Executive pay

[Koing]

Market rate. You get what your worth. NO ONE pays more then what your worth and what the market rate is going. You can get underpaid if you don't ask for a good salary.

XXX movie star gets XXX. Yes it is a hell of a lot of £££. But they will bring in a lot of £££ if they are good and the movie is good.

Koing

 

[Vette73]

Originally posted by: AlienCraft

Originally posted by: krunchykrome
yea, for the most part, they're worth it.

there's a reason why they're running publicly traded companies and we're not

Tell that to all the ex ENRON, World Com, and Adelphia employees.

home depot, old att, Bears, country wide, etc...

 

[Mr Pickles]

Originally posted by: sao123

Originally posted by: Mr Pickles
I don't think people understand how much money big businesses really make, and that the responsibility a single executive holds is well worth the amount of pay they are giving themselves. Don't think of it as a person getting a lot of money, think of it as a resource that is critical to the success of the company. Without good executives a corporation is nothing. The money they are payed is miniscule in comparison to the money they are responsible for.

Originally posted by: sao123
I have a problem with high executive pay because you could eliminate the executive and hire 20 or more qualified real workers... BE MORE PRODUCTIVE and still save money.

Here's the perfect naive example. Executives are hired for their decision making ability, not how many pens they can put together each hour or how many license plates they can stamp out in a day. An executives productivity is not limited by manpower...

and I reiterate:

Hey now! I offer the same poor decision making abilities but for only 1/10th of the salary.

People fail. Executives fail. It sucks that so many underneath them are affected, but that's life.

 

[Scarpozzi]

The biggest problem is that publicly traded companies are usually decided by board members. Board members have money, make money, and don't mind paying someone they have respect for more than what they're worth to keep them. So if you're popular, rich, and smart you have a shot of staying on board in a ranking position and making a ton of cash in the process.

If CEOs and CFOs jump ship and go to another company, they can set the company back a few months or more simply by not being there to follow through with their global plans. So ultimately, them leaving may cost the company more than if the company paid them a little extra in the form of a bonus to keep their total salary competitive.

 

[kranky]

Originally posted by: spidey07

Originally posted by: kranky
That works in theory, but in practice it seems the companies just issue more options to compensate for situations where the stock didn't go up. They claim they have to, otherwise their beloved executives might leave!

I can bring up HP's psycho CEO as a perfect example of why a mistake here or there is noted, but the outcome is always the same - you're out. The severance is there to encourage risky behavior because risk = reward. But too many mistakes and they're out, kinda like all employment.

Let the market decide and not let jealousy cloud judgment.

And to the comments about "regular employees", officers aren't regular employees nor do regular employees have the decision making power that officers do. Point blank, the reason why they are paid so well is because that's what the market for their skills and experience and past will pay them.

Has nothing to do with jealousy. I would take every cent I could get in the same situation. But the question was whether they are worth it, and I don't think most of them are. The severance is unrelated to encouraging risky behavior. It's there because that's the "standard" for executive compensation packages. How about that $190 million severance package for Grasso, the former NYSE chairman? If anyone at the NYSE deserves multi-million dollar payouts, it's the IT team because that's what the NYSE really is - a giant IT organization.

There was a homebuilder whose president quit when being investigated for backdating stock options. How convenient for him, he got a $150+ million severance. He shouldn't have bothered with the stock options, he should have just quit and taken the millions. But I guess he was just looking out for his fellow execs and trying to get them a few extra million by tinkering with the options.

What would be commendable is having executive compensation constructed so that it is completely tied to creating value. Make bonuses payable three years in the future with a contingency, so that execs which ruin the company for short-term gains do not benefit if things tank. Severance should also be tied to results - if you didn't get results, then no severance.

If these people are as good as they think they are, they should be comfortable getting paid for performance. Getting to start a job with a guaranteed payout of tens of millions of dollars regardless of how you perform does not seem justifiable.

 

[nakedfrog]

Nope, they're not, and I don't see how that much money going to the top is good for the company or the economy.

