Here is why CEO compensation has skyrocketed out of control.

[SacrosanctFiend]

Originally posted by: LegendKiller
Why don't you justify your rebuttal?

When I worked at a securitization issuer I worked 80/hrs a week for 3 months to finish up a project which saved the company $5M in one shot and will save them 10's of millions going forward.

What did I get? My boss pushed and pushed but because I was only a Sr. Analyst, I got jack. I had to be a manager to get a bonus.

That year the CEO, thanks to his buddies, cleared 30MM including exercized options.

Now, I got paid 1/500th what he got paid. Did he, himself, product 500x what I did? Did he, himself, product just as much as 500 people at my same level produced for the company?

No. In fact, he wasted so much investor wealth. Squandered so much money and lagged the stock price for so long, that investors more or less demanded he split the company up, which they did.

So he was responsible for the split of a company, and you were responsible for 5 millions in direct savings. Seems like the consequences of his actions has more weight than yours. In addition, he is ultimately responsible for the actions of everyone else in the company, whether they be good or bad. If he is that horrible a CEO, he'll eventually be replaced.

 

[spidey07]

Originally posted by: SacrosanctFiend
So he was responsible for the split of a company, and you were responsible for 5 millions in direct savings. Seems like the consequences of his actions has more weight than yours. In addition, he is ultimately responsible for the actions of everyone else in the company, whether they be good or bad. If he is that horrible a CEO, he'll eventually be replaced.

You actually get it.

Compensation is normally directly tied to your sphere of influence and the impact of your decisions. Legend's hard work did not impact the company much, while the decisions and work of a CEO can impact the entire company.

Hence, officers with their broad reaching decisions making abilities and responsibilities are compensated accordingly.

 

[JS80]

Originally posted by: spidey07

Originally posted by: SacrosanctFiend
So he was responsible for the split of a company, and you were responsible for 5 millions in direct savings. Seems like the consequences of his actions has more weight than yours. In addition, he is ultimately responsible for the actions of everyone else in the company, whether they be good or bad. If he is that horrible a CEO, he'll eventually be replaced.

You actually get it.

Compensation is normally directly tied to your sphere of influence and the impact of your decisions. Legend's hard work did not impact the company much, while the decisions and work of a CEO can impact the entire company.

Hence, officers with their broad reaching decisions making abilities and responsibilities are compensated accordingly.

Shvt flows down. Ideas and actions come from the top and the peons do all the dirty work.

But the real debate should be transparency on the compensation process for the investors' sakes.

 

[yllus]

Originally posted by: LegendKiller

Originally posted by: EKKC
if a company is willing to pay that much money for a CEO, why should uncle sam be involved

leave them alone, let them overpay the underworked and underpay the overworked.

Do you guys realize that it is a fixed game?

1. You hire a consulting company to determine what pay should be.

2. You get them to give you a good amount of pay.

3. ???

4. Consulting company gets tons of contracts for making you rich.

Thank you for understanding what I thought was the very obvious gist of the post. I'm rather flabbergasted at the completely off topic responses I got after my meeting today.

To everyone: The original post is about the board of directors and shareholders being duped. They bring in a consultant to do an arms length evaluation of what their executives should receive in compensation, and instead get back answers that curry favour with that executive so the consultant's agency gets more work. This has nothing to do with jealousy or socialism.

 

[Thraxen]

Originally posted by: JS80
Shvt flows down. Ideas and actions come from the top and the peons do all the dirty work.

But the real debate should be transparency on the compensation process for the investors' sakes.

Well, the sh!t does flow down, but the ideas don't all come from the top by a long shot. They get passed up the chain and then some CEO says, "Yeah, let's do that".

 

[LegendKiller]

Originally posted by: spidey07

Originally posted by: SacrosanctFiend
So he was responsible for the split of a company, and you were responsible for 5 millions in direct savings. Seems like the consequences of his actions has more weight than yours. In addition, he is ultimately responsible for the actions of everyone else in the company, whether they be good or bad. If he is that horrible a CEO, he'll eventually be replaced.

You actually get it.

Compensation is normally directly tied to your sphere of influence and the impact of your decisions. Legend's hard work did not impact the company much, while the decisions and work of a CEO can impact the entire company.

Hence, officers with their broad reaching decisions making abilities and responsibilities are compensated accordingly.

LOL. Yeah, didn't impact the company much. Funding 500 million dollars and saving 5mil right off the bad didn't do jack.

