Are Corporate CEOs really worth the ridiculous amount of money they are paid?

They sure are!

They deserve to get 400 times as much as their blue collar employees, because they spend 20 times as many hours per day working and they do everything 20 times as fast.

When I used to work for AT&T, I usually saw senior executives putting in 160-hour days and walking from meeting to meeting at 100 mph! ;-o

Some would argue that the CEO is worth the same fraction of the company’s revenue whether the company makes a million dollars or a trillion dollars.

Others (myself included) would argue that, while the CEO’s ideas and direction may set of a chain of events that leads to higher profits, their ideas are utterly worthless without execution, and that rising tides should life all ships; workers who implement the ideas should profit from carrying the CEO’s idea, and any CEO who wants all the spoils should carry out his plan single-handedly. Employees who work for successful companies should themselves be successful, whether they’re a line worker or a CEO.

To be fair, CEO’s should get more than a janitor as the job takes more skill and also has high risks that should be countered by high rewards (missing a spot when mopping the floor won’t cost millions of dollars) but there is a limit there, and that limit is how much help they needed to turn their worthless unimplemented idea into profit.

Imagine someone approaches you tomorrow and says “We’ve been following your career for years and love the way you work. We want you to quit your job, move your family, and come show us how you’ve done it. Name your price.”

How much would you ask for?

No, the clue is in the word ‘ridiculous’.

I don’t think so, but one could argue that if they have the ability to turn around or sink a major corporation, which ultimately involves the livelihoods of thousands of employees and billions of dollars, then perhaps they are. That’s why when the corporation starts heading downhill, like JC Penney, for example, the CEO is often the first to go. Remember JC Penney, about two years ago, decided to no longer offer sales, but just have an “everyday low price?” That resulted in the stores being empty and that guy was quickly ousted.

No, of course not…come the revolution brother :D

The only reasonable answer is: “of course not”. It’s like all that other bullshit about the “free market”. Wouldn’t it be nice if all of us could sit around a table with a bunch of friends and decide on what we deserve to be paid.? You sit on my board. I sit on yours, and together we loot our respective companies while cursing the wickedness involved with the minimum wage. And of course, there isn’t a hint of embarrassment at the public display of appalling greed.

Distribution of wealth, sort it out.

Most people seem to think that the CEO writes memos and tells people what to do. Hell, anybody can do that. It’s not true but that’s what they see. A good CEO is much like a movie star or a major sports figure. If you get the right star for your movie, it can make hundreds of millions of dollars. Get a nobody and you won’t recover your costs. So how much is that star worth? $10 million? More, less? Keep in mid that the best boy and the dolly grip do the same job whether you get Angelina Jo Lee or Suzy Slut to star in the picture.

A CEO of a big corporation can swing revenues by billions. How much is that worth? If it is a swing upwards, a lot. If it swings down, not so much. How much would it be worth to take a multi-billion company from Bankruptcy to billion dollar profits? Is Floyd Mayweather really worth $105 million in 2014, without endorsing a damned thing?

The truth is corporations are always looking for the next Lee Iacocca. They usually find the next Elmer Fudd. Lee is worth his weight in gold, Elmer is not.

Even if a CEO is terrible, they get an amazing severance package that I’m sure my family could live off of for at least a decade. I would loved to get hired as a CEO just to get fired ASAP.

I’m pretty sure you just fire up some job websites, look for “CEO” listings, then submit a resume and wait for a recruiter to call.

Or not. Can everyone who’s complaining pick a company they actually like, find out who their CEO is, and then see how they got there? Would you be willing to follow that path?

I think it depends on the CEO. Tim Cook, the CEO of Apple just got a raise to just shy of $10 million/year. Apple is the most successful company in history. If we scale the pay of other CEOs in proportion to Apple’s market cap, most CEOs are grossly overpaid. E.g. your company has a market valuation 1/1000th of the most successful company but your CEO gets paid ½ of what that CEO is. Is he really half as good as Tim Cook? Really?

There are many examples of totally incompetent CEOs who have had terrible performances and get insane golden parachute packages on their way out the door.