 

[Aharami]

i doubt most of em are worth 1/10th their salary

 

[Special K]

I won't argue that most of them are worth a high price. There are two things I have issue with:

1. The average CEO pay as a multiple of the typical salary at the company has steadily increased over the years. Does a CEO of 2007 really do 20X the work of a CEO of 1980 to justify the 20X increase in pay? Does a CEO of 2007 do the work of 1000 average workers, but a CEO of 1980 only did the work of 100 workers? It's not the absolute number that concerns me, it's the rate of increase. If we take this CEO pay trend to the extreme, it seems that a single CEO will eventually be paid the sum of all other employees' salaries in the company. Can a CEO really do as much work as every other worker in the company combined?

2. I don't think it's right that the CEO's can be rewarded for running a company into the ground.

 

[krunchykrome]

Originally posted by: Special K
I won't argue that most of them are worth a high price. There are two things I have issue with:

1. The average CEO pay as a multiple of the typical salary at the company has steadily increased over the years. Does a CEO of 2007 really do 20X the work of a CEO of 1980 to justify the 20X increase in pay? Does a CEO of 2007 do the work of 1000 average workers, but a CEO of 1980 only did the work of 100 workers? It's not the absolute number that concerns me, it's the rate of increase. If we take this CEO pay trend to the extreme, it seems that a single CEO will eventually be paid the sum of all other employees' salaries in the company. Can a CEO really do as much work as every other worker in the company combined?

Has the cost of living remained the same since 1980?

 

[0roo0roo]

meh athletes are the over paid ones

 

[kranky]

Originally posted by: krunchykrome

Originally posted by: Special K
I won't argue that most of them are worth a high price. There are two things I have issue with:

1. The average CEO pay as a multiple of the typical salary at the company has steadily increased over the years. Does a CEO of 2007 really do 20X the work of a CEO of 1980 to justify the 20X increase in pay? Does a CEO of 2007 do the work of 1000 average workers, but a CEO of 1980 only did the work of 100 workers? It's not the absolute number that concerns me, it's the rate of increase. If we take this CEO pay trend to the extreme, it seems that a single CEO will eventually be paid the sum of all other employees' salaries in the company. Can a CEO really do as much work as every other worker in the company combined?

Has the cost of living remained the same since 1980?

Obviously not, but if you're implying inflation explains the difference, that's incorrect. Adjusting for the cost of living would mean CEO salaries should have increased 2.7x since 1980, not 20x. That points out how wildly their salaries have increased.

 

[Special K]

Originally posted by: krunchykrome

Originally posted by: Special K
I won't argue that most of them are worth a high price. There are two things I have issue with:

1. The average CEO pay as a multiple of the typical salary at the company has steadily increased over the years. Does a CEO of 2007 really do 20X the work of a CEO of 1980 to justify the 20X increase in pay? Does a CEO of 2007 do the work of 1000 average workers, but a CEO of 1980 only did the work of 100 workers? It's not the absolute number that concerns me, it's the rate of increase. If we take this CEO pay trend to the extreme, it seems that a single CEO will eventually be paid the sum of all other employees' salaries in the company. Can a CEO really do as much work as every other worker in the company combined?

Has the cost of living remained the same since 1980?

If the raises were due to cost of living increases, then the multiple of CEO's pay vs. the average employee's pay would have remained the same, since both should have received a cost of living increase.

Let me use some example numbers (assume 3% COL raises each year):

1980

Average employee makes $20k/year
CEO makes $200k/year - 10X what the average worker makes

2007

Average employee now makes ~$44.4k/year
CEO makes ~$444.25k - still 10X what the average worker makes



Instead, it is more like:

1980

Average employee makes $20k/year
CEO makes $200k/year - 10X what the average employee makes

2007

Average employee now makes ~$44.4k/year
CEO makes ~$4.4 million/year - this is now 100X what the average employee makes

As you can see, this pay discrepancy did not come about due to cost of living increases. If it did, then the CEO's pay as a multiple of the average worker's pay would not have increased much, if at all, since both would have received cost of living increases during that time.

