Back when I was an undergraduate at Washington & Lee University, I made the argument to one of my history professors that low-fee DRIP plans provided an example of where Marxist principles actually overlapped with capitalist principles (I know what you’re thinking right now, and the answer is yes, I was always this sexy). My logic was this: I pointed out to the stock ownership plans that Ford, General Motors, Bethlehem Steel, RJ Reynolds, and Philip Morris offered their working-class employees to demonstrate how these plans satisfied the Marxist appeal to allow the workers to become part-owners of the company if they so desired while also appealing to the traditionally American capitalistic notion that if you work hard, spend less than you earn, and do something intelligent with that spread, you have the freedom to put together a nice life for yourself.
When I contemplate a potential investment, one of the hard decisions to make is defining the point at which a management team’s executive compensation becomes so excessive that it ought to deter investment.
So far in my life, the only stock I ever disqualified from consideration solely on the grounds of excessive compensation was Occidental Petroleum, where Ray Irani was doing things like collecting $76 million pay packages here and there. He’s gone now, but you can read about some of his collected spoils by clicking here.