Companies forced to disclose CEO-workforce pay gap

[smackababy]

Okay, lets posit that CEO salary is based on the amount of value they bring to the company.

The average CEO made 30x the salary of the average worker in the 1980's. They now make ~300x the salary of the average worker. Can you explain what CEOs provide now that they did not provide in the 1980's that would explain a tenfold increase in their relative value? Were they horrendously undervalued before and are now appropriately valued?

Isn't the far more likely answer that something else other than a sudden increase in their value caused this change?

Perhaps, it is about risk? A CEO can be fired for donating to some political cause 8 years ago after the internet finds out about it, regardless of their current stance on the matter. Nobody cares about what some lowly factory worker donates to (unless it helps promote your image, that is).

They should be compared to their peers around the world.
For example, Japanese car company CEOs provide same or better value than American car company CEOs for about 5% the salary. So I wouldn't say American CEOs are a good value.

Except, those aren't their peers. It is commendable Japanese CEOs are willing to take such little compensation. However, that doesn't have anything to do with the price of tea in China. And, if we had companies modeled after the big CEOs in Japan, we'd have a bunch of crap products. Nintendo is a good example of just how hard they are to work with.

 

[senseamp]

Perhaps, it is about risk? A CEO can be fired for donating to some political cause 8 years ago after the internet finds out about it, regardless of their current stance on the matter. Nobody cares about what some lowly factory worker donates to (unless it helps promote your image, that is).

Oh, yeah, that's a huge risk, they'll get fired after a couple years and only make 10 average worker's lifetime salaries instead of 100. Such a risk.

 

[lopri]

People who complain about the disparity between THEIR pay and their CEO's pay make it personal by making them out to be heartless crooks who care nothing about the rank-and-file.

It's always personal.

They seem to ignore the fact that a CEO's salary is negotiated by how much value he/she brings to the company, and if he/she increases its net worth.

If that person doesn't add value, they're replaced.

I'm not complaining about why CEO's salaries are made public, I'm contending the idea that this can be used as a tool to demonstrate "income inequality".

If you're a manager and I'm a line worker, you pay is SUPPOSED to be much more than my pay. That's not income inequality.

It's all good but you do not state a single reason why the SEC's rule is illegitimate. (except for the "it's always personal" part you yourself disavow later) No one doubt that CEO's contribution to a corporation is larger than a new hire and shareholders can make a better informed decision when there is more information easily available. I just don't see the outrage.

 

[cabri]

Are today's CEOs 10 times better than ones in the 70s and 80s ?

Okay, lets posit that CEO salary is based on the amount of value they bring to the company.

The average CEO made 30x the salary of the average worker in the 1980's. They now make ~300x the salary of the average worker. Can you explain what CEOs provide now that they did not provide in the 1980's that would explain a tenfold increase in their relative value? Were they horrendously undervalued before and are now appropriately valued?

Isn't the far more likely answer that something else other than a sudden increase in their value caused this change?

If the shareholders feel that the company value is being increased, that is what counts.
Not what the proggies feel.

 

[fskimospy]

If the shareholders feel that the company value is being increased, that is what counts.
Not what the proggies feel.

Too bad shareholders aren't the ones that determine CEO pay then, huh?

 

[Strk]

Perhaps, it is about risk? A CEO can be fired for donating to some political cause 8 years ago after the internet finds out about it, regardless of their current stance on the matter. Nobody cares about what some lowly factory worker donates to (unless it helps promote your image, that is).



Except, those aren't their peers. It is commendable Japanese CEOs are willing to take such little compensation. However, that doesn't have anything to do with the price of tea in China. And, if we had companies modeled after the big CEOs in Japan, we'd have a bunch of crap products. Nintendo is a good example of just how hard they are to work with.

It's kind of sad when $1.5-2 million a year is considered little.

 

[lopri]

Perhaps, it is about risk? A CEO can be fired for donating to some political cause 8 years ago after the internet finds out about it, regardless of their current stance on the matter. Nobody cares about what some lowly factory worker donates to (unless it helps promote your image, that is).

Except, those aren't their peers. It is commendable Japanese CEOs are willing to take such little compensation. However, that doesn't have anything to do with the price of tea in China. And, if we had companies modeled after the big CEOs in Japan, we'd have a bunch of crap products. Nintendo is a good example of just how hard they are to work with.

