What do you think. They do have a lot of responsibilities, but is that a legit reason to get paid that much?
I don't think they get paid nearly enough. Each one should be paid commensurately so that they can establish their own micronesian island kingdoms as immaculate god-emperors.
I think most of them are overpaid. However, its up to the shareholders if they want to overpay - its their company. I'd be for legislation that ensure that shareholder's voices are heard, etc...but I would never vote for a special CEO tax or legislation that says what a company can pay its CEO.
Some of them are some of them aren't. If they make money for the company they are getting paid right.
Most of them are over paid. Do they make their company more money than say German CEO or Japanese CEO or British CEO? Not really for the most part, but they are paid much high as a % of average worker salaries. It is the American buddy buddy business culture that is over paying them.
As you go up the pay scale the good ol' boy network gets smaller and smaller. Shareholders have squat to say about CEO compensation; it's the board of directors and boards are very incestuous. It's like agents for sports stars, they know everytime they can get a big contract for any player it raises the level for all players. It has a snowball effect. There is no job that pays $20 million that someone else isn't fully capable of doing for $10 million or that you couldn't get credible results out of someone getting $1 million. Executive pay has a lot more to do with who you know and who you have worked for than your actual skill.
Exactly, for 80% of the companies you can replace the CEO tomorrow with someone just as good for half the price. Often these people would run a company into the grounds only to be offered another company to run. And the severence packages they get is insane. You can get 100 mil plus for running a company into the ground, is that what they call capitalism?
a large part of their compensation is stock as well it should be. true incentive to grow a company. severance packages are insane, I tend to agree with that.
Overpaid relative to whom? People argue the same thing about professional athletes. If the marketplace(or the shareholders) say they're worth what they get, then so be it. Politicians have no business deciding what is and isn't fair compensation for CEO's.
Remember, the decisions that a CEO makes impact the lives and families of many employees. You want a strong, qualified person leading a company and making those decisions that impact so many people. The only way to ensure that you get one is to offer a competitive compensation package.
Overpaid relative to the value that they add to the company. There is a lot of economic research which indicates that incentivization effects to CEO's after the first few xxx tens of millions in compensation is severely diminished. A point is reached where shareholder value is impacted for little to no return on performance. Thats why Warren pays himself what, a dollar? This is a problem that corporations can fix themselves by initiating say on pay votes which a lot of institutuional investors clearly want but insiders tend to help kill off due to board proxy recommendations (most of the ones I have seen this year tend to fail 60-40 or thereabouts).
So CEOs wont do their job unless they're overpaid. That's not a very good work ethic ideal. What happened to always do your job the best you can?
I do think that much of CEO's and corporate boards are littered with insiders and professional 'board' members that don't wish to upset the group. They entrench themselves in and create hurdles for shareholders groups to make active changes. A good friend of mine that runs an activist hedge fund is pretty passionate about the lack of correllation between executive compensation and true value or cash flow creation. Especially share buybacks which does wonders for stock prices, whereas a dividend increase is a better indicator of strength. But it is a free market. Therefore shareholders must elect directors that will enforce the goals and values desired.
While there are some abuses with CEO salary and the salaries of CEOs of very large companies can be quite large, I do not think the problem is as widespread as the media portrays. The government should not get involved in regulating the amount CEOs are paid, but shareholders should become more active in that area. The salary should be based upon how the CEO increases shareholder value in the long-term. Personally, I think that is best accomplished by a reasonable base salary plus payment through stock that must be held long-term. I dislike it when corporate officers receive stock options that allow the purchase of stock for a token amount where those shares are sold at market value the same day as the option is exercised. Additionally, there are some abusive golden parachutes. I understand the need for them, but I think that need disappears (and the parachute should disappear) when the CEO obtains another job. Actually, I think his salary is $100,000, but I agree with your point.
You are living in a fantasy world. It is all about meeting this quarter's earnings projections. It is all about hyping the company stock to investors, to get your stock as highly valuated as possible, right now.
This is a tough question, because in some cases heck yes, in others...no.... You can not paint them all with a broad brush. Overall, these guys are the ones with their juevos on the line...they deserve major compensation, but not extreme compensation as some of them enjoy. I know CEOs that get no compensation at all, but huge stock rewards, they are taking a major risk that they can keep the company going strong so their stock is worth a lot more than cash would be.... Those guys deserve it.....IMHO. Risk, reward....it is all about that. DD
yes they do. just like a coach for a pro team they get to much credit and to much discredit when things go bad. I belive in market system though and it is human nature to want a strong leader.
Unfortunately the pay structure often rewards risk and volatility which may not be in the best interest of the shareholders. There has to be a way to tie stock benefits to the long term performance of the company. Without the safety valve of repricing if the stock goes down, or vesting in case of takeover. But compensation committees are bound by what the industry is paying. If you don't pay your guy at least at the high end of your industry average, it's like admitting your guy's not as good. It's a crazy system. So if the standard is to bump to the high average, and the high payers bump to a greater amount, the 'average' keeps going up and up. The system feeds itself. I think most CEO ARE overpaid. They should be paid substantial amounts, but the divide between their pay, and the compensation of others (and perfomance of the company) has grown tremendously over the last 20 years. And the CEO's aren't any smarter, harder working or doing a better job then their predecessors. Of course I have no idea on how to 'fix' it .
Exactly. They are getting paid a ton of money, but it's not all cash. Most of a CEO's pay is restricted stock that can't be vested for several years.
