What Does A Fortune 500 CEO Do To Deserve That Much Money?

First, I am talking about one that was hired not one that founded the company. They should reap big rewards. I am talking about say the Coke CEO? I don’t know exactly what he makes but I am sure it is over 5 million a year with stock options and salary. Which grosses him about $2,400/hr? I mean what could he do to garner that kind of pay?

I know most of their pay is for their decision making abibility but 2,400 an hour?

It would be interesting to see what one of those high paying CEO daily job routine. I wouldn’t be suprised to see one of em spending few hours a day getting massages, suits tailored, chasing the help around the office and asking questions on the SDMB.

Nothing. I think it’s a big rip off. It’s an good old boys network of course. I wouldn’t complain if I were getting 50 mil a year. But that kind of money is obscene.

It’s less than a lot of baseball players make.

Bill, your question cannot be unswered as asked.
This area can’t be regulated. The economy grows as it is. The less regulation, the better. Some is needed, of course, like workers rights, etc. High CEO salary does not hurt anyone (if you do not like the product, do not buy it). So, the CEOs are paid whatever the market bears. The field itself is widely open. Anyone can become a CEO, look around (of course, exeptions exist). This one is getting 2,400/hr because he could not get more.

So, Bill, do you think you could manage several billion dollars worth of employees and capital in several countries around the world, and several product lines in widely different markets, and manage to post net income of a couple billion dollars a year? Do you think you could do it while wasting your time getting massages and chasing secretaries.

I didn’t think so.

Hey, everybody in the world is overpaid in comparison to somebody else, and there is no question that many top executives get paid far beyond their capability to contribute to profitability. But running a corporation of that size, value and market position is not an easy job. Please don’t imagine that it is.

The example you mention, Coca-Cola, posted net income of $1,067,000,000 for 3Q 2000 on gross revenues of $5,543,000,000, a growth in net income of 36% from the same quarter a year before. Not too shabby. I’d say the guy who helms that ship deserves to be well-compensated, all other things being equal.

Deserves? Acording to whom? The Federal Board of Fairness in Upper Management? Corperate management hardly seems like the place to look for truth and justice.

The CEO gets that much because he’s convinced the board to give him that kind of money.

There’s a string of rationales that go along with this, of course. The higher in the manegement scheme, saleries get higher, and as pay is sign of status, it only makes sense to pay every level of management, both to keep respect up the hierarchy, and to encourage people to work hard to advance. High salaries are necisary to attract skilled people. Management types have more responsiblity, and thus are entitled to greater rewards. Management types are at risk more, and thus are paid more to compensate. (That one I don’t buy. Management types seem to have both more lucritive severance plans and more job security than the people who do the actual work) And so on.

But, basically, because that’s what he can convince the company to pay him. Capitalism, you know. Course, as the CEO is often a major stockholder, he can tilt the decision in his favor, but . . .)

If Coke didn’t think their CEO was worth that much, (or, more accurately, that their CEO in office should have X amount of pay and perks, and current head guy is worth Y ammount in addition) They wouldn’t pay him that much.


“I’m greedy and stupid!”

In terms of trying to answer this as an actual General Question: (Whether they merit their compensation is a GD discussion.)

The CEO is called upon to look into his crystal ball, consider proposals (and their associated price tags) being brought to him, decide which proposals to fund and which to kill.

He is charged with deciding which currently profitable ventures are going to become losers in the next few years, due to competition, changes in technology, or changes in laws and determine whether to change their operation or close them.

He must decide whether the unprofitable ventures can be rescued, and how it should be done.

For each of these tasks, he will have any number of division heads and division accountants, all with utterly conflicting choices and reams of “proofs” for their positions.

It is his job to sort the wheat from the chaff and make the correct decisions (at least often enough to avoid falling stock prices).

*Originally posted by pldennison *

Oh yea no problem. :wink: . But seriously I don’t think he does that. I think he maybe hires a CFO to overlook the capitol, a COO to look over the product lines, and personel Mananger to look over the employees. Then he could check with them periodically to make sure they are doing their jobs. So Yes I think he could still have to post on the SDMB and chase secretaries? :smiley:

This all I was getting at and that I wish could get that bucks. :smiley:

No its not. That is a good increase.

I would still like to see a average day of a CEO.

Of all companies Bill had to pick Coke, where it has just been made clear that CEO Douglas Daft will follow the will of the board. It seems that the big decisions are being called by people like Warren Buffett, whose Berkshire Hathaway Inc. is Coke’s largest shareholder.
That board just blew Mr. Daft’s attempt to acquire Quaker Oats (and its coveted Gagtorade sports drinks) out of the water.
Actually, if I could be paid that much money and not have to make decisions…well, I’d kinda like it as long as it could last.

Some baseball players may make more than a Fortune 500 CEO, but not many and none have as much job security as a CEO, nor do they have the potential to keep earning that amount of money until they are in their 70s and 80s.

What he does on an average day is irrelevant. As tomndebb said, he must make major decisions that have huge impacts on the company. One good or bad decision can cost billions over a period of years. Even if he spends 99% of his day posting on the SDMB, he’s still worth a lot of money if he can keep making good decisions. One day playing golf with a business partner could cement a deal worth millions to his company- how much is that worth to the company?? Even if he takes 2 months of vacation a year, he’s still adding enormous value to the company (at least the board of directors hopes so).

Also, many highly paid execs are valuable just for the contacts they have, and their reputation in the industry. This lets them demand higher salaries, much like popular actors or talented athletes. If they know key people in an industry, they can be much more valuable than someone else.

