Just found this while reading: Ratio of average CEO pay to average pay of U.S. blue-collar worker - 531:1 Percent increase in CEO pay between 1990 and 2000 (before adjusting for inflation) - 571 ( ) Number of profitable corporations that used special tax breaks and credits between 1996 and 1998 to reduce their tax to less than zero - 41 Average percent pay raise for CEO's at those firms during the years they received a tax rebate - 69 Average total compensation of the 30 highest-paid male executives - $112.9 million Average total compensation of the 30 highest-paid female executives - $8.7 million Yuck!
Good for them, as acheivers they should reap the rewards of their hard work. I wonder how many people were EMPLOYED by these people? CEO's are the main driving force behind these corporations, and are the one's who should benefit from their success. I may be a little biased though. DaDakota - aka- Eric Peterson President/CEO Fever Pitch Studios Inc.
I see this topic being reported by the media all the time, but never really understood the point of comparing a CEO's salary to a blue-collar worker's salary. Is it meant to incite some sort of class-envy or outrage amongst those who don't feel as if they make enough? The overall blue collar worker is not as highly educated, and their job performance has a lot less to do with the company's profitability than the company's upper management. Last I checked, the amount of money someone makes is dicatated by the market. You get what you can (and what somebody is willing to pay you). Besides, there are plenty of other (read: non-CEO) people that are pulling in as much or more money. Why not complain about what the ratio is between the top paid professional athletes, actors, or even musicians and blue collar workers? Who cares? x34
Last I checked, the amount of money someone makes is dicatated by the market. You get what you can (and what somebody is willing to pay you). I'm sick of hearing about the 'market' as if it's a living entity over which we have no control. We *created* the damn market. Interesting example from New Zealand: Someone leaked the yearly pay of some of our top TV personalities to the media. The most popular guy got about a million dollars NZ a year (approx $420,000 US). There was such an outcry from the public that their wages were docked 20%. Egalitarian ethics. I like 'em. Oh, and by the way: as far as I can tell, blue collar workers have the crappiest jobs of all, and work the hardest. A lot of them are women who work another housework 'shift' when they get home. Shouldn't they get some props and some bonuses too, instead of being scorned for being undereducated?
I am totally for people doing their thing, but it does definitely bother me that the CEO, and higher-ups make so much more. I don't desire any regulation or anything on this though. It is their company, they can run it the way they want . . . all I know is that when I'm a CEO, my company will rock because I won't make a tremendous amount more than the lowest-paid employees.
Then again, there's always Steve Jobs and his $1/year... (yes, he got a jet, and a large number of stock options currently WELL under water, but we are just talking about SALARY here)
Where are the numbers on how many charities and fund raising events these people (or their spouses) are involved with?
If the market effectively assigned value to each position with complete accuracy, you would be correct. That's a pretty broad assumption to make, however... especially since the market is largely "determined" by people like CEOs. The problem, at large, is that white collar people determine the value of both intellectual and physical labor. Of course they're going to be biased .
Maybe, maybe not. I have worked 7 hard years starting my own company. I am just now hiring another programmer. I have an established client base that I have built because I work weekends and nights. I am programmer/developer, salesman, business development, legal, accounting, consultant, administrator, chairman of the board, customer service, and janitor. I do all of this, and went from earning over $100k per year at another company to $0 for the first 2 years of my company. For 7 years now I have done this by myself. I will be impressed when you get there and don't make a 'tremendous amount more' than the lowest-paid employees.
No, the owners, i.e. shareholders, elect a board of directors who determine remuneration. CEOs of publicly held corporations don't determine their own compensation. Do you own shares of any corporation? Is most of your retirement in stocks? If it is, would you like the budget CEOs or the expensive ones running your companies?
This is irrelevant. Investors are still generally upper-middle class. They generally have the same evaluative perceptions as CEOs, etc. The difference between a CEO's salary and a worker's salary in Japan is significantly lower... it's a cultural perception concerning the value of different types of work. Do you really believe the market functions perfectly fairly? Or that a class which determines the market will not reward itself disproportionately?
Three important factors in determining compensation: 1) How many people can do the job (education, skills)? 2) Does the job affect a lot of people? 3) Is the job unpleasant? CEO is going to fit two of these.
