# Help me understand CEO pay **URL:** \ **Category:** Great Debates\ **Created:** [December 7, 2011, 6:56pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397 "2011-12-07T18:56:08Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Sitnam](https://avatars.discourse-cdn.com/v4/letter/s/6a8cbe/32.png) [@Sitnam](https://boards.straightdope.com/u/Sitnam)\ **Post date:** [December 9, 2011, 6:42pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/61 "2011-12-09T18:42:31Z")
> [@Stratocaster](#): > > This is what you asserted:I can’t even see your cite, but assuming it says what you translated it as, that does not support your assertion. It’s also a non sequitur. Allowing CEOs to be part of the selection process for board members by definition has an existing CEO in the equation. I suppose it could create an oversight conflict of interest, but not sure how that impacts the existing CEO’s comp. > > And most importantly, that “cite” does not offer evidence for a single instance of unethical behavior, let alone rampant abuse. Where to start? Try again…as it stands, this continues to be an unsupported assertion that has garnered a great deal of affection on this board. The cite is proof of the damaging effects to companies if the relationship between CEOs and board managers is cosy, therefore, it is entirely relevant. I didn’t link to a single instance of unethical rampant abuse because you’d hand wave it away as cherry picking. But ok, will you agree to concede your entire position if I can cite one example of it? ETA: I’m trying to establish a link to a PDF but cannot, anyone know how to do it? ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [December 9, 2011, 6:43pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/62 "2011-12-09T18:43:29Z")
> [@Stratocaster](#): > > These are the main, unsupported (so far as I have seen) memes that are now accepted as facts in certain circles: CEOs are most typically the result of crooked boards scratching the back of a buddy,… It doesn’t even need to directly benefit a “buddy”. A board member might hate his CEO’s guts, but still vote to raise his salary[sup]1[/sup]. Then that board member can then go back to the company where he is CEO, and when his salary is up for review, he can ask his board to raise it to keep pace with the market. I can’t prove that such a thing happens. I have no ability to read the minds of board members and CEOs and tell you why they do what they do. All I would argue is that such an incentive can exist. Isn’t it an assumption of capitalism that everyone works to maximize their own interest? If a board member has an incentive to raise the CEO’s pay, and little incentive not to, what should he do? I’m sure there are more factors involved. Board members can be voted out if the stockholders think they’re not acting in their best interests, for example. But do you deny that the people who set CEO pay often benefit personally when it goes up? 1. I dislike the term “compensation” when discussing CEO pay. For “salary” please include all the money, bonuses, stock options, perks, expenses, etc. from the company to the person. ---
**Author:** ![Fool\_in\_the\_Rain](https://avatars.discourse-cdn.com/v4/letter/f/8491ac/32.png) [@Fool\_in\_the\_Rain](https://boards.straightdope.com/u/Fool_in_the_Rain)\ **Post date:** [December 9, 2011, 6:53pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/63 "2011-12-09T18:53:24Z")
> [@Sitnam](#): > > ETA: I’m trying to establish a link to a PDF but cannot, anyone know how to do it? try dropbox, or put in on a webpage of yours or a friend’s. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [December 9, 2011, 7:41pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/64 "2011-12-09T19:41:43Z")
The board may not be outright crooked - just self-interested. People who believe that CEO’s are a special breed with unique abilities will decide they should be rewaded accordingly. The CEO and his collection of lackeys, who hope to be CEO, are instrumental in picking the board. Are they going to pick someone who says “You guys are nothing special, the bozo running the shipping dock could do this…”? Read _Barbarians at the Gate_ for a running commentary on handpicking and bribing the baord, and then the CEO’s shock when they are forced on lawyers’ advice to do the legally proper thing and not give him special consideration, after all the cushy cocktail events, golf games, and a fleet of corporate jets at thier disposal… The other issue is that CEO’s, many years ago, used to work their way up the company ladder. Ocasionally, someon would jump ship from one company to they other, but often in related industries, or well below the VP level. As a result, when they were selected as CEO, they were part of a team, they know the business, and they knew issues affecting the company. (Of course, if the company culture was ossified and top-heavy, theymay not recognize the problems). In more modern times, CEO’s hop between unrelated companies; thinking that for example, running Pepsi qualifies you to do a better job running Apple than Steve Jobs could do. First, the risk of jumping ship to take on a new job requires extra compensation. A guy who spent 30 years with Acme Inc., as VP, would probably be kicked upstairs from CEO to board or something with a nice pension when he was done or proved to be inept. A CEO hired off the street needs a good incentive to jump ship, and a good parachute in case he has trouble finding a next gig when he leaves. It’s