August 31, 2007
SEC and FASB Mull CEO Emolument Accounting Change
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America's Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) chiefs are close to deciding that salary and perks exceeding five million dollars annually can not rationally be deemed pay for work expended. Payouts of five million to hundreds of millions would quite boggle the minds of both Adam Smith and Karl Marx, said one insider, "off, off, off the record."
Going forward, the recommendation will be that executive remuneration exceeding five mil annually will be construed as a disbursement of corporate capital. Henceforth these deductions from a company's capital account must be subject to a public vote and agreed to per amounts by boards, directors, trustees and not so trust-ees as the case may be.
The new accounting Pronouncement will reflect that mega salaries in excess of the maximum five mil will be considered as an allocation of corporate capital which will no longer qualify for accounting treatment as a corporate expense.
A number of CEO's have formed a study committee particularly in response to the IRS position of "You can call it capital or you can call it Swiss cheese, we're still taxing exec' pay at the highest personal rate possible."
"There's a fundamental lack of fairness here," whinged the corporate CEO's.
They, the potentially afflicted CEOs, vociferously pointed out that, "This change is counterintuitive, even embezzlement is treated as a deductible expense."
Shareholders, mostly wearing Abu Ghraib style hooding to protect their identities, were cautiously pessimistic.
(Reprint 10.14.06 post)
Craig A. Johnson
America's Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) chiefs are close to deciding that salary and perks exceeding five million dollars annually can not rationally be deemed pay for work expended. Payouts of five million to hundreds of millions would quite boggle the minds of both Adam Smith and Karl Marx, said one insider, "off, off, off the record."
Going forward, the recommendation will be that executive remuneration exceeding five mil annually will be construed as a disbursement of corporate capital. Henceforth these deductions from a company's capital account must be subject to a public vote and agreed to per amounts by boards, directors, trustees and not so trust-ees as the case may be.
The new accounting Pronouncement will reflect that mega salaries in excess of the maximum five mil will be considered as an allocation of corporate capital which will no longer qualify for accounting treatment as a corporate expense.
A number of CEO's have formed a study committee particularly in response to the IRS position of "You can call it capital or you can call it Swiss cheese, we're still taxing exec' pay at the highest personal rate possible."
"There's a fundamental lack of fairness here," whinged the corporate CEO's.
They, the potentially afflicted CEOs, vociferously pointed out that, "This change is counterintuitive, even embezzlement is treated as a deductible expense."
Shareholders, mostly wearing Abu Ghraib style hooding to protect their identities, were cautiously pessimistic.
(Reprint 10.14.06 post)
Craig A. Johnson
Labels: Adam Smith embraces Karl Marx, CEO embezzlement, not so trustees
Comments:
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I am about to leave the corporate world behind me. I have shitty timing and missed out on a big stock option thing by leaving my company for two years. I returned at precisely the wrong moment, financially.
Oh well, I suddenly knew a lot of millionaires and I wasn't one. Wah!
I do jest, because I could have used that money, but I did notice one thing over time...
People I knew and loved and that at one time I had respected were suddenly completely defined my their money.
It was a moment in time when lots of so-called ordinary people were getting very rich, very quickly. That gave it an air of authenticity or something, for those in it. It was interesting to observe because my peers assumed, for what ever reason, I was in the "club".
Anyway, what I did during my 2 years away was life changing and defining and frankly, what I would have gotten would not have made me a millionaire. What I got instead was my interior wealth. So be it.
All this long winded point to say, I have watched my own company grow sick with this disease. The way the most senior people whine over every f-ing penny that they are entitled too while we lay off the people at lower rungs and find ways to demoralize and demote those who are left.
It is so sick. I am glad to be gone daddy gone.
That said, I once read something that I think is really true... Most Americans will never be that wealthy they like to think, act and vote like they are.
THAT explains a lot.
Sorry to ramble on so. This topic annoys me - o the poor whiny CEO's!!
Oh well, I suddenly knew a lot of millionaires and I wasn't one. Wah!
I do jest, because I could have used that money, but I did notice one thing over time...
People I knew and loved and that at one time I had respected were suddenly completely defined my their money.
It was a moment in time when lots of so-called ordinary people were getting very rich, very quickly. That gave it an air of authenticity or something, for those in it. It was interesting to observe because my peers assumed, for what ever reason, I was in the "club".
Anyway, what I did during my 2 years away was life changing and defining and frankly, what I would have gotten would not have made me a millionaire. What I got instead was my interior wealth. So be it.
All this long winded point to say, I have watched my own company grow sick with this disease. The way the most senior people whine over every f-ing penny that they are entitled too while we lay off the people at lower rungs and find ways to demoralize and demote those who are left.
It is so sick. I am glad to be gone daddy gone.
That said, I once read something that I think is really true... Most Americans will never be that wealthy they like to think, act and vote like they are.
THAT explains a lot.
Sorry to ramble on so. This topic annoys me - o the poor whiny CEO's!!
And with that happy IRS tidbit, Happy Labor Day Cognitorex!
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# posted by 
: September 03, 2007 8:45 PM
: September 03, 2007 8:45 PM << Home
