Many of the executives with the richest pay and pensions have shipped jobs overseas and ripped pension benefits away from their workers.
They defend these practices, contending that paying people livable wages and taking care of them in retirement is too expensive.
Yet these same executives -- such as the top dogs as Lehman Bros. Holdings Inc. and Countrywide Financial Corp. -- took hundreds of millions in pay and stock, while their companies faltered.
That pay was not a reasonable use of corporate assets, said David O. Friedrichs, a professor of sociology and criminal justice at the University of Scranton in Pennsylvania. It was grand theft.
"We have no trouble understanding that somebody who walks into a bank with a gun is committing a crime," he said. "CEOs who walk into boardrooms, armed with reports from compensation consultants, who have all sorts of conflicts of interest to push pay as high as possible, are committing grand theft against stakeholders."
When managers are free to rob corporate coffers, it shatters the trust of investors.
If investors become convinced that they can't trust executives to forgo their selfish interests and use investor capital to grow the business, they will start making demands.
Instead of trusting executives to share the profits when we give them our capital, for example, investors will start demanding contractual interest.
In other words, we'll stop investing in stocks and, instead, put our money in corporate bonds, where the company must pay a set rate of return. The shift is already being seen in industry statistics.
Over the last two weeks, investors pulled $22.3 billion out of equity funds while investing $6.5 billion more in bond funds, according to the Investment Company Institute, a trade group for the mutual fund industry.
To be sure, there is still plenty of money invested in stocks. Part of the reason is that some companies still do things right. Consider, for example, Costco Wholesale Corp., the Issaquah, Wash.-based retailer that operates warehouse stores.
Its CEO, James D. Sinegal, earns a salary of $350,000, while his warehouse employees earn roughly $17 an hour -- about $34,000 for a 2,000-hour year. Sinegal can get a bonus of as much as $200,000, but typically recommends less -- something akin to the bonuses paid to warehouse employees, according to the company's proxy statement.