the classic long-term security vs. big money trade-off. A CEO dropped cold into a businesss may be a breath of fresh air but more likely will have problems; he won’t know who around him is reliable or trustworthy, or how to negotiate his underlings’ office politics. (At that level, when the potential stakes are a multi-milion dollar position, the stakes are very high!). If he’s not familiar with the business, he’ at the mercy of powerpoint presentations and underlings’ recommendations. Also, bonus used to be that - a bonus. Today, most compensation comes from the stock options and bonuses, and salary is close to irrelevant (only a few million…) This means that the handpicked boad can adjust pay every year instead of a fixed contract for a specific amount. Giving stock options where the option price is well below market price is odd too- why not just give them money and options at today’s market price? The big problem is stock options. The incentive is to do what they can to increase short-term returns and boost stok proce, no matter what it means long term. Cutting R&D in a tech company is a fantastic profit-maker, because so much of the money goes into R&D. Long term, it’s gotta be the dumbest strategy sinced sliced soup. Ditto for laying off your staff and replacing them with contractors; or destroying morale with layoffs simply because a group of analysts suggest your headcount is too high based on their guidelines. But - these strategies are often done by CEO’s. TO be fair, the impetus to boost stock price is driven by investors who are also involved in stock rentals (short-term stock owners). The whole industry is centered around self-serving short-term stock boosting over long term planning, but that’s a separate debate. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 9, 2011, 9:21pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/65 "2011-12-09T21:21:19Z")
> [@John\_Mace](#): > > Does anyone have stats on the rising pay of celebrities (movie stars, sports figures, musicians) over a similar time period that we typically see these CEO pay graphs? It would be interesting to see if there is a similar trend, and if so, perhaps there might be a similar reason. Why wouldn’t the pay of CEOs in other countries be a better comparison than the pay in a totally unrelated field? > [@MichaelEmouse](#): > > I often get the impression that the people who complain about the fact that “in 1970 CEOs made X times as much as workers but now they make 10X times as much” would, if we were in 1970, be complaining that “CEOs made X times as much as workers”. > > It’s quite possible that CEOs of big firms are, on average, overpaid. This is most be linked to a principal/agent problem, both in terms of information about problems/opportunities and incentives to better/worsen them. If a company were wholly owned by one person who dedicated himself fully to the company, there would be no significant problem of CEO overpay. But then, in such a situation, the shareholder would likely be the CEO. I think CEO pay is just emblematic of the breakdown in how the market compensates labor. Its not just CEo pay, its the concentration of compensation to the folks at the top. Perhaps this is inevitable as the labor base widens as we open labor markets like India and China but in teh case of CEOs and how they are compensated, I think the system is rigged. > [@John\_Mace](#): > > Do you know how the price of something is determined? Hint: It has something to do with “bear” and “market”, but it’s not a bear market. And it has little, if any, relation to the price of that “something” 50 years ago. Seriously, the first part of your post is like the complaint made by the crotchety old man who refuses to go to the movies because they cost so damn much more than they did when he was a kid. Or the person who scoffs at people paying $3.00 for a cup of coffee at Starbucks. After all, how much does water a handful of coffee beans cost? > > Things change. The value of things change. We don’t determine the value of a thing by what it’s value was 50 years ago. I think the system is rigged, CEOs have managed to insulate their compensation from rational market forces. When they started with stock options incentives, the idea was to REPLACE some CEO pay with stock options to align the interests of management with the shareholder. Then the CEO convinces the compensation committee (made up of other CEOs on whose committee he may serve) that it is not necessary to reduce his pay to make room for the stock options that will align his interests with the interests of the shareholder. Then the CEO decides that rather than issue dividends, the company should engage in stock buyback programs because dividends are a measure of increase in shareholder welfare that CEOs are not sharing in. So they spend money on buying back stock rather than dividends and share prices naturally rise for no other reason than because tehre are fewer shares outstanding. Then the CEO decides that his expiring worthless options need to be refreshed (at a lower strike price to reflect the lower stock price) because it would otherwise be unfair to him and it only makes his interests that much MORE aligned with teh interests of shareholders. Its not exactly the free market. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 9, 2011, 9:25pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/66 "2011-12-09T21:25:31Z")
