This video exposes how a policy meant to cap executive pay backfired, turning "performance" into a loophole for massive wealth transfer. It’s a sharp reminder that regulatory good intentions often subsidize the very inequality they aim to fix.
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If you pay your CEO more, you pay less in taxesAdded:
And as the new CEO, this is your paycheck. Why? Why is it so much? Well, part of why CEO pay is so high is this little section of the tax code. See, before 1993, when companies were writing stuff off on their taxes, CEO pay was written off as an expense. The CEO's pay is deducted from the company's income.
Like, if you pay your CEO more, you pay less in taxes. Yeah. But then the Clinton administration changed the tax code to say you can only write off $1 million of the CEO's pay. But that should push CEO pay down, not up. But there was this little sub paragraph that said, "If the CEO's pay were tied to their performance, then there's no limit to how much you can deduct it from your taxes." What is performance? Yeah, like being paid with options. See, a stock option is just an option to buy a stock at a certain price. So, you're the CEO.
Our stock is $10 a share right now.
You'll have the option to buy 10,000 shares at the price of $10 each. So, if the price of our stock doubles, you'll still be able to buy those 10,000 shares of $10 each and sell them instantly for $20 each and make $100,000. Turns out when you attach CEO pay to performance, CEO pay explodes. Oh, these options, they're they're free. Yeah, sure seems like it. Seems like it. Yeah, so it's not. No, no. See, making more stock out of thin air makes the stock worth less.
Like your grandparents retirement fund, some of that is stock. This CEO pay, these options, they're coming from them.
It's coming from all shareholders. It's called share dilution. And you guys on the board, you guys are fine with this.
In the grand scheme of things, your paycheck is a rounding error. And you, the compensation team, you guys are chill. Yeah, you hired us. Oh, yeah. And you guys, you're chill with that? Well, yeah. We're current and former CEOs of other companies. What about you? Are you fine with this?
You You just asked
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