Interesting reads here: Shareholder Responsibility Tale of Two CEOs I will say the following: 1) I cannot comment on this matter in any detail as it pertain to my employer. You all know who I am and where I work, so I can't speak in hypotheticals without being transparent. That's too bad, too, because lately I have had a lot to say about this particular topic as it applies to my employer. 2) Other than the dictation of market forces, why do CEOs make what they make? It's too simple to say, "That's what the market dictates" if I point out a CEO making $27 million and receiving performance bonuses of millions of dollars worth of stock even as his company goes through two rounds of layoffs. I, er, know someone who is approximately seven layers below his company's CEO, and I guarantee the CEO makes more than seven times the salary of my friend. In fact I guarantee it's more than 14 or 21 or 28 times what my friend makes. It is more like 600 times what my friend makes. Why? I don't necessarily begrudge CEOs enhanced compensation packages. I just want to know why you all think they're as enhanced as they are. ------------------ "It's a funny thing, 'friends' You got beginnings and you got ends I guess I'll see you when we're ashes again-- Chris Robinson
It depends on the CEO. Ask Apple if Steve Jobs' arrival as CEO made any difference. Ask HP if the arrival of Carly Fiorina made any difference. Yes, the post of CEO is a very important role and his/her decisions are far more important, in general, than us peons' decisions. He/she guides the ship in many cases and gives the ship direction. A CEO believe it or not is a worker. And it really depends on who the worker is, but in general most people consider the CEO more important otherwise they wouldn't be getting paid that much money? Why do they believe this? Because a worker is expendable. He can be replaced. I can find a Java programmer or a janitor on every street corner. I can't find a good CEO with 20+ years of experience that easily. Sure it could. But if a worker vanished, could the company continue? Yes. Simply because in probably 95-99% of the cases, they can easily be replaced. The knowledge base, experience, and skillset of a CEO is far more difficult to acquire than the "average worker". I'm all for free market simply because if you think you can make a better CEO, then by all means do it. You, too, can be CEO! I absolutely agree -- this is free market at quite possibly its worst. ------------------ "I had mine chewed off by a boss one time." -- Behad leaves us wondering if he gets hazard pay...
A good CEO sets the strategy for the future of the company. Basically a CEO is looking into the future to make his company competitive. Workers are given a task to accomplish to get the company to achieve the goals of the CEO. There are people in the middle who also must be thinking of the future but ultimately the future of the company is done by the CEO. I don't have any problems with CEOs making a ton of money. Granted the free market economy leads to some to be over paid, but hey that always happens (see K. Cato). Keep in mind many CEOs are under the same spotlight the pro athletes are. They must alwyas be on there best behavior and if a skeleton is drug out of their closest, it will be in the news.
I believe Shanna hit it right on the head. CEO's are paid what they are paid because they can, and do, get away with it. I think it's part of human nature. You'll do something if you can get away with it, and if you get your hand slapped, you stop. Although I think it will take a little more than a hand slap to get this kind of thing to stop. ------------------ "Blues is a Healer" --John Lee Hooker
Just admit it BK. You don't like invisible hands to goose you. "United for a Fair Economy" sounds like communism to me. [This message has been edited by heypartner (edited June 20, 2001).]
Because they can. Simple as that, in my opinion. You get a few great CEO's who get good deals from companies to come in and revamp the company. Let's say IBM goes out and gets the best CEO there is and pays them $10M. Now, Compaq looks for a new CEO -- well, the "going rate" is $10M -- even if the CEO is not as good. So they offer $11M.. and on and on it goes. Same reason baseball salaries escalate out of control -- you keep paying more for marginal talent because it becomes "expected". Some CEO ran a dot-com company into the ground. They offered this guy something like $300,000 a year FOR LIFE as a compensation package for leaving the company. How messed up is that? This is also one of the reasons, in my opinion, that there's a wealth-distribution problem in the US over the past two decades. The rich get richer and the lower class workers stay flat because of the above effect. ------------------ http://www.swirve.com ... more fun than a barrel full of monkeys and midgets.
Uh oh Kagy, I.T. is watching what you post They may be contacting Ms O'Hara soon. Seriously though, the CEO is the reason that we have our jobs and a big reason for our success. If you think he's overpaid just look at Kelvin Cato. ------------------ "Oh No..." -Bill Walton in 97 just before Stockton's buzzer beater
Abso-freakin-lutely!!! It is also why there is such a social gap. Do CEO's eat in the commisary or cafeteria with workers? Workers are numbers, not people. When you meet people face to face, it is nearly impossible to ignore their struggles. But, if they are kept at arm's length, they can be ignored. ------------------ Things do not change; we change. - Henry David Thoreau
Baqui99: But that isn't true in the rest of the world. In Japan, for example, CEO salaries are seldom more than 3 times the average employee. In some parts of Spain, there are mandates that prohibit any salary from being more than 2.5 times the average. Many Americans seem to think there's something divine about the free market. I don't think it should be elevated the level of perfect arbitrator. The free market serves the purpose of promoting efficiency by preventing waste, and giving incentive to competition. But it's not perfect. Is the contribution of a CEO *really* that significant? Who's ultimately more important, the workers or the CEO? If the position of CEO vanished, could the company continue? How does one determine productivity of management? How are they accountable for pay-scale assessment? These are all valid questions that hte free market doesn't really answer correctly. People on top have the ability to determine their own pay scales; at that level, I'm not even completely certain that supply and demand functions properly. You wouldn't trust Joe-worker to determine how much he's paid; why trust a CEO, either? I'm all for executives being paid more than workers. Contrary to what some may think, I'm not a true communist. But I do believe that the free market fails to provide perfect fairness, and we can help it out a little. There's something wrong with a teacher making 18k, and a CEO making 300k (as Shanna mentioned) for retiring. ------------------ Lacking inspiration at the moment...
Seriously though, the CEO is the reason that we have our jobs and a big reason for our success. In the case of this particular company, I agree. This CEO started the company, took all the risks, and really led the way. He deserves rewards for his work. My problem is with the marginal CEO's that don't accomplish anything -- basically, people who are paid on what they are expected to do rather than actual results. With that said, if someone paid me $10M to be a CEO without any performance requirements, I'd be happy to do it. ------------------ http://www.swirve.com ... more fun than a barrel full of monkeys and midgets.
BK, you might find this interesting... http://www.universallivingwage.org/ Located right in your back yard. ------------------ Things do not change; we change. - Henry David Thoreau