> [@Stratocaster](#): > > Man, anecdotes really rule the day in threads like these. “There have been cases,” eh? CEO comp is not even a rounding error typically in a Fortune 500 company, relative to their total expenses. Gretchen Morgensen covered several such cases in her columns. However if you don’t understand the difference between profits and expenses, you maybe should not participate in these discussions. > [@](#): > > John summarized the disconnect nicely, I think–if your real bitch is about worker pay, what makes anyone think a lower-paid CEO naturally means higher paid workers? It doesn’t. Since I specifically did not claim that this would result in higher worker pay, in the part you quoted, I don’t know what you are blathering about. > [@](#): > > These are the main, unsupported (so far as I have seen) memes that are now accepted as facts in certain circles: CEOs are most typically the result of crooked boards scratching the back of a buddy, decisions largely unrelated to any expectation of a CEO’s value added; CEO pay structure encourages them to actually make companies unprofitable, so that they can cash out; and worker productivity gains are being unfairly turned into cash for the CEO (and/or the shareholders). No one need support such assertions; they are accepted as fact. Does anyone have any actual, you know, evidence for such outrageous claims? No one I’ve noticed is claiming that any of this is illegal. Do you know how CEO compensation committees work for large corporations? Do you know how they select companies to compare against? Do you not see the benefit of CEO X in raising the salary of CEO Y? You’ve already seen the difference in compensation between the US and the rest of the world. Are you claiming that US corporations are that much better, that much more profitable? If not, you are invited to explain the difference better. There have been plenty of news stories about this; your willful blindness is not my problem. As for productivity, you are invited to look up productivity improvements and worker compensation increases. It is clear that the productivity improvements are not going to workers. Where do you think they are going? I didn’t say that CEO pay encourage them to make companies unprofitable - quite the opposite. What I said was that it encourage short term profitability and thus a short term increase in stock price and thus increase in the value of options. Certainly the strategies of the investment banks which led to the crash are a perfect example of this. Is this news to you? > [@](#): > > (By the way, among the many economic and financial terms misunderstood on this board “worker productivity” must be near the top of the list; it does not mean what people seem to think it means–automation, for example, increases worker productivity, an effect that has been HUGE in our economy over the last 50 years. I haven’t seen anyone use anything except the correct definition using output. I meant government measured productivity of course. It is obvious to anyone who knows anything about economics that real wage gains have to come out of productivity gains; otherwise your company becomes uncompetitive or, if everyone does it, you have price inflation and no one is actually any better off. Increasing productivity has been the driver of real wage gains in the past. As I said before, the difference in the past decade has been that productivity increases have not gone into wage gains, but at least partially into CEO paychecks. (We’ll include other top execs in here also.) Want to address that now you are finished telling your betters how stupid they are? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 9, 2011, 9:34pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/67 "2011-12-09T21:34:12Z")
> [@John\_Mace](#): > > Do you know how the price of something is determined? Hint: It has something to do with “bear” and “market”, but it’s not a bear market. And it has little, if any, relation to the price of that “something” 50 years ago. Seriously, the first part of your post is like the complaint made by the crotchety old man who refuses to go to the movies because they cost so damn much more than they did when he was a kid. Or the person who scoffs at people paying $3.00 for a cup of coffee at Starbucks. After all, how much does water a handful of coffee beans cost? Great. Is EPS that much better than 50 years ago? Do you think adjusting for inflation helps? In any case, the metric measures CEO compensation against employee compensation. Starbucks cost the same for the boss and the lackey. So your objections make absolutely no sense. > [@](#): > > As for “syphoning”, that’s nothing more than an appeal to emotion. Guilty as charged. Sometimes emotions are good. The money is coming from somewhere,and it is owned by the stockholders, not the CEO. Let’s just say the hypothesis that higher CEO compensation leads to greater stockholder value has a few counterexamples. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 9, 2011, 9:36pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/68 "2011-12-09T21:36:41Z")
> [@Stratocaster](#): > > Cite? I can’t just let these pass any more. Two letters: HP Don’t you even read the business section? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 9, 2011, 9:39pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/69 "2011-12-09T21:39:42Z")
> [@Sitnam](#): > > ETA: I’m trying to establish a link to a PDF but cannot, anyone know how to do it? If you can get to it through Google, you can copy and paste the Google link even if you don’t have the url of the pdf. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 9, 2011, 9:47pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/70 "2011-12-09T21:47:32Z")
