CEO pay

[TexasDevilDog]

I know this has been a sore subject for some people. Lets not talk about feelings but numbers....

The average CEO of a large U.S. company made roughly $10.8 million last year, or 364 times that of U.S. full-time and part-time workers, who made an average of $29,544, according to a joint analysis released Wednesday by the liberal Institute for Policy Studies and United for a Fair Economy.

That gap is down from 411 times in 2005 and well-below the record high of 525 times recorded in 2000 when Clinton was in office.

http://money.cnn.com/2007/08/28/news/economy/ceo_pay_workers/index.htm?postversion=2007082908

;)

[01WhiteCobra]

But the comparison isn't exactly apples-to-apples, in part because IPS and UFE changed how they measured CEO options pay this year..

[bullfrog]

all of Clinton's buds were still posting false profits to allow for the bigger CEO paychecks. :D

[White trash wagon]

all of Clinton's buds were still posting false profits to allow for the bigger CEO paychecks. :D


Actually "Kenny-boy" (Ken Lay) was Bush's pal. Sarbanes-Oxley legislation makes cooking the books much more difficult.

But the real topic, there are several causes of exorbitant CEO pay.

A. Most CEO's sit on boards of several other companies, so the board voting the pay packages are your other CEO buddies.

B. Greed of american investors... for the last 20 years, investors here expect double digit gains every year, so CEO's who will ruthlessly do ANYTHING to boost stock value are rewarded well......even though that may include cooking the books, illegal business manuvers, "hollowing" out a corporation, outsourcing & illegal labor.

So a few have gotten rich while the US manufacturing base has all but been eliminated, and the middle class are loosing ground financially.

When I was a kid, Mattel toys were all made in the USA (not China), and CEO's back then averaged 16 times the pay of the average worker. Until the early 80's an annual yield of 7% was considered good.

Scott

[GhostTX]

I'd like to know what justifies that kind of salary. What "work" do they really do that makes the company earn its profits?

[Casper]

I'd like to know what justifies that kind of salary. What "work" do they really do that makes the company earn its profits?

What justifies athletes making exhorbitant amounts for sitting on a bench?

What is wrong with making money?

Why should there be any kind of control outside of the market itself?

[ayzo]

Think of a CEO as an asset such as a highly skilled athlete. Soccer teams are willing to pay out $250 million for 1 guy because he may generate more revenue through ticket sales and lead the team to more wins. A company is willing to pay a CEO $40 million a year because he may be able to generate more revenue, reduce debt, increase productivity, and increase value for shareholders. If a CEO is able to bring in an extra $500 million a year in profits for the company a $40 million dollar a year paycheck is fully justified. The problem is when companies lay off 1,000 people to save $30 million but then increase the CEO pay by $15 million.

[93blowngreenlx]

I think of it this way... as a field sales person for a company you might make between 4-10% commission on sales. You are directly attributing revenue and profit to the company and you are gettting paid a good chunk of cash to do so. Say you bring in 1 million in sales and make a $100,000 doing so. That million may be actually around 200k in actual profit to the bottom line. The CEO brings in an additional 500 million IN PROFIT and makes around 30 million a year to do so that is no different. If a company looses money they get canned and if they make money they get PAID, it is all relative, just on a larger scale.

[AL P]

When you make a decision that makes a company millions of dollars, why shouldn't you be compensated for that?

[bullfrog]

I am old fashioned, but treat your people right. You should never make your fortune on their backs and then **it on them to increase your earnings/bottom line. I have always heard "Dance with the one that brought you"

[TexasDevilDog]

.

Close enough for government work.

[01WhiteCobra]

Think of a CEO as an asset such as a highly skilled athlete.

Some of them are, some of them aren't. Sometimes you waste your first round draft pick on the Heisman winner and it ends up turning into a bust.

Some, like Bill Gates and Warren Buffet, they deserve all they can get.

People like (Dorfman, ex-at&t CEO) doesn't deserve jack and made multiple millions. During his reign the at&t stock plunged 60% and revenues were down for much of his tenure. Finally they chopped it up and SBC bought them up at fire sale prices.

People like Carla Fiorina from HP. How the hell she thought she could compete with DELL at the time is anyone's guess. Now she did double sales... but the absolute profit was the same. All the time while pocketing millions upon millions.

The list goes on and on.

[BP]

When you make a decision that makes a company millions of dollars, why shouldn't you be compensated for that?

Excellent point. The last corporation I worked for had a very well paid CEO and he was solely responsible for over $100 million in revenue every year. Had he went to the competition they'd have the business. Still though making $6,000,000 a year just because you play golf with the president of a major client is a little extreme but thats how life works. Of course the same companies stock went from $15 a share to under 35 cents in 3 years under his leadership so you never know:)

[mikeb]

People like Carla Fiorina from HP. How the hell she thought she could compete with DELL at the time is anyone's guess. Now she did double sales... but the absolute profit was the same. All the time while pocketing millions upon millions.


Carly was the first one that came to my mind when I saw this thread. The CEO path seems to be 1). come in and gut the company, 2). offshore production, and 3) get rewarded for "meeting goals" by reducing production costs. Then if they stay around long enough for the company to fail there is always the golden parachute to bring more money. Then it's off to search for #1 again.

I see very little real business leadership in this country anymore. It's all about meeting next quarter's numbers, impressing wall street, and adding value for the stockholders. The business itself is a rather annoying side thing that no one wants to put effort into.

[GhostTX]

What justifies athletes making exhorbitant amounts for sitting on a bench?

What is wrong with making money?

Why should there be any kind of control outside of the market itself?
I'm merely saying how does their input justify their output. While I do think athletes are paid way too much, I wouldn't know what that "fair" salary is.

Part of my job is doing cost savings and I've literally worked on products and have saved the company $1 Million on one project alone. But my effort into the company does not equal the output of my pay. I earn the same amount. No bonuses, royalties, or percent based increases on the amount I contributed to the company. These CEOs can screw up royally, bankrupt a company and still walk out with millions.

[Vertnut]

How about John Wilder, with TXU? He brought them out of a $12 a share slump a few years ago, to over $100 a share. He was worth every penny.

[GhostTX]

How about John Wilder, with TXU? He brought them out of a $12 a share slump a few years ago, to over $100 a share. He was worth every penny.
To me, monopoly seems like an easy way to make money.