CEO's pay -- 300 times regular folks'!

Great Debates
1

At the risk of sounding petty, I have a problem with too many American CEOs bloating themselves up at corporations that they didn’t create or in any way help nurture into success.

They seem to go into these places like carpetbaggers and before you know it, there they are sitting tall at corporate boards doing the one hand washes the other hand thing with their new pals – voting themselves obscene bonuses, raises, fabulous golden parachutes … hitting the treasuries like a bunch of out of control pigs, all the while waving the flag and saying how wonderful American capitalism is!

What these types are getting away with is beyond disgusting – it’s evil!

Many moons ago, I was at Youtube and there I watched a clip of a Ross School of Business instructor address a classroom of new students about their bright futures and how wonderful things were going to be for them, and I was sickened by his arrogance as he stood up there talking about all the big easy money that would be theirs for the taking just by playing the corporate game … and how the school would do its part to help them screw-over the millions of poor folks that grunt-out their lives working in those places!:mad:

As an out of work janitor that busted my butt for 18-years at a manufacturing plant, only to end up having my job taken due to a certain greedy CEO that came in and conducted a “pay analysis study” immediately following her pocketing $6.4-million from the corporate treasury, I can tell you that the activity in question is no victimless crime. (She did that clever move after having been at the job for a mere 6-months, incidentally.)

Here’s a link to some facts on the subject: Top CEOs Make 300 Times More than Typical Workers: Pay Growth Surpasses Stock Gains and Wage Growth of Top 0.1 Percent | Economic Policy Institute

I wish there would be a grassroots uprising of regular working-stiffs demanding more of the corporate pie, but unfortunately they’re exhausted from the long hours they have to work … so not much chance of that happening.

I know many folks will jump in and defend the status quo, and that of course is fine since this is the Debate forum. But, I very much hope that someone will explain to this simple old boy how any justification for these elites to be given 300 x the dollars the regular folks under them make is fair and logical? (Do these type of CEOs have mental functions that give them 300 times the cognitive power of their underlings, is that how the formula works?)

Again, I have no quibble with CEOs that create their own corporations, only those others, the snakes and piglets.

2

If a guy pays $100M for a Van Gogh, does that mean the painting is 100K x better than a painting that sells for $1,000? I’m not sure why anyone would think that pay scales would be linearly related to… well, anything except maybe the market value of the company.

Let’s say a company is valued at $1B. How much is an individual line worker able to increase the market value of the company? Nothing measurable. Now, a good CEO could double the market value in a few years. Let’s say the line worker makes $40k per year. As a shareholder, is it worth paying a CEO $12M a year for, say, 3 years in order to increase the market value of the company by $1B? It would be worth it to me. That CEO’s pay is chump change.

Now, you might ask why the CEO who doesn’t increase the market value of the company still get paid megabucks, but that is a different question. Or, you might ask if it’s necessary to pay a CEO $12M/year but again, that is a different question. Do you at least see why it might be worth it?

3

It’s not a zero sum game. The pay of the CEO is often times (nay, usually) based on stock price. They are incentivized to make it go up, which makes sense because the officers and directors of a for-profit have a fiduciary duty to maximize shareholder wealth.

If they are getting all this pay through stock options, as is often the case, then the only ones screwed, if they are screwed at all, is not the workerbees but rather the existing shareholders, who see the value of their shares diluted.

Sorry you’re out of work.

4

Short of trying to regulate C-level pay, how do you propose to solve the problem? I dislike it all intensely, but it’s one of those ‘free market’ things where companies pay what they see as appropriate compensation to fill those top slots.

How do you propose to get companies to stop playing this bidding-war game?

If you’re even considering thinking about suggesting the idea of legislation, how on earth do you word, implement and enforce it? Assume for simplicity’s sake that the 10,000 suits that are essentially nuisance/holding action/wahhhhhh! are all dismissed.

