In reference to the comment
by John Médaille about CEO's, they have acquired 15% of all shares of
corporations traded on the NYSE according to BusinessWeek, 2002, Online Special
Report, 15 April, as posted at http://www.businessweek.com/magazine/content/02_15/b3778012.htm
This was quoted in my
paper presented at the Australian Stock Exchange last year that can be
downloaded from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=546942
and contained the following:
----------------------------------------------------------
While economists may
concern themselves with “excessive” profits, the concept of surplus
profit will not be found in economic textbooks. Economists are not aware
of surplus profits, because unlike excessive profits, accountants are not
required to report them. Excess profits are reported in a given
accounting period but surplus profits typically require consideration of a
number of accounting periods. Surplus profits can exist with or without
any excessive profits and could possibly arise with the investor reporting an
accounting loss! .
The result is that
investors get overpaid with surplus profits without them being measured,
reported and so without anyone knowing! The extent of corporate investors
getting overpaid is indicated by the degree to which corporate profits can be
siphoned off from publicly traded companies to Executives. BusinessWeek
(2002) reported that CEOs had allocated to themselves options that represented
15% of all the shares issued on the New York Stock Exchange. In 2004, the
value of all NYSE companies was $US12.9 trillion, so the average value obtained
by the 2,800 or so CEOs was around $US640 million each . NYSE companies
have become what I describe in Section 6 as “Ownership Transfer
Corporations”.
-------------------------------
Regards
Shann Turnbull PhD http://www.aprim.net/associates/turnbull.htm
Principal, International Institute for Self-governance
PO Box
266 Woollahra, Sydney,
Australia 1350
Ph+612 9328 7466 Mobile
0418 222 378, Papers at:
http://ssrn.com/author=26239
-----Original Message-----
From: owner-homestead@cog.kent.edu [mailto:owner-homestead@cog.kent.edu] On
Behalf Of John Médaille
Sent: Thursday, 28 July 2005 9:33 AM
To: homestead@cog.kent.edu; homestead@cog.kent.edu
Subject: Re: HOMESTEAD: Ray Carey's Democratic Capitalism
At 06:21 PM 7/27/2005 -0400, Norman G. Kurland wrote:
>As I will point out, your analysis does not square with the
facts. The
>original owner was a hard-nosed businessman and his price was at
the high
>end of what constituted a fair market price. He got his money
out of the
>business and invested it in other securities. Market
forces were at
>work. Management, which was and still is first-rate, did not
change at
>the time of sale.
So then, the stock was priced at seven times earnings. If you know of
any
other stocks at that price, let me know.
> The CEO retired several years ago with a nice ESOP
distribution, and
> the former VP has been CEO for about 10 years. The company
had no
> pension plan at the time of sale. With the company growing
dynamically
> and a work force ten times the original team, the average 10-year
> employee has an ESOP account in the 6 figures. What was key
to the
> buyout was the application of Kelso's pure credit concept.
This
> company's history proves that, in the hands of good management,
synergy
> is at work between the productiveness of capital and the
productiveness
> of labor and capital pays for itself.
Yet, in 29 years, the price only tripled. That doesn't sound like good
results. It is certainly not 14%/annum.
>You can sneer at the model,
I sneer at nothing. I point at that tripling in value over the course
of 29
years does not sound like good results. Does it sound good to you?
>but it works in the real world, as long as capital credit is
accessible to
>workers with no reduction in their take-home incomes. (In fact, the
labor
>incomes of Mid-South workers are at the high-end of their
industry.) No
>magic was involved. Only the power of capital finance.
Had no-interest
>(i.e., service charge only) capital credit been available under
section 13
>of the Federal Reserve Act, as advocated in our book Capital
Homesteading
>for Every Citizen
>(http://www.cesj.org/publications/capitalhomesteading/whatif-flyer.pdf)
>and supported by Rodney Shakespeare,
the loan would have been paid off
>much sooner.
Right, with taxpayer help.
John C. Médaille
"A dead thing can go with the stream...
but only a living thing can go against it."
-G. K. Chesterton
http://www.medaille.com/distributivism.htm
john@medaille.com
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