Are CEOs overpaid?

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.

This is an interesting conversation. The first time I've put these thoughts on "paper." So, thanks for that.

Yes, it is. You are welcome!

I don't know what "110%" really means. One person's 60% is another person's 100%. The trick is hiring good people.

I agree. Whatever level of results are expected, ought to be well-specified in the job description or employment contract. That way, there can be no argument whether someone measures up, goes beyond, or falls short.

A company's success depends on many factors; my work, the work of my colleagues, etc. Management has to make sure that our work effort is directed appropriately - that we're doing that which needs to be done. Now, if we can direct ourselves, that's great, but without strong leadership that will end up with people "pulling" in N directions each according to his or her vision of where the company ought to go, and not in a single unified effort.

The best boss I ever had let me come in at the civilized hour of 10:00 a.m., didn't enforce a dress code, and gave days off after the crunch time was over. One night I'm finishing up some work with a colleague and casually said, "How many hours did we work last week?" He shrugs. So, we sit down and do the total. Holy crap, the boss had us working between 65-70 hours a week without knowing it. The guy has an instinct for hiring people who would work themselves to death for a few perks and reasonable money. Oddly, it was about the most fun I ever had in an office.

Yeah, if management is good - and what constitutes "good" varies from person to person - then a lot of productive work can be gleaned from each employee. Question, though, is it right to expect that, especially if it's unspecified?

I'm salaried, and my job description is pretty vague. I do not like that, because I have no idea if I'm doing enough! My pay is tied to my work - if I fail then the company doesn't do well and goes under, and my pay then goes to zero. ;-) I know, by virtue of my professional training, that what I'm doing is done correctly. But I'm not trained in business; I don't know whether I'm doing what needs to be done. Had I wanted to be a businessman, I would have studied that.

In regards to getting equal value off shore -- language issues aren't a problem in India and any shortcomings are more than made up by the low, low everyday prices.

Perhaps - I've dealt with Indians who were unintelligible speaking "English," as well as Indians who put my English language skills to shame. There's a wide variety, and the same need to choose employees wisely.

In relative terms, many of them are paid less if the company does badly than if it does well under their leadership.It may be the difference between $60 million and $90 million, which isn't a small sum, but it is less.

I think the problem in this discussion is that salaries in the tens of millions and golden parachutes seem like a pretty cushy exit for someone who has failed in a job. And they are. But that's the deal the executives made. They got as much as they could for their service going in. That's what Adam Smith meant when he called England a "nation of shopkeepers." Everyone is trying to sell their product or service at the highest possible price.

This is what workers need to learn. They need to ask for the extra money when hired, then continue to add to their inventory of "skills" throughout their careers. They need to display their merchandise to its best advantage and they need to keep their "shops" open as long as possible.

You keep going back to management. In my experience, the best "management" has one thing in common -- the ability to define problems for other people to solve, i.e. the sales of widgets has plummeted! Marketshare is dwindling! The company is one the rocks! Why? We're all doomed!

It's management's job to step in and say, the competition has come out with a new widget that does x, y and z. Quick, dump some money into R&D to get a new widget with more features and then into maketing to advertise it.

Of course, these problems are "3-dimensional." They exist within the company, out in the market and off in the future. So the best managers think in three dimensions -- no easy thing. That was Carly's problem at HP. She couldn't or didn't anticipate that computers would turn into commodity items and the Compaq name wouldn't mean diddly. She assumed that people would be willing to pay several hundred dollars more for a "high end name brand" compared to a Dell.

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