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.
"In my opinion, anybody able to convince another human being they are worth $40 million a year -- and keep a straight face while doing it -- is worth every penny."
They have to convince a committee.
A committee is a life form with six or more legs and no brain. ROBERT HEINLEIN
Actually the compensation consultant has to convince the committee.
But the idea is very simple -- someone/anyone's salary is tied to the amount of money they can make for the person they're working for, whether that be a single individual or a bunch of stockholders. If I'm putting up dry wall and I bring in six new jobs to the guy I work for, then I expect to be compensated for my trouble. If I'm a CEO and I add a couple hundred million in value to the company, then the board better pay up.
The people who complain about CEO salaries are almost always those who have no concept of this principle, neither do they typically add value to the company they work for -- what they do is do their jobs and add no value to the firm.
If I'm putting up dry wall and I bring in six new jobs to the guy I work for, then I expect to be compensated for my trouble. If I'm a CEO and I add a couple hundred million in value to the company, then the board better pay up.
Sure. The trouble is that when that 40 million dollar CEO does something stupid which costs the company hundreds of millions they still want paid big money. If people want big money they should be willing to shoulder a little risk.
CEOs are fired all the time for costing the company money. The thing is, we rarely hear about them. Usually it's announced as a retirement.
Here is one that is absolutley right......MY blanket keeps me warm at night.
You must be very precise when you are dealing with analism!!!!!!!!
This is the wrong question. CEO's are probably no more overpaid than many other people who can fool others into paying what they ask. "The worker is worth his hire." They are however wrongly paid. Their compensation should be subject to proxy fight every year, which keeps stockholders aware and interested. Labor, capital, managemant; each always thinks the others get too large a piece of the pie.
Shareholders need to be educated especially when voting on proxy statements. I personally vote against executive compensation when the stock has been performing poorly.
Look at Larry Ellison of Oracle. His pay keeps going up and it is a double digit percentage. I know (through a friend who works for them) that none of the rank-and-file workers have not got a pay raise, not even a cost of living adjustment for inflation In the company I work for, they always call an all hands meeting and in strong terms, encourage us to vote with the executive board especially on executive compensation. I always vote against it since executives get double digit percentage increases while us rank-and-file workers get something like 2%, barely to keep up with inflation.
Now, our executive board is pushing for "diversity" (i.e. gay crap) throughout all corners of the company.
good for you.....There have been too many reports about executives who make huge bonuses, even when the company is in the crapper
This is the private sector. Who was the man that had to resign from Fannie Mae because of an "accounting error" that misplaced billions and recieves a huge retirement? Raines? What is his name!?
Apples and oranges,
Madonna, A-rod and Julia Roberts are the owners of their talent .They have managers who are their "CEO's"
I have no problem with with someone who hase taken a risk and has done well it's the CEO'S who are have a "Head's I win tails you lose " contract that annoys me.
Oh well, gotta go punch the clock.
As long as the answer is "Yes," then CEOs are overpaid.
From what I have seen, "Qualified" too often means "A buddy of the guys on the board," which is obviously a limited pool. After having seen several great companies completely wrecked by glaring incompetents, after seeing many cases in which there was no correlation between compensation and performance, to me the answer is obvious: Many if not most CEOs are hugely overpaid.
The David Packards of the world deserve every penny they get, but there are not many of those.
Yes...as are athletes, movie stars, liberal professors...on and on and on.....
It's a vicious cycle and a very complicated issue. I don't know what the government can do about this except aggressively police any public corporation who violates IRS, DOL, FASB, etc standards. Also, negative publicity by private watchdog groups would be of benefit.
Not unless the shareholders say the CEO is paid too much.
There's an old saying about all airline pilots make too much money except for the ones who are piloting the plane I'm riding on.
......if you aren't a stockholder, it's not your question to ask. If you are, tell the board what you think the CEO is worth.
Any other complaints are just paycheck envy.
The underlying problem is that we have all seen too much evidence that a megacorp CEO gets pretty much the same reward whether he turns a $14 billion corporation into a $500 billion one or turns a $500 billion corporation into a $14 billion one. Carly Fiorina's golden parachute (after she had to be kicked out before ruining what was left of HP) is but the latest of many examples.
Boards need to start exercising some disclipline rather than old-boy crony "capitalism", both for the good of their own companies and to restore public faith in the system generally.
There is a problem here, but it is not overpayment of CEO's per se. The problem is that CEO's and other managerial types in many cases no longer take their responsibility to shareholders seriously.
Jay Gould was vilified for saying 'The public be damned I work for my stockholders," but alas too many management types are working for themselves rather than their stockholders.
The fault really lies with the boards of directors which negotiate sweetheart deals with CEO's, CFO's and the like in which large pay packages are not tied to performance, and worse still, negotiate 'golden parchute' packages in which an utterly failed top manager is guaranteed of being bought out for huge sums after ruining the interests of the shareholders.
yes
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