 

[Gothgar]

OK, so say they reduce the max pay for these CEO's and other top execs, exactly how much of a raise do the lowly employees think they are going to see?

Reducing one man's pay by 10 million, then spreading that over 50k employees, gimme a break, why even complain, live with it or go get a new job.

 

[BladeVenom]

Last time I saw a study there was an inverse correlation of pay to performance. The worse a company was doing the more they paid the CEO.

 

[Special K]

Originally posted by: kranky

Originally posted by: krunchykrome

Originally posted by: Special K
I won't argue that most of them are worth a high price. There are two things I have issue with:

1. The average CEO pay as a multiple of the typical salary at the company has steadily increased over the years. Does a CEO of 2007 really do 20X the work of a CEO of 1980 to justify the 20X increase in pay? Does a CEO of 2007 do the work of 1000 average workers, but a CEO of 1980 only did the work of 100 workers? It's not the absolute number that concerns me, it's the rate of increase. If we take this CEO pay trend to the extreme, it seems that a single CEO will eventually be paid the sum of all other employees' salaries in the company. Can a CEO really do as much work as every other worker in the company combined?

Has the cost of living remained the same since 1980?

Obviously not, but if you're implying inflation explains the difference, that's incorrect. Adjusting for the cost of living would mean CEO salaries should have increased 2.7x since 1980, not 20x. That points out how wildly their salaries have increased.

My 20X number was not accurate. I knew the multiple had increased, but I wasn't sure by how much.

Here is once source claiming the multiple has gone from 54X in 1980 to 465X in 2005. It doesn't really matter what the exact multiple is though - you cannot attribute an increasing multiple to cost of living increases. If the pay raises were due solely to cost of living increases, then the multiple should have remained constant, since all employees would have received the cost of living increase.

link

 

[spidey07]

It's easy to explain away the change since 1980. The size of the companies have gotten much bigger and so has their revenue.

Since a CEO's decision's impact are directly related to the size and revenue of a company of course their compensation have outpaced a regular worker whose decision influence hasn't changed. Basically their impact has increased significantly and so should their compensation.

 

[sao123]

Originally posted by: krunchykrome

Originally posted by: Special K
I won't argue that most of them are worth a high price. There are two things I have issue with:

1. The average CEO pay as a multiple of the typical salary at the company has steadily increased over the years. Does a CEO of 2007 really do 20X the work of a CEO of 1980 to justify the 20X increase in pay? Does a CEO of 2007 do the work of 1000 average workers, but a CEO of 1980 only did the work of 100 workers? It's not the absolute number that concerns me, it's the rate of increase. If we take this CEO pay trend to the extreme, it seems that a single CEO will eventually be paid the sum of all other employees' salaries in the company. Can a CEO really do as much work as every other worker in the company combined?

Has the cost of living remained the same since 1980?

Ahh yes... because ALL CEO's should be able to afford 2 homes, 6 cars, a yaght, and retirement for life without ever having to work again...


:disgust:



I for one am in favor of a worldwide salary cap.

 

[So]

Originally posted by: Ns1

Originally posted by: Double Trouble
I personally like the idea of simply capping executive pay at some multiple of what the median income for the company is. That way the execs can get compensated properly, and they have an incentive to make sure everyone else in the company benefits as well. The way things are now, those at the top see their pay and benefits increasing at a much more rapid pace than the rest of the world.

The problem is the best CEO's will go to the company that pays more. That is a fact.

The thing is, is a $100,000,000 CEO really 50,000% more effective than a $200,000 CEO?

 

[child of wonder]

I don't have a huge problem with the amount a CEO makes. What I have a problem with is them making horrid decisions that forces the company to lay off workers, cut pay, cut benefits, etc. and then they are fired or resign and walk away with massive severance packages.

IMO if you're going to be a big boy and make big boy decisions and mess with people's lives and incomes like that, you shouldn't get some giant safety net. You should fall just as hard as the people you cause to fall. They should get a paltry severance package the same as anyone else, or none at all if they're fired for doing a horrible job.

