Jesse Eisinger has a column in today's Wall Street Journal in which he urges shareholder activists to mind executive pay.
From 1999 to 2003, the five top dogs at each of the 1,500 largest publicly traded firms cumulatively took down $122 billion in salary, bonus and stock, compared with $68 billion from 1993 through 1997.
That's real money by any measure, but as a percentage of earnings, it's downright astonishing: In the period from 2001 to 2003, top-executive compensation amounted to 9.8% of the companies' net income, almost double the 5% in 1993 to 1995. That's money that otherwise would end up in shareholders' pockets.
I have long observed that the real winners in the stock market are the CEOs. Unless you're a huge whale of an investor (at least eight figures in the market), the CEO's at the companies you invest in will make more money from working there than you're going to make by investing in their companies' stock.
It especially irks me when the company files for bankruptcy and the shareholders lose everything, but the company execs get to keep their high paying jobs and get new stock options granted after reorganization.
But you mustn't let all this prevent you from investing. Better to make five figures riding on the tails of their seven figure coats than to make no money at all.