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

Great Debates
101

I missed the fact that you clarified your post #32. That one was rather absolute which is what I was responding to. That being said, if you grant that there are CEOs who are worth their weight in gold, then isn’t the question really what **John **posited in post #31, specifically, “Seems to me we should start by deciding if any CEO is worth that (and I put forth one reason in my first post). From there we can move to a discussion about under what circumstances that is true.”

I’m not understanding why this is demonstrative of poorly aligned CEO compensation. Can you elaborate on this one?

Isn’t this more a problem with the way the incentive programs are established? If only short term gains are rewarded, you would expect those to be maximized by decision makers. Proper incentive plans need to be established that reward long term gains whenever possible. Again - this is a decision of the board.

102

I somehow get the impression that those actually taking the side of the particular type of CEO I have a beef with are either kids of CEOs … or are themselves those type of CEOs and are doing their best to defend themselves and the system that allows them to make out like bandits.

The others that don’t fall into either category (that are for CEO greed), if there are any, I suspect would be fine even if the insanity of the phenomena were to reach a point whereby workers were to only receive a small dish of dog food and a bucket of water per-day for their hard work, while the overlords in question got to max-out on ALL the dollar profits!

It really is baffling and scary, too.

Last night I happened to watch a two-hour TV special about Henry Ford. And one of the things they said he did was that he one day got his board cronies together and told them that he wanted to give the average worker in his company $5.00-per-day (upping it from the $2.43, I think it was) and most of said cronies were steamed out of their gourds at the idea of doing such a thing, but Ford – though a nasty anti-Semite that he was – ruled against them.

Other car companies, according to the show, were very untrilled at what Ford had done but had little choice except to do the same. It was pointed out that much good came out of the “backend” from doing that, i.e. workers being able to buy the cars they made, happier workers, etc., though out of the “frontend” of doing that the idiot “experts” of the day said it would be a disaster.

Boy, were they wrong!

These days the greed and arrogant expectations of many of the CEOs that are handed the reigns of corporations remind me of what was going on in Ford’s day; they don’t want the status quo even questioned, keep the grunts in a psychological headlock and hammer endlessly on with how things are so peachy creamy … and with an unspoken understanding that their jobs will go overseas if they don’t agree to keep tap-dancing to this completely unfair insanity!

Note: Feel free to download to paper any of these anti-CEO-greed comments and pin them to corporate bulletin boards when no one’s looking! (There needs to be a sea change, and only the regular workers have the power to get the ball rolling!)

103

Possibly, but the suits who fill those roles seem to be quite eager to take on the short-term, high-yield, scorched-earth roles and don’t seem to overlap with the ones who take on the job for the long run. So there’s blame both ways.

104

Just FYI, this is actually a persistent myth that won’t die, that Henry Ford raised wages in order for his workers to be able to afford his product.

He really did it because because in 1913 annual worker turnover was 370 percent. He lowered labor costs by reducing turnover and the expense of constantly training new hires. I’m sure WWI had something to do with that turnover, but that was his main motivation.

More details here

105

You’re probably better served by discussing the arguments people are making, rather than making guesses about their background.

106

According to the program I watched, he was a salt-of-the-earth type of person in many ways and (generally) loved people, so I don’t think it’s fair to strictly say “he really did it because…”

107

Ford was a plain, salt-of-the-earth, ordinary robber baron.

One illustrative story I love is that he ate salisbury steak - basically a hamburger patty with a little spice - three times a week, precisely because it was plain American food. When he ate it in most restaurants, he complained that it wasn’t as good as his cook always made… which was true, as very few restaurants ground up filet mignon to make it.

Ford had his good points, but it’s hard to assemble very many that point to him being a very nice guy.

108

Who anointed you to deem what’s outlandish and what isn’t?

Seems a bit outlandish on your part.:stuck_out_tongue:

109

My guess is that he did more good for the world than all of his critics ever did combined, but I could be wrong.

110

I wouldn’t necessarily argue, but I’m not sure that crosses paths with the gist of this topic. In any case, he was very, very much in it for the long run - not just him, but his succeeding generations. That leads to some very different practices and choices from a system where a top-slot tenure can be measured in months, and the goal is ecstatic stockholders.

111

But I have engaged in arguments with folks, haven’t you noticed?

My “guesses” were within the context of the larger frame of my post and I have no apology for how I dovetailed them … so benignly.

Maybe some of us need to get into a reading comprehension class, Telemark?:smiley:

112

[quote=“Amateur_Barbarian, post:110, topic:723259”]

I wouldn’t necessarily argue, but I’m not sure that crosses paths with the gist of this topic.