> [@Damuri\_Ajashi](#): > > I think the system is rigged, CEOs have managed to insulate their compensation from rational market forces. This is really a perfect example of an arms race. CEO X gets an increase, so CEO Y tells his board that if they don’t think he is better than X they should fire him, so they give him some more.CEO Z does the same. This is magnified since it is not the board’s money. Movie stars are paid on a per picture (or season) basis. They are paid by the people who own the money, and if the profitability of the last movie or season decreases, they no longer get the same compensation. I understand why people don’t see this because there are no press releases about decreased pay. Sport stars, who are on longer term contracts, now have salary limited by team salary caps. Not that they don’t get overpaid due to what Thaler calls Winner’s Remorse, which shows that the winner of almost any auction has paid too much. ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [December 9, 2011, 11:22pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/71 "2011-12-09T23:22:11Z")
> [@A\_clever\_user\_name](#): > > 1. If CEO pay has indeed increased significantly, why the change? I’m not going to get into the whole thread, but one thing to keep in mind is that while we have nice clean numbers on salary, it may not be an apples-to-apples comparison; I have seen persuasive argument that executives of all stripes got way more in the way of expense accounts, country club memberships, etc. back in the day. FWIW. ---
**Author:** ![Horatio\_Hellpop](https://avatars.discourse-cdn.com/v4/letter/h/e5b9ba/32.png) [@Horatio\_Hellpop](https://boards.straightdope.com/u/Horatio_Hellpop)\ **Post date:** [December 9, 2011, 11:42pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/72 "2011-12-09T23:42:56Z")
> [@Stratocaster](#): > > John summarized the disconnect nicely, I think–if your real bitch is about worker pay, what makes anyone think a lower-paid CEO naturally means higher paid workers? It doesn’t. Not sure that was ever my bitch, so much as “turnaround experts” who lay off a huge chunk of the workforce and outsource most of the remaining jobs to Asia, still run the company into the ground, and are lavishly compensated for this. This isn’t what the market will bear, it’s a monstrous, short-sighted criminal conspiracy. That’s my bitch. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [December 9, 2011, 11:58pm UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/73 "2011-12-09T23:58:17Z")
> [@Robot\_Arm](#): > > It doesn’t even need to directly benefit a “buddy”. A board member might hate his CEO’s guts, but still vote to raise his salary[sup]1[/sup]. Then that board member can then go back to the company where he is CEO, and when his salary is up for review, he can ask his board to raise it to keep pace with the market. > > I can’t prove that such a thing happens. The last line, though, is what bugs me, but only in its omission. On this board, it is largely gospel that such a circumstance is beyond dispute. I have never presented to our board, though I have helped prepare presentations; I know its make-up. Fortune 500 firms’ boards, in addition to other financial officers of financial giants–by the way, exactly the sorts of people who can provide proper governance–are peopled by former senators, university professors and deans, doctors, and other people of renown and, frankly, known integrity. The financial officers are often retired from their former positions, by the way. They are, from my perspective, men and women of honor with the company’s best interests as their only obligation. I think that would be decent people’s starting assumption, unless there’s evidence to the contrary. It is speculation to say that they have ignored a CEO’s worth in selecting him, or that they base his compensation on a quid pro quo expectation, parties to a shameful conspiracy. It is not only _not_ fact, it is libelous when made based on the sort of “of course capitalists are evil” supposition that is the bread and butter of this board. Not saying that’s what you did. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [December 10, 2011, 12:03am UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/74 "2011-12-10T00:03:30Z")
> [@Voyager](#): > > Gretchen Morgensen covered several such cases in her columns. However if you don’t understand the difference between profits and expenses, you maybe should not participate in these discussions. Since you didn’t seem to follow the point, you might want to follow your own advice. I’m well aware of the difference, by virtue of education, training and job experience. I have been in management in financial services for going on 30 years. Spare me your Finance 101 primers and snark. Since the rest of your post is a discourteous attempt to “educate” me, ignoring the essence of what I said, I’ll not waste any more time on you. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [December 10, 2011, 12:06am UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/75 "2011-12-10T00:06:44Z")
