“Marissa Mayer will pocket $186 million when Verizon fully acquires Yahoo next month — in yet another example of a CEO being paid for luck rather than performance,” Steven Clifford writes for The New York Post. “Yahoo’s core business stagnated under Meyer’s leadership. However, when she took the job, she inherited Yahoo’s 15 percent stake in Alibaba, the Chinese e-commerce colossus. Alibaba’s increasing value caused Yahoo stock to double over her five-year tenure. And so Meyer will be rewarded handsomely for the stocks and options she holds in her company — for essentially doing nothing. This is how ‘pay-for-performance’ works in corporate America.”
“‘Pay-for-luck’ means that CEO performance and rewards are completely divorced. The Wall Street Journal’s 2014 pay survey found that only one of the 10 highest-paid CEOs ranked among the top 10 percent by investor performance. Five rigorous academic studies have found little, or even negative correlation between CEO pay and performance,” Clifford writes. 
“If that happened, the resulting outrage might become so intense that boards and politicians would seriously consider curbing excessive CEO compensation. My favorite remedy is a luxury tax, a levy used by Major League Baseball to control player salaries,” Clifford writes. “The IRS should do the same to corporations. For every dollar over $6 million that a company pays an executive, it should pay a dollar in luxury tax to the US government. This would include all forms of compensation including gains on stock options and golden parachutes.”
Read more in the full article here.
MacDailyNews Take: Why pay it directly to the government? You like wasting money? In 2015, the federal budget was $3.8 trillion or roughly $12,000 for every woman, man and child in the United States.
We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much. — Ronald Reagan
The American people are not undertaxed, the government in Washington is overfed. — Ronald Reagan
Why must everything that moves (or not) be taxed? If you like this luxury tax idea, why not make it law that every dollar over $X million (we’re not sure where Clifford came up with $6 million; was he thinking of Steve Austin?) that a company pays an executive, it must pay a dollar back to the shareholders in the form of dividends (which, of course, will be taxed anyway)? That would have the same effect of tamping down executive compensation, but it would also stimulate investment (as many people reinvest dividends) and the economy at the same time.
SEE ALSO:
CEO Marissa Mayer drops the ax, shutters about half of Yahoo’s content verticals – February 17, 2016
Yahoo CEO Marissa Mayer gets a chance to make one last stand – February 3, 2016
Yahoo to lay off 15% of staff, close five offices, explore non-strategic asset sales – February 2, 2016
Yahoo investors running out of patience with CEO Marissa Mayer – January 4, 2016
Hedge fund manager blasts Marissa Mayer for equipping employees with 22,000 iPhones – January 4, 2016
Yahoo board to weigh future of company, Marissa Mayer, source says – December 2, 2015
Yahoo or Microsoft can terminate search deal anytime on or after October 1st – April 21, 2015
Microsoft loses exclusivity in Yahoo search deal shake up – April 17, 2015
Yahoo gains further US search share; Google falls below 75% for first time – February 3, 2015
Microsoft, Yahoo vie to become Apple Safari’s default search option – November 26, 2014
Firefox dumps Google for default U.S. search, switches to Yahoo/Bing – November 20, 2014
Yahoo’s Marissa Mayer was right to ban working from home, right? – August 12, 2014
Yahoo CEO Marissa Mayer wants to save Google a billion dollars – April 18, 2014
Yahoo’s strategy: Rebuild search, take share, win iOS from Google – April 17, 2014
[Thanks to MacDailyNews Reader “Lynn Weiler” for the heads up.]