Likewise, what you state is not a reason to oppose this rule. Shareholders can take all those into consideration to reward the CEO's. More information, like more speech, will help make better informed decisions.

The rule does not dictate how much CEO should or should not earn. It merely requires more transparency. I am perplexed by opposition based on sheer speculation and contempt on ordinary workers and shareholders.

If the shareholders feel that the company value is being increased, that is what counts.
Not what the proggies feel.

Then what is the problem?

 

[Retro Rob]

The average CEO made 30x the salary of the average worker in the 1980's. They now make ~300x the salary of the average worker. Can you explain what CEOs provide now that they did not provide in the 1980's that would explain a tenfold increase in their relative value? Were they horrendously undervalued before and are now appropriately valued?

Would you be willingly to show average increases in company PROFITS over that time frame?

My contention really is not so much the gap, but how is this evidence of income inequality.

Isn't the far more likely answer that something else other than a sudden increase in their value caused this change?

I would agree.

 

[cubby1223]

So the new rule doesn't change much, then what is the outrage for?

Do you realize how much business people don't have allegiances to the United States? Thanks to advancements in global communications and travel, businesses are more mobile than ever before.

I imagine the scope of this legislation would encompass any company publicly traded on one of the U.S. stock exchanges. There are plenty of foreign nations who are bidding to become more business-friendly.

The U.S. government for the longest time was stocked full of lawyers, now recently it's shifted more towards activists winning positions. Over in China, people with business background are taking over their government.

I could go on more, but suffice to say, the U.S. is not the be-all end-all location of business in the world. Yet we often act like we are.

Government transparency is a separate issue which I'd think there is little disagreement among the people, except for a few sensitive areas. You are committing logical fallacy by conflating the two. Government transparency and corporate transparency are not mutually exclusive. We can have both.

He's not committing a logical fallacy, you misinterpreted his statement. He's pointing out the hypocrisy of a political party pushing ideals that they themselves don't hold themselves up to.

 

[lopri]

^ Are you saying that foreign corporations need not follow the laws of the U.S. when they do business in the U.S. territories?

 

[piasabird]

Then the government can dictate mandatory CEO ratios. What about the ratio of a president at say 300K + paid vacation and a free plane and health care and a man on Minimum wage that can only make $20k a year. How do you compute all the perks that a CEO may have like stock options and a company car or plane?

 

[lopri]

^ Another logical fallacy (slippery slope, reductio ad absurdum) and hyperbole. I am still waiting for a coherent argument.

 

[cubby1223]

I like the contrast with the discussion of the company who set an internal minimum wage at $70k. In the context of common workers who disagreed with them getting the pay bumps, some on this forum reduced their argument down to validate yourself by the amount of work you do and compensation you receive, it's wrong to believe you're invalidated by someone else making a certain amount you don't believe they deserve.

Somehow I don't think those same individuals will use that same guiding principle to argue this situation

 

[piasabird]

What about the bonuses received? Some companies have larger bonuses than pay checks.

 

[cubby1223]

^ Are you saying that foreign corporations need not follow the laws of the U.S. when they do business in the U.S. territories?

There you go again misrepresenting what someone says. I'm saying all U.S. laws have a certain scope. And if the company doesn't fall within the scope of that law, they are not responsible for following them.

 

[Mai72]

I don't get this fixation on CEO pay. Yes, they make more than the average worker. They also provide more value than any single average worker.

I agree. I had read an article on the life of an average CEO. Most are up at 4am. They have a few hundred emails first thing in the morning. Work is insanely hectic with few breaks. Then when they get home its more work. Even on the weekends.

Most put in 70-80 hours a week. People just see the salaries and automically get jealous. In reality, most people wouldn't last 2 days as a CEO.

 

[ivwshane]

Would you be willingly to show average increases in company PROFITS over that time frame?

My contention really is not so much the gap, but how is this evidence of income inequality.



I would agree.

What was your point again?

 

[senseamp]

Do you realize how much business people don't have allegiances to the United States? Thanks to advancements in global communications and travel, businesses are more mobile than ever before.

I imagine the scope of this legislation would encompass any company publicly traded on one of the U.S. stock exchanges. There are plenty of foreign nations who are bidding to become more business-friendly.

The U.S. government for the longest time was stocked full of lawyers, now recently it's shifted more towards activists winning positions. Over in China, people with business background are taking over their government.