Arjuna34

Dunno who said it, but a corporate CEO once was quoted: “Ninety-five percent of the decisions I make each day could be made by an average teenager. I get paid to make the other five percent.”

Also read somewhere a few years ago a breakdown of Michael Jordan’s salary. He was making, I think, $30 million a year. It broke down how much he made watching a movie, or playing in a 48-minute game, or driving home … stuff like that. At the end it said “And he’d have to continue playing for 78 years to equal what Bill Gates has today.”

place to look for truth and justice.
This ain’t the coporation headquarters, that your church.

Bill, people explained to you why CEO receive what they do. You do not understand. This is your problem. You know what you do and think they do more or less the same, just faster. If you see them at work, you wouldn’t understand either. You will miss the infrastructure. That’s why you ain’t CEO.

Hey Peace,

Calm down buddy. I understand they are paid to make decisions. But why is soo high? I mean they could make wrong ones too. Maybe a better question is to ask how do they arrive at a CEO salary. If he has contacts, yes I could see that as being a plus for offering more.

Does the companies board say we will pay 5 million a year and then the CEO applicant comes back and says I want 6 million or what?

pldennison:

i could. at least, i could probably manage it for as long as some of today’s CEO stick around. a CEO hasn’t got a lot to do with managing day to day operations of a large corporation.

CEOs get paid as much as they do because they increase shareholder value. this doesn’t always mean having any superhuman skills or doing what is best for the company, as stock valuation has no basis in any kind of logical reality. it’s all based on perception. for example, you’ll pay big to hire a “hot” CEO because analysts, knowing you hired a “hot” CEO, will raise their estimate of the value of your stock. sheesh, at least an overpaid baseball player can hit a ball over the fence x% of the time.

a favorite method of increasing shareholder value today seems to be massive layoffs and mergers. this is only good in the most short-sighted sense, but CEOs are more and more like temps, so what do you expect?

-fh

First of all, most CEOs make “only” upper 100,000’s to a million a year. Their “real” pay comes in the form of options and bonuses (Cisco’s CEO made $120 million in ONE year on options). This isn’t entirely bad, CEOs pay is tied directly to stock and company performance. The theory is, as the company (and its shareholders) do better, the CEO does better. Now, you could argue that this windfall should be split amongst ALL the employees, and that would be nice.
In reality, it’s simple economics. The reason Coke pays their CEO $5 million a year is that if they don’t someone else will.

Is it fair? Well, depends on who you ask. On the one hand, is ANYONE worth that kind of money (I mean is anyone’s job worth that kind of money)? On the other, CEOs only get paid millions if they’ve generated billions.

The real crock is CEOs that get multimillion $ buyouts when they’ve been fired for being lousy at their job.

Nice work if you can get it I suppose .

I can tell you a little bit about a CEO for whom I once worked. I had a pretty interesting perspective.

He was the chairman for a corporation, Forbes’ top ten. He had four major hobbies: cigars, wine, modern art, and especially cars. Fast cars, which I was hired to keep as clean as possible at all times. (I called myself a “stable boy.”) He used to like to come putter around the garage in his spare time, which was about ten to fifteen minutes a week, tops.

I have met a lot of very intelligent people in my time, but nobody else could hold a candle to this guy. He was conversant in any subject (including all the ones that I’m familiar with). I used to try to dangle obscure topics in front of him just to see if he’d ever wave off. He never did. Not only was he familiar with just about everything, he was expert in many topics. The only subject which I felt I might have had an edge on him was military history, my major in college. He was fluent in at least one other language and I suspect a few others as well.

He was a stern, abrupt, compulsive character, and it took a year to draw him out enough so that he would speak more than a few sentences to me (that’s when I began to learn just how scary smart this guy was). Nobody felt like they really knew him–he was just too complicated. I also took care of the automobiles of the other higher-ups, and oftentimes we would compare notes about the guy. Two things were universally agreed upon: 1) the guy was a genius of the highest order; and 2) he knew how to do everyone’s job.

He knew how to detail cars as well as I did. He knew all the chemistry behind the manufacture of lubricants. The CFO supposedly deferred to him. And he was not shy at all about controlling the actions of literally dozens of people, maybe hundreds, personally, all the way down to me. There were seven levels of management between his office and my workbench. Yet there was no question that I worked for him, and him alone. I was by no means unique, although my job and my status was.

It was commonly known that this guy would call up middle managers on the far side of the world, unannounced, to ask specific questions about that person’s job and the particular problems they were having. It seemed like he knew every employee’s name, their marital status, and their job description. He seems to have loved dropping in unexpectedly into people’s offices, even far away factories. Many people complained that it was completely unsettling to have this fellow wander into, say, the advertising department and start making recommendations about the print quality of the magazine ads. He worked his ass off, but only about ten or eleven hours a day. I don’t think the guy needed to sleep very much either. He was genuinely contemptuous of the fact that I couldn’t consistently make it into the office at six a.m. every day and still be working when he left at five that evening.

His temper was the stuff of which legends are made. Nobody who met his wrath would risk invoking it again.

Honestly, I don’t think I’m a dumb guy, or incompetent, or a slacker, but this dude was like some sort of freaking alien. And on top of it all, he was a pretty nice guy who really cared about people. But damn, am I ever glad I don’t work for him anymore.

Sofa King,

Man, that dude sounds like the James Bond of the coporate world.

Bill, the General Questions answer to your question is “because that’s the market clearing price for CEO’s.”

If you want to continue to complain about it, take it to Great Debates.

      • Just because they get that much money doesn’t mean they worked for it, silly. A good thief can steal your wallet and not get caught ~ a great thief can take it while you’re watching him do it. - MC