Billionaire investor Carl Icahn places the blame for much of the recent corporate carnage squarely on the shoulders of the companies' boards of directors, which are supposed to keep an eye on the bottom line for the shareholders.
"The trouble with the country is that we don't have accountability. The boards in this country are not doing the job, and that's why you have the trouble on Wall Street," Icahn told ABC News' John Stossel.
Icahn, 74, has been called a corporate raider, renegade capitalist and the Superman of shareholders because he has battled entrenched corporate boards to bring greater efficiency to companies and value to shareholders.
Over the years, Icahn has taken controlling positions in mega-companies like RJR Nabisco, Texaco, Western Union, Viacom and Time Warner.
Icahn recently sat down with Stossel to discuss a system that richly rewards CEOs while their companies fail.
Watch John Stossel's interview with Carl Icahn Friday on "What Are You Worth?" -- a special edition of "20/20" at 10 p.m. ET
Icahn faults the boards more than the CEOs of troubled financial companies because the boards ignored the red flags raised over risky mortgage-backed securities.
"Everybody got their huge bonuses, but who paid the price?" he said. "Not the CEOs, not the board members. The shareholders of these companies paid the price. And that's unfair and it's wrong."
But Icahn also says that awarding huge salaries to underperforming CEOs is "absurd ... it's a complete travesty."
Icahn -- who stresses that there are many good boards and CEOs -- maintains boards don't have to pay a fortune to get a talented chief.
"I assume the people on the board aren't stupid. Why are they giving them all this money?" Stossel asked.
"You go to these board meetings, everybody is buddy-buddy, everybody's friendly," Icahn said. "It's like a fraternity."
Icahn has called CEOs the survivors of the corporate world, but says it's the "survival of the unfittest": "[The CEO] would never have anyone underneath him as his assistant that's brighter than he is because that might constitute a threat. So therefore, with many exceptions, we have CEO's becoming dumber and dumber and dumber."
Icahn: Beware Good Golfers
The person who moves up the ladder to CEO, Icahn told Stossel, is more of a politician than a manager.
"He doesn't make waves, because if you make waves they throw you out."
When asked if he objected to successful CEOs being paid high salaries, Icahn said "absolutely not."
"Let him make his money if the shareholders are making the money," Icahn said. "But don't pay him these huge bonuses, these huge severances."
Executives should be fairly compensated, Icahn said. "It's insane to pay somebody 700 times what the average worker gets."
"By and large, the guys on those boards are businessmen, and they should know how to hold these guys accountable, and know what numbers to look at. You don't go in and say, 'You ought to do this, this and this to run the company.' You say, 'Hey, you're not doing as well as your peers, how come?'"
Icahn added that "Hey, by the way, you don't have to be playing golf every day.'"
"Most of them aren't playing golf all the time," Stossel countered.
"You'd be amazed," Icahn replied. "I have a rule that if a guy has a five handicap or lower, I don't want him."
To fight back against dysfunctional corporate boards, Icahn has started United Shareholders of America, a grassroots effort to empower shareholders. Icahn believes that if enough shareholders join the group on his Web site The Icahn Report, he can be their voice to change state and federal rules that make it difficult to vote out entrenched boards.
"This whole thing could be stopped if the shareholders stood up and went to Washington," Icahn said. "Even the senators and congressmen I talk to want to do something, but they want to know the public's behind it."
Icahn believes the current financial crisis will not be helped if President-elect Barack Obama continues to pump money into the economy when he takes office. "That's not the answer. It's a short-term fix. It's like somebody dying and you give them a little morphine."
"Unless you change the system," Icahn told Stossel, "we will not be able to compete in the future, one, and we're going to keep having the exact headaches we're having today."
Icahn Says Auto Bailout Was Necessary
Icahn reluctantly acknowledges that the auto industry had to receive a bailout. "We have to get the automobile companies out of the mess, because this economy is so fragile."
"And I don't believe in big government, I believe in laissez faire… The automobile industry didn't have to be in the mess it's in, OK? No question there's a bad economy, no question they might be doing worse, but they haven't done anything in the last four years to really deal with it."
"Some people say, you're the bad guy," said Stossel. "You corporate raiders, you go in, you save money, but you save money by firing workers."
"That's ridiculous, because if you look at the companies that I've taken over, I keep putting money into them," Icahn replied. "We put in hundreds of millions of dollars. Almost every company that I have, I've put in a lot of money, but I don't fritter that money away."
"I could go into a company and I'll tell you I can save 30 percent of costs, not just by firing employees. But just by [eliminating] wasted investments."
"It's not doing the world any good… having five people or four people doing the job that one person should be doing. At the end, that person's going to lose his job anyway."