Whatever. CEO's do anything to justify their sleep at night. The CEO of my company justified his largesses by claiming creation of shareholder value, yet he created nothing and destroyed a lot. As with many big CEOs these days, performance is nowhere near tied to compensation.

The CEO is nothing more than the visionary of a company and the connection-maker. While his/her contribution to the company is large, it isn't as large as those that support him/her. Simply saying that it is only ignores the heart of the problem, the broken system.

What happens when a CEO destroys shareholder wealth or loses money for the company, or performs poorly, or doesn't even keep up with past performance? Where does he give back money or get paid less or barely more? Hardly ever.

Even worse, removing a CEO often results in golden parachutes the size of texas, so getting rid of a crappy CEO often is just as bad as keeping him for another few years. What a great way to reward crappy performance.

Look at Jack Welch. He wasn't even near the best performing manager in GE history, his growth rates were lower. However, his pay was the highest in GE history and his post-employment comps were silly.

At least I got out of that idiotic place, went to an even greater idiocy, and then finally got a place that directly rewards performance.

The whole situation is like handing the keys to a candy, toy, and video-game company to a kid and expecting him to be responsible. Most of these arses don't stop and think "Hey, just because I can, should I"?

No, they rig the game, milk it, and move on.

 

[ultimatebob]

Originally posted by: Thraxen

Originally posted by: JS80
Shvt flows down. Ideas and actions come from the top and the peons do all the dirty work.

But the real debate should be transparency on the compensation process for the investors' sakes.

Well, the sh!t does flow down, but the ideas don't all come from the top by a long shot. They get passed up the chain and then some CEO says, "Yeah, let's do that".

The problem with that line of thought is that a lot of good ideas get killed along the way by penny pinching bureaucrats higher up the chain who do not fully understand the idea they're being asked to fund.

 

[glutenberg]

Originally posted by: spidey07

Originally posted by: SacrosanctFiend
So he was responsible for the split of a company, and you were responsible for 5 millions in direct savings. Seems like the consequences of his actions has more weight than yours. In addition, he is ultimately responsible for the actions of everyone else in the company, whether they be good or bad. If he is that horrible a CEO, he'll eventually be replaced.

You actually get it.

Compensation is normally directly tied to your sphere of influence and the impact of your decisions. Legend's hard work did not impact the company much, while the decisions and work of a CEO can impact the entire company.

Hence, officers with their broad reaching decisions making abilities and responsibilities are compensated accordingly.

Strange. Wouldn't the President of the US be paid 36,952.94 (National Average Wage) x 294,444,215 (US Population) = 11,028,391,170,242.10 since he's in charge of 294 million citizens and should therefore be paid 294 million times more?

 

[SacrosanctFiend]

Originally posted by: glutenberg
Strange. Wouldn't the President of the US be paid 36,952.94 (National Average Wage) x 294,444,215 (US Population) = 11,028,391,170,242.10 since he's in charge of 294 million citizens and should therefore be paid 294 million times more?

Unfortunately for the President, his/her position is governmental not commercial.

 

[glutenberg]

Originally posted by: SacrosanctFiend

Originally posted by: glutenberg
Strange. Wouldn't the President of the US be paid 36,952.94 (National Average Wage) x 294,444,215 (US Population) = 11,028,391,170,242.10 since he's in charge of 294 million citizens and should therefore be paid 294 million times more?

Unfortunately for the President, his/her position is governmental not commercial.

GE CEO Jeffrey R. Immelt:

2006 Compensation: $3,300,000 + $5,000,000 bonus + 548,000 (other pay) = $8,848,000 annual pay

316,000 (GE employees) x 36,952.94 (Average Wage) = $11,677,129,040.00

Difference between your theoretical pay of $11,677,129.040.00 and actual pay of $8,848,000 (not including money earned from stock options) = $11,668,281,040. Looks like we're underpaying quite a bit at this moment.

 

[SacrosanctFiend]

Originally posted by: glutenberg

Originally posted by: SacrosanctFiend

Originally posted by: glutenberg
Strange. Wouldn't the President of the US be paid 36,952.94 (National Average Wage) x 294,444,215 (US Population) = 11,028,391,170,242.10 since he's in charge of 294 million citizens and should therefore be paid 294 million times more?

Unfortunately for the President, his/her position is governmental not commercial.

GE CEO Jeffrey R. Immelt:

2006 Compensation: $3,300,000 + $5,000,000 bonus + 548,000 (other pay) = $8,848,000 annual pay

316,000 (GE employees) x 36,952.94 (Average Wage) = $11,677,129,040.00

Difference between your theoretical pay of $11,677,129.040.00 and actual pay of $8,848,000 (not including money earned from stock options) = $11,668,281,040. Looks like we're underpaying quite a bit at this moment.