> [@Voyager](#): > > Two letters: HP > > Don’t you even read the business section? This is now officially comical. The point I made was that it is idiotic to assert that conspiratorial comp setting is the norm, not the exception, and that it is inexorably impacting workers’ pay and unfavorably (as a rule) impacting the bottom line. You interpreted this to mean there has never been abuse, anywhere, any time. Wow. You might want to put down the business page and put a little more effort into reading posts before you respond to them. Oh, wait, it’s you. I should be done with you. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [December 10, 2011, 12:10am UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/76 "2011-12-10T00:10:09Z")
> [@Sitnam](#): > > The cite is proof of the damaging effects to companies if the relationship between CEOs and board managers is cosy, therefore, it is entirely relevant. > > I didn’t link to a single instance of unethical rampant abuse because you’d hand wave it away as cherry picking. But ok, will you agree to concede your entire position if I can cite one example of it? No. Let me be more clear than I was in my response to you. If you assert that there is a widespread, institutional drag on either profitability and / or workers’ pay, you should be able to provide something more than speculation or one-off examples. My point, which could have been clearer, was that you didn’t even do that. What would be helpful, when one asserts something is a general rule, is evidence that that is so, not merely that it’s possible. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [December 10, 2011, 12:43am UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/77 "2011-12-10T00:43:43Z")
> [@Stratocaster](#): > > The last line, though, is what bugs me, but only in its omission. On this board, it is largely gospel that such a circumstance is beyond dispute. I have never presented to our board, though I have helped prepare presentations; I know its make-up. Fortune 500 firms’ boards, in addition to other financial officers of financial giants–by the way, exactly the sorts of people who can provide proper governance–are peopled by former senators, university professors and deans, doctors, and other people of renown and, frankly, known integrity. The financial officers are often retired from their former positions, by the way. They are, from my perspective, men and women of honor with the company’s best interests as their only obligation. I think that would be decent people’s starting assumption, unless there’s evidence to the contrary. Can you provide something more than a “one-off example” that such integrity is " the norm, not the exception"? > [@](#): > > It is speculation to say that they have ignored a CEO’s worth in selecting him, or that they base his compensation on a quid pro quo expectation, parties to a shameful conspiracy. It is not only _not_ fact, it is libelous when made based on the sort of “of course capitalists are evil” supposition that is the bread and butter of this board. I never said they ignore a CEO’s worth. They probably do try to pick the person who will do the best job, there’s no reason for them not to. How much they choose to pay that CEO is a different matter. And I notice you didn’t answer my question. Can there be an incentive for some board members to personally profit from a rising market in executive pay that they help create? ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [December 10, 2011, 1:48am UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/78 "2011-12-10T01:48:17Z")
> [@Robot\_Arm](#): > > Can you provide something more than a “one-off example” that such integrity is " the norm, not the exception"? You would like me to prove that board members aren’t doing bad things? > [@](#): > > I never said they ignore a CEO’s worth. They probably do try to pick the person who will do the best job, there’s no reason for them not to. How much they choose to pay that CEO is a different matter. > > And I notice you didn’t answer my question. Can there be an incentive for some board members to personally profit from a rising market in executive pay that they help create? Is it possible? Sure. I don’t think it’s likely, unless there’s collusion to an extent that the world has never seen. ---
**Author:** ![Untoward\_Parable](https://avatars.discourse-cdn.com/v4/letter/u/51bf81/32.png) [@Untoward\_Parable](https://boards.straightdope.com/u/Untoward_Parable)\ **Post date:** [December 10, 2011, 1:52am UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/79 "2011-12-10T01:52:08Z")
Try to understand why we allow an economy where people with 100’s of millions they inherited from previous generations gets to make a million a week off of investments while gaming the market. There is nothing to be understood about people getting paid ridiculous amounts other than it reveals that human beings are a hierarchical species where a few manipulate the rest to provide themselves with the best of life money can buy. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [December 10, 2011, 3:49am UTC](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397/80 "2011-12-10T03:49:17Z")
> [@Stratocaster](#): > > Is it possible? Sure. I don’t think it’s likely, unless there’s collusion to an extent that the world has never seen. My whole point is that there doesn’t have to be collusion. There need not be any agreement among the participants for this to happen. Any individual could use their position on a board to drive up pay, and reap the benefit of a rising market. [Previous page](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397.md?page=3) [Next page](https://boards.straightdope.com/t/help-me-understand-ceo-pay/605397.md?page=5)