 

[Engineer]

Originally posted by: So

Originally posted by: Ns1

Originally posted by: Double Trouble
I personally like the idea of simply capping executive pay at some multiple of what the median income for the company is. That way the execs can get compensated properly, and they have an incentive to make sure everyone else in the company benefits as well. The way things are now, those at the top see their pay and benefits increasing at a much more rapid pace than the rest of the world.

The problem is the best CEO's will go to the company that pays more. That is a fact.

The thing is, is a $100,000,000 CEO really 50,000% more effective than a $200,000 CEO?

Ask the Toyota CEO.

 

[MikeyLSU]

who cares what they make, that is the point of a free market. A company can pay whatever they want to whomever they want.

Do I think they are worth it, no. But why cap a salary?

Would you like it if the gov deemed your job to cap at $20,000 because that is what that job is "worth"? You will say it is different, but why, a cap is a cap.

Obviously the companies think it is worth it to pay this amount so who are we to tell them they are wrong?

 

[compuwiz1]

Originally posted by: ChAoTiCpInOy
It doesn't make any sense. There are people that actually need that money.

The money they get when they leave is normally part of their pre-negotiated compensation package.

And you are right, there are people who need that money, so I guess they'd better get to work and make something of themselves in this great country with more opportunity than anywhere else.

 

[Josh]

Psssh you all know that none of you would be saying shit if you were the ones collecting that $1,000,000 per week paycheck

 

[krunchykrome]

Originally posted by: kranky

Originally posted by: krunchykrome

Originally posted by: Special K
I won't argue that most of them are worth a high price. There are two things I have issue with:

1. The average CEO pay as a multiple of the typical salary at the company has steadily increased over the years. Does a CEO of 2007 really do 20X the work of a CEO of 1980 to justify the 20X increase in pay? Does a CEO of 2007 do the work of 1000 average workers, but a CEO of 1980 only did the work of 100 workers? It's not the absolute number that concerns me, it's the rate of increase. If we take this CEO pay trend to the extreme, it seems that a single CEO will eventually be paid the sum of all other employees' salaries in the company. Can a CEO really do as much work as every other worker in the company combined?

Has the cost of living remained the same since 1980?

Obviously not, but if you're implying inflation explains the difference, that's incorrect. Adjusting for the cost of living would mean CEO salaries should have increased 2.7x since 1980, not 20x. That points out how wildly their salaries have increased.

I wasn't implying that inflation was the reason for the increase in executive compensation. But it's not something to disregard either. Another point to mention is that executives today face much tougher regulations, penalties, and consequences for their actions today than they did 30 years ago. Top management and executive positions require them to manage and oversee a much more convoluted business envrionment today than what was in 1980. Also, keep in mind that today, it's very common for executives to receive much of their compensation package in non-salary items such as options. This wasn't as common 30 years ago.

 

[krunchykrome]

Originally posted by: sao123

Originally posted by: krunchykrome

Originally posted by: Special K
I won't argue that most of them are worth a high price. There are two things I have issue with:

1. The average CEO pay as a multiple of the typical salary at the company has steadily increased over the years. Does a CEO of 2007 really do 20X the work of a CEO of 1980 to justify the 20X increase in pay? Does a CEO of 2007 do the work of 1000 average workers, but a CEO of 1980 only did the work of 100 workers? It's not the absolute number that concerns me, it's the rate of increase. If we take this CEO pay trend to the extreme, it seems that a single CEO will eventually be paid the sum of all other employees' salaries in the company. Can a CEO really do as much work as every other worker in the company combined?

Has the cost of living remained the same since 1980?

Ahh yes... because ALL CEO's should be able to afford 2 homes, 6 cars, a yaght, and retirement for life without ever having to work again...


:disgust:



I for one am in favor of a worldwide salary cap.

Yes, they should be able to afford all of that. They've paid their dues, and accomplished more than what we have. While we're posting on this off-topic forum, they're running billion dollar businesses. I'm not bitter.