CORPORATIONS - ATTACKS ON SALARIES PAID TO CORPORATE EXECUTIVES

Authors

Abstract

In October, 1933, the former president and chairman of the governing board of one of the world's greatest banks appeared before the Senate Committee on Banking and Currency, in Washington. During the course of the testimony, it was revealed that through the years 1929-33 this executive had received from his bank upwards of $1,100,000 in salary, bonus, and extra compensation. For the two years immediately past, he had served as a director in fifty-nine other corporations, from one of which he had at one time received a salary of $40,000 a year for services as director only, and from another a stipend of $20,000 a year, as a director and chairman of the finance board. The case was not conspicuous for its isolation; it was merely one of numerous recent revelations of the extravagant salaries and bonuses paid to the high officials of corporations even in depression times, during a period when low-paid employees were suffering wage cuts and stockholders were getting little or nothing. Apart from legislation looking toward a planned regulation of corporate compensation the dissentient stockholder is not remediless when such compensation becomes the object of his scrutiny. To the suit of such stockholder, applying promptly for relief, the courts, under certain circumstances, will give ear, despite the often repeated aphorism that courts hesitate to interfere in the internal management of a corporation. Under what circumstances may salaries paid to corporate executives be attacked?

Recommended Citation

CORPORATIONS - ATTACKS ON SALARIES PAID TO CORPORATE EXECUTIVES, 32 Mich. L. Rev. 672 (1934).
Available at: https://repository.law.umich.edu/mlr/vol32/iss5/5