Corporate directors made 11% more in 2008, despite 39% fall in S&P

The S&P 500 fell 39% last year, but that didn't stop directors from paying themselves 11% more, according to The Corporate Library.

"The median increase in total board compensation was just under 11%, while the median increase in compensation for individual directors was slightly higher, almost 12%," according to the report.

These figures should put to rest once and for all any notions of a pay for performance culture in corporate America. If shareholders lost 39% of their money while directors earned an additional 11%, it's hard to argue that there isn't as serious problem with corporate governance.

To be fair, a lot of directors lost huge amounts of value in their holdings in the companies they "serve" -- but at the same time, directors typically have only minor stakes in those companies. And it's a very rare director indeed who has ever actually purchased the company's stock with his own money. For instance, not a single non-employee director of General Motors (NYSE: GM) owned more than 9,628 shares of the company's stock, according to the latest proxy statement. Kathryn Marinello had the distinction of owning exactly zero shares of the company's stock. A lot of people are suffering as a result of the company's collapse. But not the directors!

This latest report from The Corporate Library provides still more evidence that corporate governance in America is a complete joke. Instead of imposing arbitrary caps on executive pay at bailed out companies, President Obama would do well to look at ways to improve the ability of shareholders to hold bad directors accountable. That's the only long-term solution to this crisis.

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