5

[QUOTE=Dibbs]
I know many folks will jump in and defend the status quo, and that of course is fine since this is the Debate forum. But, I very much hope that someone will explain to this simple old boy how any justification for these elites to be given 300 x the dollars the regular folks under them make is fair and logical?
[/QUOTE]
I am sorry you were laid off, and I think it will be difficult or impossible to convince you that it was ‘fair’. So maybe we can fixate on ‘logical’.

Can you see how it might make sense that the CEO makes 300 times as much as the janitor? Do you think it is logical that NBA players make 300X more than a janitor? Because the factors involved are much the same.

Regards,
Shodan

6

Only in that there are about as many top-shelf CEO positions as NBA slots. I suggest that you could not fill many more NBA teams with first-rate talent, while another 50,000 uber-CEO slots would be no problem at all.

7

Is that based on any hard evidence?

Regards,
Shodan

8

I’d be surprised if there were even 500 “uber-CEOs” in the whole country. If there are as many as you say there are, then don’t use that prefix. We’re talking about people who can significantly and sustainably increase the market value of their company.

9

Those are all good comments. But isn’t it true that CEOs merely get data from someone that collected it and then, after pondering it (with a couple of martinis in the belly), they throoow the dice?

If that’s basically how it works, then what’s so tough about it? It seems to me that pretty much anyone with a half of mind could do that. And in those instances where the CEO blows it, and blows it again and again, then he’s politely shown the door and is handed a FAT check for his services (and doesn’t have to work another day in his life!).

I suppose it’s fair to say that there’s not much linear about any of this, but if linearity is what it would take to make things more fair, more sane, then why not shoot for it?

10

Instead of fuming, why not join them? Go to business school, graduate, play the corporate game - easy money!

11

You’ve used some terms that I’m not familiar with, but my gut keeps screaming at me that you’re horrible wrong in so many ways!:o

If this were a game of chess, we’d call it a draw.:smiley:

12

Is that what you think Steve Jobs did while he was CEO of Apple? If so, then I don’t think any further discussion will be fruitful.

13

The fact that that’s not how it works and you think it is is why they’re making the making the big money and you’re not.

I assure you these big corporations are not giving their CEO’s millions upon millions of dollars to roll the dice.

14

I think these are pretty important issues, don’t you? If you’re paying somebody $12,000,000 a year and he’s producing $20,000,000 a year in additional profits, he may be worth the money. But possibly a CEO is being paid $12,000,000 and the company is losing money. Or maybe a CEO who’s only getting paid $2,000,000 could have produced the same $20,000,000 in additional profits.

Has anyone run the numbers and found objective evidence that there’s a general cause and effect between CEO salaries and the amount of additional profits they produce? Or even a correlation?

15

Fair enough! Let’s put it this way, CEO pay (well, the bulk of it, that provides outsized multipliers of lower-level pay) comes from the balance sheet, not the income statement. Workerbee pay comes from the income statement. Two different pots of money.

16

Are you saying Steve Jobs is a typical CEO?

17

Yes and no. Yes, in general, I think these are important issues. But given the way the OP is set up, I think those are best left for their own debates lest they detract from the simpler question posed by the OP.

Are you saying you think I might possibly be saying that Jobs is a typical CEO?

18

Again, since the bulk of the big paydays comes from stock options, the correlation is near perfect. In fact, many comp plans are based on how much your stock price increases over and above the S&P 500 or Wilshire, so the CEO doesn’t merely benefit from a rising tide lifting all boats.

19

Well, if I were the benevolent, wise, iron-fisted dictator that this world so needs, I’d smash the whole construct into bits and start over by mathematisizing every job occupation under the sun and place it within a philosophical framework that begins with the question, What is happiness?

By doing this, the “needs” and the “wants” would be separated and from there the formula would move to a what’s “fair and ethical” point with a specific numerical dollar value affixed on a sliding scale … and a wrecking would deal with Wall Street as the crooks doing the backroom deals would have to get real jobs, as their world would mercifully no longer exist.

Seriously, the whole thing needs to be reexamined and made more fair.:slight_smile:

20

But the “factors” need to be scrutinized and then tossed. Can’t we all agree that the current system, if not seriously broken, is unfair to a huge number of hard-working people that are worthy of a larger slice of the pie?