See people will still defend a CEOs salary , but heaven help us the sky is falling if the lower wage earners want a living wage, that will just be the death of us all.

I realize that a CEO has a lot more responsibility , but even if he/she fucks up they still get a pile of money getting booted out the door.
The CEO of WalMart makes more in one hour than anyone of their hourly workers make more in a year,but the sky is falling if those low earners want a living wage.

@SQUEEKY2: I don’t think I see anybody above saying the sky is falling if low earners want a living wage. Those who know me know that I work for a national organization that defends and advocates for employees (working class employees, mostly). This is what I do for a living. Nobody is saying that it’s ok for people to not make a decent wage. At least, nobody here is.

It’s true that the spotlight is glaringly aimed at CEO salaries these days, and even Walmart is wincing from the blowtorch of attention leveled at the plight of its low earners. The pressure from the bottom IS there. The hope is only that it can be maintained and increased.

@jca Nobody here is making that case, but there are many people not here that do.

@gorillapaws Pretty much. Then again, Jobs was a $1-a-year man.

Personally, I think more should follow the example of Jobs, Iacocca, Zuckerberg and Elon Musk by having a $1/yr salary and having their fate determined solely by the value of their company, and do so without any more of a safety net than employees have. If you want big rewards, you should take big risks. And for fuck’s sake, do it without the Golden Parachute!
Yes, I know that the bulk of many executive’s compensation is non-salary, but they often still earn a lot even if they don’t succeed. For instance, Tim Cook earned over $1.7m base salary just for sitting in the CEO chair on top of the 0.2% of Apple’s net income. Warren Buffet has it about right though; a modest base salary (only $100k/year, which is successful but not extreme) with any income beyond that based on performance. In Buffet’s case “performance” is his shrewdness as an investor, since much of his income is pure dividends and capital gains on his portfolio rather than guaranteed wages/salary.

Only if I abduct him and hold him ransom for…. *holds pinky to corner of the mouth
One MILLION dollars!

@jerv: Yes, that’s why I wrote “At least, nobody here is.” The implication is that other places, there are people making that case.

Within the irrational framework of capitalism, and assuming that profit is good, and assuming that whatever anyone “earns” is justified because that’s what the “free market” has determined (just as long as the government or unions don’t interfere!)—then the idea that their remuneration is justified is sort of cohesive and plausible.

The thing is that few people really know what a CEO does. @Jaxk contends that most people think they only hand down memos and tell people what to do. I think most people don’t really know what they do. We may have an inkling that memos are something to do with it, but only because people receive memos from “higher up” in the hierarchy in which they work.

It is this mystery of how and why they make so much, that protects them. It is difficult for people to critique or oppose something, when they have no direct experience or information about it. One can feel that CEO pay is probably too high, but one can’t know for certain without actually knowing what it is they do.

The result is is that the claim that they’re paid too much can be rebuffed with clichés, each with their implicit and unchallenged assumptions;

“They need to be paid that much, because they’re responsible for billions in profits”.

“They’re paid that much, because they’re uniquely talented individuals who could be lost to rival firms.”

“The success of a corporation rests on the CEO; hence their remuneration.”

“They’re paid that much, because it motivates them to perform well.”

All clichés that I’ve heard in one place or another (one or two in this thread already) and not one of them with any merit.

I’m sure that some CEOs are quite brilliant. Some are genuinely talented people with backgrounds in science, engineering, and technology. Unfortunately, their institutional role is entirely parasitic. They appropriate wealth produced by the labour of others, even if they themselves contribute in some some way (most don’t).

@Kropotkin Bear in mind that many of those assumptions are considered truth by people that adamantly refute the historical failings of Horse-and-sparrow—(or Supply Side) economics and thus should be taken with a huge grain of salt anyways.—

@Kropotkin – By your definition all management, sales, accounting, human resources, etc. is parasitic. I wonder how you rate the role of government.

Hey @Jaxk these CEOs sure come across as very parasitic when they get a suitcase full of money as severance when they do get the boot out the door when the company has finally had enough of their screw ups.