I was just responding to what you said…:o

113

So, you think lots of people, especially internal people, would turn down the job if it only paid $20 million. Sure…
If Satya increases shareholder value he is worth something. If he decreases shareholder value he is worth a lot less. Market cap has nothing to do with it. And it should be, though it isn’t, increase in shareholder value beyond that attributable to general stock market trends.
The share price increase when Ballmer left just showed that MS kept a CEO who destroyed shareholder value for a long time. Ballmer didn’t get paid all that much because he has so much MS stock that he didn’t need the money. But I’m sure that if he wanted $60 million he could have gotten it. Good thing?

114

Dan Ariely notes that one of the major reasons CEO pay data had to be published (and it was an SEC requirement) was to shame the CEOs into limiting their pay. But it didn’t work that way. He notes that what really happened is that each CEO thought he deserved more than that idiot in company X, and thus we got an arms race.

Note also that just recently shareholders got to vote on executive pay - but the vote is not binding. In several cases the Board ignored it. So let’s just say that shareholder input is not very significant.
And I agree with the other comments that massive inequality of wealth affects everyone. During the bubble, when inequality decreased, drug dealers got real jobs because they paid better. That’s good for everyone.

115

Well, and back atcha. :slight_smile:

In any case, I think Ford is outside the modern mold of CEO and it would be hard to compare him to anyone in today’s “mercenary management” model.

116

Dibbs has some good points.

My experience with CEO’s is that they often look at the bottom line first but not entirely

As he mentioned, the lady in charge of his ex-company looked at the balance sheet and said that these positions are eliminated including his own.

A lot of CEO’s wrongly think that they are the most important person in their organization. No doubt that they are important but a lot of them let their ego guide their way.

All that a CEO can do is to slowly guide an organization in the direction they want to go in.

Think of a large ship. All that a CEO can do it slowly guide it where it needs to go. The actual work is done by the crew.

Yes, the right CEO can do wonders for a company but the wrong CEO can be devastating.

And yes Dibbs is correct in that having some connections can be helpful but if the CEO is not as good as expected, they will soon be pushed out.

The few CEO’s that I have met are very nice in person and have a general understanding of how things work but do not know the specifics.

Take Ford for an example, Do you think the CEO of Ford knows how the fuel mapping for the fuel injection is done specifically with different parameters. I doubt it.

I would guess that the CEO of Ford would know that the fuel and air is controlled by a computer with various feedback loops to control the process it and goes through fuel injectors but he would not know the specifics of the programming as they are very complicated programs.

Dibbs may be a little bitter but I guarantee that he would be one who would bend over backwards to help someone out if he could.

The problem is that his skill set as a janitor is not highly valued in today’s society even though he may have a LOT more common sense than the typical business graduate.

Not sure what his background is, but depending on his knowledge and with some help, he might be just as good of a CEO as the one who fired him.

One thing that I have learned is that these people like Dibbs are often much in tune with the real world and have a world of life experience that some of these newer business graduates just do not have.

The only thing is that Dibbs may come across as very blunt and probably is not exactly the most diplomatic in many situations.

117

If you think that people who accepted jobs offered to them voluntarily by companies that thought that they were worth the 300X pay… are snakes and piglets, I don’t think that you are serious when you say that you have no problem with CEOs that create their own corporations.
One grassroots activity that can get a bigger share of the pie is called “making one’s self more valuable to the corporation.”
BTW, why should they get more of the ‘corporate’ pie? Why not more of the ‘mom and pop’ pie?
You want to make disposal of monies that you have neither earned nor created. What is wrong with *this *picture?

118

They and I and you deserve what people are willing to give us through voluntary, mutually beneficial transactions.

119

FWIW, wealth inequality seems if not directly at least partly correlated with worker unions. Unions did the old turn-of-the-century robber barons in. Flash forward to the 60s, between the Cold War and anti-Commie sentiment on one hand and (some) unions having turned massively crooked and being used as boogeymen, trust in unions among Americans waned progressively. Flash further forward to today, and thanks to sterling PR efforts on the part of the wealthy not only are blue/white collar workers barely unionized any more but half of them vote for union-busting governors and business deregulators.
Queue massive, unchecked greed because fuck you that’s why and whaddayagonna do about it, peon ?

Well ? What ARE you gonna do about it ?

120

"The study also clearly shows that at the high end, the more CEOs were paid, the worse their companies did; it looked at the very top, the 5% of CEOs who were the highest paid, and found that their companies did 15% worse, on average, than their peers.

How could this be? In a word, overconfidence. CEOs who get paid huge amounts tend to think less critically about their decisions. “They ignore dis-confirming information and just think that they’re right,” says Cooper. That tends to result in over-investing—investing too much and investing in bad projects that don’t yield positive returns for investors.”