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By Don Phillips | 05-28-2009 05:36 PM

Bogle: Executive Compensation Has Gotten Totally Out of Hand

The Vanguard founder and former chairman thinks that imperial chief executives are managing firms for their own benefit and not for common shareholders.

Don Phillips: In recent years, you've moved your focus from just the fund industry to much more of capitalism in general, of corporate America. How would you say the state of corporate stewardship is in the US today?

John Bogle: I don't like the state of corporate stewardship in America today. I think the managers of our corporations, their employees, they behave like the imperial chief executives, we call them. They look to their own financial interest. They issue enormous options to themselves. They get the board approval, but they control the boards.

The compensation has gotten totally out of hand, ridiculously out of hand. It's basically robbing the shareholders of these corporations of the money that's really rightfully theirs. That's a system that has to change. Corporations should be managed for the shareholders and not for the managers or the insiders.

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