Oops yer right, I missed that remark in the OP.
Yeah, but didn’t you get the memo?
CEOs only respond to carrots; workers only respond to sticks.
This is the thing, how do you attract a new CEO? Let’s say I’m the asst manager at a successful Starbucks, making a fabulous salary, and kicking ass at the job. The struggling Barstucks across the street wants to hire me as their manager in a desperate attempt to keep the business afloat.
Am I going to quit my safe and well paying job to take on a risky venture? Perhaps, but only if the risk was going to be well rewarded. I’d also bargain for more security in my finances, the golden parachute. CEO 2 isn’t sitting in his mom’s basement loading resumes to Monster, he’s already got a corner office and a fat paycheck every week. He doesn’t need to take a risk, so you won’t get him without making him secure. That’s the issue I see with limiting CEO compensation.
WRT carrot and stick. You’re not going to attract a new CEO by telling him how hard you’re willing to hit him when he screws up.
That’s exactly right. Because it’s tied to to quaint notions like freedom.
When you impose a minimum wage by law, you are taking away the freedom of an employer to pay what the market will bear, and forcing the market to set a value for labor higher than it actually is.
The owners of a company, through their elected representatives, the board, should be perfectly free to pay their CEOs - and their workers - whatever they wish. If the CEO, or the worker, feels he is being compensated poorly, he can leave.
That’s freedom. No one is compelled to do anything.
It’s the best.
Workers are entitled to the freedom to be hit with sticks, to starve, to go broke, etc.
:dubious:
Tom Stemberg co-founded Staples with Leo Kahn and remained its CEO until 2002.
When you inflate an executive salary by anticompetitive collusion between executives and board members, you are taking away the freedom of an employer to pay what the market will bear, and forcing the market to set a value for CEO services higher than it actually is.
The economic argument for allowing employers to pay “whatever they wish” is that competitive pressures will force them to offer compensation at levels set by market forces, thus maximizing economic efficiency.
If employers are gaming the system and interfering with markets so that the salaries they’re offering don’t correspond to this “market price”, then this argument no longer holds.
I know that. I know them all although the two you named are more enemies than friends. I don’t want to get into personal relationships here. Stemberg ceded operational control for a while the same way that Bill Gates has done. That was to my wife’s godfather and the person that mentored me in my earlier years.
The gains from stock options were extremely lucrative and very unexpected even to Tom and Leo.
The options I get are not public traded. I not seen any listing for an option that cannot be exercised until date X but must be exercised by date Y. With X tending to vary form 6 months to 5 years from the date of grant and Y being 10 years from data of grant. There are other options that are traded but not those. That is a very standard silicon valley style of option granted to people. I have never seen this kind of option publically traded.