Keith’s April 22 Radio Show

Posted by Keith on April 22, 2007 at 4:10 pm  

Segment One: Update on Trip
Segment Two: General Economic Observations
Segment Three: U.S. Investment Strategies I
Segment Four: U.S Inv. Strats II & Tax Freedom Day

Segment One: Where to Invest in Hawaii I
Segment Two: Where to Invest in Hawaii II
Segment Three: Poverty in the Phillipines…
Segment Four: Q&A, Other

Segment One: Should Sallie Mae be Taken Private?
Segment Two: The Student Loan Industry & Callers
Segment Three: The Rick Renzi Land Swap Controversy
Segment Four: CEO Compensation — What’s Appropriate?


1 Comment so far

  1. Kevin on April 23, 2007 12:44 am


    I’ve enjoyed catching your radio show on Sundays for a few years now and your Global Adventure is certainly an exciting and interesting progression of your professional and personal life. With much affinity for you, I must take you to task for the comments you made concerning appropriate CEO pay. As a shareholder in companies both directly and through mutual funds; the CEO pay has gotten out of hand and is not accountable to the company’s true performance.

    Please consider that when picking an actively managed mutual fund, one would focus on the relative performance of the fund manager to a benchmark, not whether the fund went up or down in absolute terms. A fund that looses money, but not as much as it’s peers is an example of better management than a fund that goes up in value but not as much as its Peer group. One should view CEO compensation in similar terms to determine appropriate compensation. Just because the company’s shareholders had 50% gains does not automatically mean that the CEO did a great job. If the sub-industry peer group went up by 100% over the same time frame, perhaps the Board should be looking for a new CEO, not rewarding the one that under-performed even though the share price went up in absolute terms! Only those with equity interest (shareholders) in the company and equity at risk should get direct market rewards. Does the CEO pay the company when he or she underperforms? Obviously not, this “can’t loose” pay system (if the Market goes up so does CEO pay, if the market goes down they get highly compensated pay as well) is little more than legalized embezzlement of shareholder wealth, in my opinion. Don’t get me wrong, CEO pay should be measured in the millions of dollars when earned, but CEO compensation should be based on fundamental company performance (ie, fundamental targets set by the board of directors), not market performance (which in the end no one has the ability to control, not shareholders, not CEO’s not even mutual fund mangers).


    Well said! Actually I could not agree more. I hope I did not leave a contrary impression on the show. Thanks for your input.


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