So upper-middle class investors are willing to pay for top-level CEOs, but poorer investors prefer mediocre CEOs? Or are you saying that upper-middle class investors like giving money to executives b/c they have different perceptions? Not clear on how the type of investor (in terms of wealth) affects their willingness to compensate a CEO. The truth is, if a person has an issue with the company's compensation, they can invest in another company. Of course it might not be the best company, or it could be a great one where the CEO gets compensated in stock (by the way, thats where the real money is, a la multi million $). The basic tenet is, people are willing to pay for performance. So a starting employee makes,oh $25k. Much less, if he's on minimum wage. $250k.....that gets you a CEO for a $50MM company. Now, take a look at a multi-billion $ company, and do the math. The bottom guy still gets $25k b/c its still an entry level position and there are a lot of people available. Now, this CEO probably pulls in a cool MM, and the multiple is 40+....Knowing this, I am surprised the ratio is only 11. Do I have a problem with this? Not one bit. If there is a real problem, its in the stock compensation of execs. I wholeheartedly believe that they should get options b/c when the shareholder makes $, so do they. The problem is when they get compensated, regardless of how the company does, a la more options issued if the stock falls, severance packages of $MM, etc. That is the great tragedy of corporate severance.
Good post Cohen. I personally enjoyed this line the most Why don't you take responsibility for your own situation and change it if you want.
Originally posted by haven This is irrelevant. Investors are still generally upper-middle class. They generally have the same evaluative perceptions as CEOs, etc. That's ludicrous. Same 'evaluatve perceptions'...what the hell is that? You mean they all like a profitable company? The difference between a CEO's salary and a worker's salary in Japan is significantly lower... it's a cultural perception concerning the value of different types of work. That does not disprove anything. What about the outcomes? Our economy has been kicking the pants off of theirs for years; maybe they should consider revisiting their executive compensation. Maybe their companies with the highest paid execs are the most successful? W/o outcomes, this is meaningless. What about Europe? Their CEO salaries are rapidly growing and now approach 75% of what a US CEO makes. Do you really believe the market functions perfectly fairly? Or that a class which determines the market will not reward itself disproportionately? Obfuscation. Take an extreme position to appear to 'win' any point. You don't answer who you'd rather hire for your company, which is directly relevant, then you ask whether the market is perfect. Do you know of any perfect markets?
Haven, You don't get it do you? The CEOs are generally the people who took the risk, started the company, and went through the rough times. They are the ones who SHOULD reap the rewards of a companies profitability. What exactly are you saying, that the employees should decide upon salaries and bonuses? I mean what risk did they take? The risk to accept a pay check? WOAH big risk there. What about the times early in a companies development where you are sweating out recievables, hoping they get there in time to meet payroll, or the time the CEO does not take ANY money in order to pay his employees. CEO's have EARNED the right to be where they are, and the Havens of the world just want to criticize without actually contributing. CEO's of the world UNITE !!!!! MORE MONEY FOR THE CEOs DaDakota
I agree with you Da, up to a point. CEO's of small companies take a risk doing what they do. I know. I own a company too. It is all my risk. However, it is different when the company is one of the Fortune 500. Most of these companies employ hundreds and change CEO's, on average, every 5 to 7 years. These CEO's don't have any risk other than the possibility of losing their job if they don't perform. Of course, unlike the blue collar workers, they will get a hefty severance and stock options when they leave. For example, this from the Houston Chronicle... <i>Acting Chief Executive Officer Stephen Cooper will make $110,000 a month to guide Enron Corp. through bankruptcy and can pay 15 associates $100,000 a month to help him. Cooper's contract, filed with the U.S. Bankruptcy Court in New York City, requires him to work 20 hours per week, about $1,300 an hour, while restructuring the company.</i> Now, this is a company that is bankrupt and just ****ed over their employees to the tune of millions of dollars in retirement funds!!! The concern I have is the widening gap. Today, if a company is struggling and a new CEO comes in and lays off 2,000 employees as a way to cut costs, the market rewards him by sending stocks soaring and the company praises him for a job well done. Nevermind the employees who got the pink slip and who are forced to deal with the problem of finding a new job in a marketplace that just shrank. I'm not saying people shouldn't try to make as much money as they can or that they should be pissed on for doing it. I am saying that, at some point, there has to be a balance. It's fine to get paid, but if that pay comes at the expense of people who can barely afford to pay the bills, something is wrong with the system. People are more important than corporations.
Jeff, This is where we disagree, look at Lee Iacoca he came in layed off a ton of people and turned Chrysler around. The guy at Enron is trying to do the same thing. Do you realize that instead of THOUSANDS of people losing their job, without these restructuring, EVERYONE would lose their job? Why not complain about actors who make 20 million a picture to stand in front of a camera and read lines off of a screen. Actors to me are the most overpriced, non talented, people on the planet. I have filmed movies and I can honestly say that actors are WAY WAY WAY overpaid. Why not complain about Basketball players too, they make too much money, don't they? I mean does the ball boy make the same as Cuttino? The market sets the price, you can not blame someone for taking advantage of it. Heck, if someone offered you the Enron gig, wouldn't you TAKE it? DaDakota