CEO's of mortgage reits making $20-30 million per year
The article on the compensation of the guys that run the mortgage reits says compensation is not geared to performance or aligned with investors. They get paid based upon all the borrowed money times 1% or 1.5%.
Why are the CEO's of these mortgage reits paid more than the CEO of JP Morgan Chase, BofA or Citicorp. The CEOs of the banks have to handle $200 billion in assets and debt while the reits have a fraction of that.
The implication of this is that they would not be motivated to deleverage if that is what they would need to do to reduce risk to a more manageable level.
I think there needs to be more oversight on how CEOs get paid. They could pass a law that forces the board's pay package to come up to vote every year with for and against arguments being offered by opposing factions who get chosen by the amount of shares they have behind them. These augments would be packaged with the ballots. If they did this I think one would see a dramatic change in CEO compensation. The problem is now that the investor doesn't have enough say in how their profits are spent. And as a result these guys get away with robbery of share holder money. This is not a free market issue. It is an accountability issue.
You do not need laws on compensation levels. The shareholders and especially the institutions that own shares could place that business before a meeting of shareholders just like the insiders place incentive option plans and approving the appointment of the accountants before investors each yea.r