Well said.
USA #1 in CEO VS average worker pay rates, rawr
- Thread starter Archbob
- Start date
Well said.
Partial ownership of the company. My tax dollars subsidizing the company.
We're halfway there.
Syterion
Voodoo Economist
Amadeus does have a good point. I in general should have no say in what they make. However, the shareholders of companies like these need to realize that their CEO's pay is excessive to say the least. Also, I've heard that those studies that show CEO pay to performance correlation, when adjusted for the economic collapse, show no correlation, even negative correlation.
However, if these companies were part of the bailout, then yes I should have a say.
However, if these companies were part of the bailout, then yes I should have a say.
I am a bit surprised that Mexico isn't worse than the U.S., actually, given how terribly lackluster their unions are, the US$4.83/DAY minimum wage and the runaway wealth and greed of their industrial tycoons with even weaker worker protections than the U.S.
That said, were I emperor of the U.S. and able to instill my will on the U.S. tax system, I would instill an adjustment into taxes that would drastically hike taxes for executives based on the ratio of their pay over their lowest-paid full-time workers. The greater the span, the greater the tax.
That said, were I emperor of the U.S. and able to instill my will on the U.S. tax system, I would instill an adjustment into taxes that would drastically hike taxes for executives based on the ratio of their pay over their lowest-paid full-time workers. The greater the span, the greater the tax.
amadeus
Bishop of Bio-Dome
I wouldn't be opposed to regulating the pay of employees of companies that receive subsidies. Anything that weans them off subsidies is good for us.
Imagine this scenario:
The economy is in downturn. Recession is looming. Your company is about to lose a lot of money. You're going to lose $700 million. Would you be willing to hire a CEO with a salary (including bonuses if successful) of $50 million to save you $500 million?
Of course you would. Then everyone would be screaming at you how you're giving your CEO bonuses when your company is $200 million in the hole.
The economy is in downturn. Recession is looming. Your company is about to lose a lot of money. You're going to lose $700 million. Would you be willing to hire a CEO with a salary (including bonuses if successful) of $50 million to save you $500 million?
Of course you would. Then everyone would be screaming at you how you're giving your CEO bonuses when your company is $200 million in the hole.
There isn't much evidence correlating CEO performance with company performance, regardless of pay.
There's a false dichotomy in there. CEO performance is company performance. The reason a company is succeeding or failing is usually the initiatives set out by the CEO.
Not really. The more you pay a CEO, the less he manages the company for the long term. Mostly you can't say that CEOs matter.
Sorry, I'm too tied up in the principles of finance...
The CEO's performance will dictate the company's performance above or below its beta - volatility to the market.
A proper CEO will manage the company well and earn shareholders an expected return on their investments. A great CEO will have the company earn above the expected return (and thus the share price will go up, long-term speaking). A poor CEO will have the company earn below...
A crappy CEO can still have the company make money in an economic boom, and a good CEO can still have the company lose money in a recession.
But their performance is directly tied to the company's performance.
Actually, that's the point of vesting stock options. "CEO pay" is usually measured media-speaking in terms of total output, but a lot of their pay is typically in incentive bonuses - if the company does well, they do well.
They are probably the most important thing in a company. The high finance decisions have the greatest impact.
amadeus
Bishop of Bio-Dome
Well, the CEO's pay is tied to the demand for the CEO, not necessarily their performance.
Well, more like past performance or indication of performance. Certainly there's a supply/demand effect there, but you're typically shopping for a CEO that will do your company well - your budget will have an effect on how good a CEO you can get.
Evidence?
From what I've seen, the success of companies has little to do with the CEO, good or bad.
Archbob
Ancient CFC Guardian
Steve jobs leaves apple, it dies. He comes back, it booms.
When your CEO complains the minimum wage workers are costing too much in payroll and gets rid of 1,000 $7.25/hour workers, then gives himself a $10 million raise as a result, there's something effing wrong.
The economy is in downturn because CEOs have dumped workers in favor of raising their own pay. CEO pay has gone up much higher as a % of previous year pay than for the average person, concentrating the wealth higher and higher. Because so many workers have been dumped and companies refuse to keep up with cost of living for their workers, the quality of life for most people in the country have gone down.
CEOs get $20 million dollar bonuses for crashing their companies and either getting fired or quitting. Based on that fact alone, seen over and over in the domino toppling of banks and those getting bailed out by taxpayers, even attempting to suggest CEOs are paid millions based on performance is a complete and utter falsehood.
False. Fat cat uber-rich investors hire only fat cat uber-rich CEOs and pay them tens of millions even if they drive the company into the ground. What do the hard workers who actually carry out the company's business get when the CEO collects tens of millions for crashing the company and costing all of them their jobs?
I assume the interim CEO was not being paid much.
innonimatu
the resident Cassandra
- Joined
- Dec 4, 2006
- Messages
- 15,374
Actually, it's not the CEO's money either. Generally they hold power without ownership. And the stockholders are in no position to control them, because the stock is so dispersed as to make any individual stockholder powerless. The way it works is that corporate boards appoint CEOs, CEOs appoint boards, and they form a little "corporate aristocracy" among them.
Given this void of power by the owners, which the supposed caretakers then appropriate for their own benefit, it seems that the least which could be done would be to have the government fill the void through stricter regulation. It's far from the best solution - not my favorite, certainly - but it would alleviate the problem.
They do earn too much, and it's another purely american phenomenon. I do see people complaining about that.
I mean good evidence. Simply showing a bunch of companies that succeeded with "good CEOs" is worthless as evidence.
If you have a bunch of companies, and assign integers (say from 0-9) randomly, you're going to end up with a bunch of "6's" which succeed. That's not relevant though, you need to figure out a way to show that assigning a company a "6" is significantly more likely to cause it to succeed than assigning it an "8".
Similarly, you need to show that assigning a "good CEO" to company A is more likely to cause company A to succeed than assigning a random CEO, without using the success of company A as a metric in defining the quality of the CEO.
Archbob
Ancient CFC Guardian
Its not only good. Apple succeeded with a good CEO, failed when he didn't, and flew again when he came back on board. Jobs is probably the single most important person to apple.
That makes no sense at all, how are you going to show that a CEO is more likely to cause a company to succeed without using the success of the company to measure the CEO?