Wow, you took me seriously. The equation to determine reimbursement should not be "average worker wage" x "number of employees." However, the more employees you have under you usually gives you a larger sphere of influence, and you should be reimbursed more for that.

 

[BigJ]

The new CEO of Home Depot just rejected a compensation package offered to him. Instead of having a very large base pay and restricted stock, he wanted almost all of his compensation tied to company and stock performance. Bold move.

 

[bcterps]

Government positions are a completely separate issue. In terms of responsibility vs salary, the President is grossly underpaid. No one runs for President to make money. Any high ranking govt official makes a ton more money after they've left the govt.

 

[LegendKiller]

Originally posted by: BigJ
The new CEO of Home Depot just rejected a compensation package offered to him. Instead of having a very large base pay and restricted stock, he wanted almost all of his compensation tied to company and stock performance. Bold move.

And one that cuts both ways. Basing it on stock performance can lead to short-term stock targets and not long-term ones. It's a step in the right direction but one that needs to be further modified.

 

[glutenberg]

Originally posted by: SacrosanctFiend

Originally posted by: glutenberg

Originally posted by: SacrosanctFiend

Originally posted by: glutenberg
Strange. Wouldn't the President of the US be paid 36,952.94 (National Average Wage) x 294,444,215 (US Population) = 11,028,391,170,242.10 since he's in charge of 294 million citizens and should therefore be paid 294 million times more?

Unfortunately for the President, his/her position is governmental not commercial.

GE CEO Jeffrey R. Immelt:

2006 Compensation: $3,300,000 + $5,000,000 bonus + 548,000 (other pay) = $8,848,000 annual pay

316,000 (GE employees) x 36,952.94 (Average Wage) = $11,677,129,040.00

Difference between your theoretical pay of $11,677,129.040.00 and actual pay of $8,848,000 (not including money earned from stock options) = $11,668,281,040. Looks like we're underpaying quite a bit at this moment.

Wow, you took me seriously. The equation to determine reimbursement should not be "average worker wage" x "number of employees." However, the more employees you have under you usually gives you a larger sphere of influence, and you should be reimbursed more for that.

So, you think a buddy - buddy system where one CEO scratches another's back because they often sit on each other's board is a a fair and equitable system that determined that a CEO's sphere of influence is 500 times more than an employee's and thus should be paid out in the same manner? Who in the world created the whole golden parachute idea? Let's have stock options that pay out no matter what? That's the most ridiculous nonsense ever created for a compensation scheme.

By the way, I took you literally because you felt that you needed to express your view that someone who's in charge of 417 people needs to be paid 417 times greater. Your exaggeration was returned with another exaggeration.

 

[D1gger]

Originally posted by: bobdelt
Blame the lawyers. You'd be nuts to take on that much responsibility without being paid that much.

:thumbsup:

You have the answer right there. The demands made upon and the responsibility that a CEO takes on require that they are very well compensated.

 

[CarlKillerMiller]

Originally posted by: ebaycj

Originally posted by: spidey07
All I see is sensationalist numbers and class envy.

Socialism FTL. 🙁

Why is it that in nearly every post you make, you feel the need cleverly insinuate how large your income/bank account is?

If that's clever, I'm spiderman.

 

[glutenberg]

Originally posted by: D1gger

Originally posted by: bobdelt
Blame the lawyers. You'd be nuts to take on that much responsibility without being paid that much.

:thumbsup:

You have the answer right there. The demands made upon and the responsibility that a CEO takes on require that they are very well compensated.

No one is arguing that they should be better compensated but to the extent that even if the company loses value during their tenure they get to leave with a $210 million payout? The idea that a stock option (which inherently is meant to be tied with stock value) pays out even if the stock value goes down? These are not the creations of a free market but one where the market has been cornered and locked down by a select few.

 

[Phokus]

Never in my day would i have expected so-called free marketers who support CEO's who STEAL from shareholders.

 

[brandonbull]

Originally posted by: spidey07

Originally posted by: Phokus
What the hell are you talking about, the issue is the board of directors not taking responsibility for the compensation packages, it has nothing to do with socialisim.

Read closer and you'll see what I'm talking about...

OMG!!! CEO pay raised 6 fold in 25 years! The horror! We must pass laws to stop this!

I call that socialism/anti-capitalism.

What do you call the way CEO pay has been minipulated unfairly?