Supreme Court to Hear Case on Executive Pay

Source: NY Times

Last summer, Richard A. Posner, a federal appeals court judge, issued a surprising and prescient dissent. Executive pay is out of control, he said, and the marketplace cannot be trusted to rein it in.
Judge Posner is a conservative with libertarian leanings, and he is a leader of the law and economics movement associated with the University of Chicago. He often relies on economic analysis in his judicial decisions, and he believes that many questions are best sorted out by the marketplace.
But corporate America has insulated pay decisions from market discipline, Judge Posner wrote. "Executive compensation in large publicly traded firms often is excessive," he added, "because of the feeble incentives of boards of directors to police compensation."
The Supreme Court will hear the case this fall, as anger over huge bonuses paid to the executives of failing firms continues to grow. The case, Jones v. Harris Associates, may turn out to be the court's first significant statement on the corporate culture that helped lead to the Great Recession.


Read more: http://www.nytimes.com/2009/08/18/us/18bar.html

I would love to see some serious constraints on executive compensation. And not just on salary; on every single thing of value, including pre- and post-retirement perks.

... there's no way any one of them should be able to collect millions in compensation while the '40 hour a week' folk have to skimp by on an annual 2% raise because "of the tough economy".

Makes no fucking sense.

vastly overstated.

If last summer qualifies as anyone being "prescient" on the total disconnect and financial dysfunctionality regarding out of control executive pay, then I'm being equally "prescient" when I suggest President Lincoln shouldn't go to the play.

Thanks for the thread, steven johnson.

And will he be resentful enough to rule against execs?

From the article:
"Mutual funds are odd enterprises. They are typically formed and run by their investment advisers, which select the fund’s board of directors. That board then negotiates the adviser’s fees."


... so all an "investment adviser" needs to do is appoint a board of directors who will be grateful enough to "compensate" him generously for the favor.

I suspect this isn't going to come out well for our side.

and 5-4 against ANY limits on corporate campaign contributions in Citizens United v. Federal Election Commission.

http://www.ropesgray.com/files/upload/LitAlert_Jones_v_Harris_Associates.pdf

Please Posner did NOT sit on the Three Judge panel that heard the case and made the above decision, instead his dissent (NOT at the above cite) relates to the decision of the full panel NOT to rehear the case. That decision was a separate hearing now withdrawn from the 7th circuits list of opinions.