacker News Reader

> But the free market is an ideal which is easy to game. CEOs hand picking the board, and the board then turning around and deciding on the CEOs compensation is an example of the free market being gamed.

I want to own stock in such corporations. (Seriously. None of the "good governance" stuff has ever correlated with the thing that I want out of a stock, namely, return on my investment. I've no objection to you investing in companies to feel good about yourself, but I'm in it for the money.)

If you think that a given company's CEO compensation is wrong, don't own the stock.

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If you think that a given company's CEO compensation is wrong, don't own the stock.

This assumes good competition among CEO compensations. But when I say "game", I mean that there's essentially a cartel of CEO compensation among all publicly traded companies, so that you can not just invest in a company which does not overpay the CEO.

> I mean that there's essentially a cartel of CEO compensation among all publicly traded companies, so that you can not just invest in a company which does not overpay the CEO.

Oh really? Google and Apple's CEOs make $1.

Forbes regularly profiles companies whose CEOs make significantly less (and more) than what you claim is the only game in town.

And if you think that other countries do it better, you can buy stock in many of their companies via ADRs. (IIRC, Japan's CEO pay works somewhat like you'd like.)

I note that you didn't acknowledge that CEO pay practices don't have investor benefits, so why do you care? More to the point, since you can easily choose companies that work the way that you'd like, why should my choices be limited?

Compensation is more a side effect of the issue discussed in the link. Shareholders are unable to even make a nomination for the board of directors, so the very people who own the company are unable to make decisions regarding how the company is run.

There's more info in this Motley Fool article: http://www.fool.com/investing/general/2010/06/18/dont-let-wa...

Even huge pension funds typically hold no more than 0.3% to 0.5% of large and medium-sized companies, so it's impossible to picture that happening very often.

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