That's Business

I am a would-be capitalist. I own stock. I would like to buy more. But today the stock market is a giant Ponsi scheme, as brokers bid each other up and up, each gambling on selling high before the market crashes again. .

As for American business, corporations have been corrupted by the greed of CEO’s abetted by complacent boards of directors. All of them are overpaid. These people vote themselves grants of enormous blocks of stock. They are less concerned about the profitability of the company than the price of stock, which they can sell to enhance their own fortunes.

This week I received annual reports from two corporations in which I invested my money. I was asked to vote for boards of directors who will continue these corrupt practices.

I own 400 shares of American Electric Power, a utility company based in Columbus, Ohio. My husband bought those shares more than 20 years ago with cash he earned working for 40 years for International Truck.

Last year Michael G. Morris, chairman and CEO of AEP, received a base salary of $1,294, 808 and $5,265,750 in stock, plus “other compensation” for a total of $7,539,278.

The company has 13 directors. One of them is E. R. Brooks, a 72-year-old retiree, living in Granbury, Texas. Mr. Brooks’s compensation for serving on the board of AEP in 2009 was $95,750 in cash and $120,000 in stock, plus other compensation for a total of $219,413. It seems to me Mr. Brooks can live very well down in Granbury on the money he gets from people paying for their electric lights in Ohio.

I also own 300 shares of Kraft Foods, which I bought this year with money from the sale of my house. My kids grew up on Kraft Dinner, and I figured even in tough economic times people would eat macaroni and cheese.

Irene Rosenfeld, chairman and CEO, received a base salary of “only” $1,470,000. But she also got stock and other compensation for a total of a whopping $26,345,201! To me is obscene. Four other executives were paid more than $5,000,000 each.

Kraft has 12 directors. Three of these each received payments in cash and stock totaling $271,144. These men were also highly paid executives in other companies. John C. Pope is chairman of PFI Group, “a financial management firm.” Frank G. Zarb is managing director of Hellman & Friedman, “a private equity firm.” Frederic G. Reynolds, former Chief Financial Officer of CBS, is also a director of AOL, Inc. I wonder what any of these men know about making and marketing cheese.

I paid $7,787 of my money for my 300 shares of Kraft. Then the board GIVES themselves and the company executives thousands of shares. Irene Rosenfeld of Kraft was given stock valued at $7,829,391. This is the way business is done in America today.

I also wonder what the men and women who work at the Kraft plant here in Garland think about how hard they work for their pay, while directors, who meet four times a year, take enormous payments back to their mansions scattered around the country.

I read in TIME, March 22, 2010:
“In 1978, according to the Economic Policy Institute, the ratio of average CEO pay to average wage was about 35 to 1. By 2007 it was 275 to 1.”