# What Does A Fortune 500 CEO Do To Deserve That Much Money? **URL:** \ **Category:** Factual Questions\ **Created:** [December 1, 2000, 8:45pm UTC](https://boards.straightdope.com/t/what-does-a-fortune-500-ceo-do-to-deserve-that-much-money/43636 "2000-12-01T20:45:10Z")\ **Posts on this page:** 4\ **Page:** 2
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [December 2, 2000, 12:22am UTC](https://boards.straightdope.com/t/what-does-a-fortune-500-ceo-do-to-deserve-that-much-money/43636/21 "2000-12-02T00:22:25Z")
\>\> If you want to continue to complain about it, take it to Great Debates. And make sure you read several past threads on this topic. It has all been said before. Bill, Manhattan has put it very well in a nutshell. CEO’s get what they can, just like anyone else, and employers pay them what they think they are worth to them. It’s the free market. In any case, why would _you_ care? it’s not like it’s _your_ money. Or are you a major shareholder in some big corporation? In that case you would be barking up the wrong tree. The place to do it would be the shareholders assembly. ---
**Author:** ![Bill\_H](https://avatars.discourse-cdn.com/v4/letter/b/a5b964/32.png) [@Bill\_H](https://boards.straightdope.com/u/Bill_H)\ **Post date:** [December 2, 2000, 7:53am UTC](https://boards.straightdope.com/t/what-does-a-fortune-500-ceo-do-to-deserve-that-much-money/43636/22 "2000-12-02T07:53:39Z")
Supply and Demand. When you get to that level, you’re damn good. There’s a huge difference between being in the top 1% and being in the top 1% of the top 1%. ---
**Author:** ![Dr\_Paprika](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr_paprika/32/3042_2.png) [@Dr\_Paprika](https://boards.straightdope.com/u/Dr_Paprika)\ **Post date:** [December 2, 2000, 5:09pm UTC](https://boards.straightdope.com/t/what-does-a-fortune-500-ceo-do-to-deserve-that-much-money/43636/23 "2000-12-02T17:09:21Z")
There was a good article on this subject in the recent _The World in 2001_ in _The Economist_. **How Should The Bosses Be Paid**. Here is a capsule summary. “The threat to bosses’ bulging portfolios of stock options will continue to grow in 2001… [due to] committees that increasingly understand how to structure incentives. Some managers will continue to receive stellar pay, but those that do will be more likely to deserve it. In Europe, fat cats have long attracted resentment… [In] America, magnates are witnessing growing anti-business sentiment and remarkable discontent with well-heeled bosses. In a recent poll by _Business Week_, only a quarter of people felt business deserved the credit for the prosperity of the last few years. Moreover, only 14% felt that what was good for business was good for America, half the proportion supporting the same view in 1996… three quarters of Americans complain that the bosses of big American companies are overpaid” According to a recent book, _The State of Working America_ by Mishel, Bestein and Schmidt, "American bosses are the highest paid, earning 60% more than anywhere else… with compensation 34 times a factory worker (compared to 15-20 in Europe). "This money is increasingly coming with many strings attached. Miko Giedroyc has invented the CEO delta, a measure of how much the wealth of the chief executive changes with each 1% change in the company share price. With some guesswork, it seems to have changed (in England) from 1.06 (i.e. 1060 pounds/%) in 1990 to 64.3 in 1999. “High pay will be hard to curb, whatever the public thinks. Talent is scarce. The average life of an American CEO is only four years. An executive’s salary is a small proportion of the value they might add to a companies overall value… the question is whether shareholders are getting value for their money.” Hmmm… “situation improving…”… yada, yada, hmmm. “According to one study by Graef Crystal, 86% of executives in America’s top S&P 500 firms received an average of $8m a year under conventional options between 1995 and 1998. Under a scheme that rewarded beating the market, only 32% would have been paid **any** money (my bold)” “The intelligent responses to the grumbles about executive pay is to explain how it works and to remove the system’s perversities. It needs to be seen to be fair. That means having none of the chief’s golfing partners on the renumeration committee”. I think that may be the real problem here. ---
**Author:** ![Sofa\_King](https://avatars.discourse-cdn.com/v4/letter/s/58956e/32.png) [@Sofa\_King](https://boards.straightdope.com/u/Sofa_King)\ **Post date:** [December 2, 2000, 10:19pm UTC](https://boards.straightdope.com/t/what-does-a-fortune-500-ceo-do-to-deserve-that-much-money/43636/24 "2000-12-02T22:19:01Z")
BTW, just to back up Dr. P’s post, the feller I worked for received a mere $685,000 salary, the very lowest in his field. The way I heard it was that his options were stellar if the corporation exceeded expectations, minimal if he failed to meet them. This was considered highly unusual at the time by those who understand these things (I don’t–that’s just what I was told). He was also one of the younger CEOs out there, just a little over fifty, I think. Curiously, I believe he still has his job, five years after I left, and he had it for at least a year before the two or so I put in with him. So it would appear as if he’s doubled the average tenure. My guess is that he is exceptional as a CEO, if not singular. But if the other guys are remotely similar, I have to grudgingly give them my respect. They must work very hard. [Previous page](https://boards.straightdope.com/t/what-does-a-fortune-500-ceo-do-to-deserve-that-much-money/43636.md?page=1)