I could go on more, but suffice to say, the U.S. is not the be-all end-all location of business in the world. Yet we often act like we are.

Oooh, so scared our CEOs will run away to China:

http://www.bloomberg.com/news/artic...sh-senior-executive-pay-at-biggest-banks-soes

Senior managers at the nation’s five largest lenders -- all of which are government-controlled -- had their total compensation for this year cut to no more than about 600,000 yuan ($95,800), said the people, who asked not to be named discussing private information. Industrial & Commercial Bank of China Ltd. Chairman Jiang Jianqing earned about 2 million yuan in 2013.

Their pay is dwarfed by overseas counterparts. Jiang’s compensation for 2013, which included salary, bonus and benefits, was about 1.6 percent of the $20 million earned by Jamie Dimon, the chairman and chief executive officer of New York-based JPMorgan Chase & Co., the largest U.S. lender by assets, that year.

 

[piasabird]

I have worked in a factory and some people with more experience and a good work ethic produce more of a quality product than other people. Then there are people that take more time off or have more medical appointments. Who is to say the job of a janitor is worth more or less than that of a fork lift operator or a machinist or the job of an engineer?

 

[cubby1223]

Oooh, so scared our CEOs will run away to China:

http://www.bloomberg.com/news/artic...sh-senior-executive-pay-at-biggest-banks-soes

It's easy to argue against when you choose to misrepresent what is stated.

Basically boils down to Asia is slowly building a foundation for growth over the coming decades, while the U.S. is more trying to hang on to as much as it can. Investment money is what makes things happen and growth is where the investment money flows to.

 

[ivwshane]

I like the contrast with the discussion of the company who set an internal minimum wage at $70k. In the context of common workers who disagreed with them getting the pay bumps, some on this forum reduced their argument down to validate yourself by the amount of work you do and compensation you receive, it's wrong to believe you're invalidated by someone else making a certain amount you don't believe they deserve.

Somehow I don't think those same individuals will use that same guiding principle to argue this situation

Lol! Like the ***** hypocrite you are, you misrepresent other people's position.

You aren't smart enough for a nuanced discussion you dumb ****!

 

[piasabird]

Corporate income, profit is very hard to compute or prove. It is all a paper shuffle. Some income goes to payroll, some goes to insurance, some goes to perks for board members or company big-shots. Some money goes to advertising and marketing. Some money goes reinvestment in infrastructure, some goes to pure research. Some goes to miscellaneous expenses. Then if there is anything left that is profit. Profit is an elusive figure.

 

[lopri]

There you go again misrepresenting what someone says. I'm saying all U.S. laws have a certain scope. And if the company doesn't fall within the scope of that law, they are not responsible for following them.

How is it that asking a question is misrepresenting? I wanted to know what you are trying to say when you invoked the needs(?) of foreign corporations because it seems foreign (forgive the pun) to the discussion at hand.

So let me rephrase the question, at the risk of misrepresenting, because it is still unclear to me what you wanted to convey;

Are you suggesting that there are some international norms and expectations that counsel against this disclosure rule and the foreign corporations will respond to this rule in a manner that will have adverse consequences on the U.S. economy?

 

[senseamp]

It's easy to argue against when you choose to misrepresent what is stated.

It's typical rightwinger scare tactic BS. If we don't bend over, these job creators are all going to go somewhere else, or not develop new things, or go to China, or whatever. Why isn't Toyota CEO moving his company HQ to the US if he is paid like 1/20th of Ford CEO?

 

[Atomic Playboy]

Then the government can dictate mandatory CEO ratios. What about the ratio of a president at say 300K + paid vacation and a free plane and health care and a man on Minimum wage that can only make $20k a year. How do you compute all the perks that a CEO may have like stock options and a company car or plane?

All of those perks are already calculated and valued by the company and disclosed on annual 10-K and proxy reports to the SEC and shareholders. They have different columns for keeping track of every different form of compensation, including salary, bonuses, stock awards and options, and other assorted forms of compensation. All of this is already required filing; all they're doing is requiring one more calculation that gives the average employee salary at the organization and the CEO's total compensation package as a multiple of that average. I don't know why you would need that to see that "Oh, the President of Nike made $16.8 million in total compensation last year, I guess that is a lot more than $40,000," but whatever.