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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