Posted on 03/02/2005 3:13:38 AM PST by JohnHuang2
Are CEOs overpaid? Posted: March 2, 2005 1:00 a.m. Eastern
© 2005 Creators Syndicate, Inc.
In the wake of the Enron and WorldCom corporate scandals, the purveyors of envy have found another opportunity to preach about what they consider the evils of high CEO salaries, retirements and bonuses. After all, according to them, evil must be afoot when a corporate executive earns more in a week that the average worker earns in an entire year. Let's look at it.
Dishonest Enron and WorldCom CEOs are rare among corporate executives. As such, all CEOs shouldn't be tarnished for the misdeeds of a few any more than we'd tarnish all newspaper reporters because a few among their ranks were liars like the Boston Globe's Patricia Smith and Mike Barnicle, Jayson Blair of the New York Times, and the Washington Post's Janet Cooke.
What people get paid is none of our business. That said, yes. Most haven't a clue how to run a company. They are public figure heads, nothing more. Most do more damage to their respective companies than they help. Most companies succeed despite their CEOs.
It all depends on how much you value money.
Shareholders voting with their feet would be more effective than new regs..
Those guys are entrepreneural and not what we are speaking of here. The "hired man", especially from outside, is more the topic of discussion.
You are supposed to feel sorry for CEO's because they fight for YOUR rights.
That just about covers it.
I worked for a Fortune 500 company in the early 2000s that had what I called a "plantation" mentality. The pay was banded in such a way that your first three or four promotions might move you from making $21k a year to about $25k - very little movement. Once you became a supervisor, your pay jumped to about $35k. Managers went to $45k. Once you became an officer, the starting pay jumped to over $100k - before bonuses, negotiations, etc. The top executives in the company were making quarterly bonuses in the seven-figure range. Problem was, you generally had to have ten or twelve years of service to even *think* about moving into a managerial slot, and the company absolutely refused, as a matter of policy, to hire any managers from outside the company.
The executives were certainly worth more than I was to the company, and thus should be compensated at a far higher rate than me. However, paying your hardworking employees a pittance while voting huge bonuses to yourself is still a crappy deal for the employee.
Check out what ATT's CEO and his subordinates got for running it into the ground. For shedding divisions such as cable which Comcast scooped up. I'm with Comcast and hate the way they've jacked up prices. But they know how to make their venture profitable. Unlike the ATT top management
My recent favorite is Carly Fiorina, who outsourced so many American jobs it is now called Hewlett-Patel. Then shredded Compaq, and now years later the company is still tanking. She failed to deliver on a single promise, yet she is showered with praise.
Indeed. Cronyism is rampant, and virtually invisible, and virtually impossible to change. Well, it could be changed, but any cure is much worse than the illness.
The thing is, almost everyone is a stockholder. Not directly, but by way of mutual fund or pension fund holdings.
You don't have to have a proxy to vote to have an interest in seeing that a company your pension fund owns stock in doesn't act against your interests by providing massive stock options and a golden parachute deal to a CEO who's taking the value of the company down (or for that to matter to worry about the incentive structure provided by such perverse arrangements even to a good CEO).
Is the Pope Catholic?
And 86.3% of generalities are as well!
The STOCKHOLDERS are the OWNERS of the company: the CEO is merely an employee.
He (she) gets paid EXACTLY what the shareholders want.
True; but just HOW does he DO this????
Not any cure.
The problem with these crony networks is when they get too powerful they start instituting socialism to engender a captive government to protect their interests. The process hampers creativity and competition. The keys to the fix lie in laws governing corporate governance, accountability, and voting stock. I don't have any fixed opinions on the correct policy, but am musing on it.
Simply, the Jack Welchs' have no special business acumen that warrants them receiving ridiculous salaries. Michael Eisner does not deserve a dollar in compensation for every person who enters one of the Disney parks. Those funds could go to the stockholders or, gawd forbid, could be given back to the consumer in the way of lower prices.
isn't a bonus supposed to be a reward for exceptional (good) performance? sometimes these bonuses are paid even whem performance is far from exceptional.
"The thing is, almost everyone is a stockholder"
A stock exchange is not a socialist institution. If you don't like how much a CEO is paid, don't buy the stock. If your pension fund owns it, complain to them.
Stockholders own the company. Don't try tell people what to do with their own property, because that is not your concern.
Would you rather own stock in a company with the lowest-paid CEO or stock in a company with the highest-paid CEO?
"Simply, the Jack Welchs' have no special business acumen that warrants them receiving ridiculous salaries. Michael Eisner does not deserve a dollar in compensation for every person who enters one of the Disney parks."
Ok, then buy Disney stock and petition the next board meeting with your ideas. If you buy enough you can petition for a seat on the board and do something about it. Too late for ol' Jack.....
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.