Sorta like when your friend Obama bailed out wall street those CEOs got fat bonuses , when some of them should have been facing charges as to what they did, so yeah that to me was very parasitic.

@SQUEEKY2 – You may be right but I don’t know anyone that got a suitcase fill of money. The are about 20 million companies of various sizes in the US. All of them has someone at the top whether it is a CEO, President, whatever. Salaries range from $0 up to about $100 million. Those at the top are primarily compensated with stock, maybe 20% salary and 80% options. It is hard to put all these people in the same category and treat them all the same. Some are fairly compensated some are under paid and some overpaid. Most don’t have a golden parachute and if we want to discuss those that do, it would seem appropriate to note who. Many have an employment contract and if you want to fire them without cause, you have to buyout the contract. That’s no different than any other contract.

No one can explain how or why Obama has done what he did either in the bailouts or anything else, so I won’t even try. I know you have issues with what he did with corporations but he did the same with government. His first actions were to raise government salaries and give out bonuses. If you recall he took office shortly after Christmas and he was having trouble remembering if he got the job as President or Santa Claus. Frankly he’s still having that problem.

I would like to work at A&W for $45/hour.

@Jaxk I think that the publicized cases like the Waltons and Koch brothers demonizes the executives that are more representative of the really real world.

As for raising government salaries, I think that this paints a different picture. Look at the huge raises that civilian federal workers got in 2011–13. I wonder who was POTUS during that time and allowed that huge pay hike to happen? Looking a little further back shows that Santa Claus was in 2000 and 2002 (the height of Obama’s power), at least on the salary side.

I think it best to just drop Obama as a contentious diversion, leave politics out of this as much as possible, and get back to CEOs.

The CEO of Walmart is Doug McMillon who has worked there since 1990. He started with the company in 1984, left to get his MBA, and came back. He makes around 1 million dollars in salary. The rest of his compensation is in stock, much like what seems to be requested here.

The Waltons mentioned here inherited money from their father, who started Walmart from essentially very little. So, if you start a company and it becomes huge, I guess leaving money to your kids is a ridiculous move.

The Koch brothers are again, men who were left a lot of money by their father, who was an MIT graduate and an engineer. Which I think we can agree, engineering is still a talent, right? He was rich because he innovated oil refineries and built a business on it. He was the little guy and overcame the big guys in his industry who tried to sue him out of existence. I don’t like his politics, I don’t like his kids, but he earned his money with a better mousetrap.

So the Koch brothers get paid for being born and still being able to feed the oil machine. They were rich before they had jobs, and did not earn their money as CEOs.

So the Waltons and Kochs of the world are not examples of CEOs who are overcompensated. The fathers are not examples of CEOs who are overcompensated. They are examples of people who built enormous businesses by being at the right place, at the right time, with the right idea. You can disagree with them, but they are not what’s being discussed here.

I think honestly people here have seen a few stories, on a few CEOs who probably lead banks and investment firms, and decide that is the way the world works. 20/20 doesn’t have a lot of stories about people who are hired to save 500 jobs in a manufacturing company or the people who have worked for one company their entire career and eventually end up leading it. I’d say those are more numerous than what’s being demonized here.

It’s also really common for the CEO to not have the highest direct compensation in a company, but I’m not sure if facts will change anyone’s mind here.

I’d just ask that you actually go look at someone’s story before you decide it’s time to be angry at “CEOs”. Internet outrage should at least be informed outrage, right?

Nice @funkdaddy so why do people get so upset, when the low wage earners just want a living wage then??

Oh and I guess you can blame the media for spotlighting the ones that have the fairy tail salaries.
And from what I read on the internet and being informed the CEO of Walmart makes more in one hour than any of their hourly employees make in a year.
And Walmart is one I blame for paying their employees so low they need Government food stamps at the end of a 40 hour week just to put food on their table, but have heard that this year Walmart is adjusting that( about fucking time).

$1,000,000 is about $500 an hour if we’re assuming the CEO works no overtime (unlikely) and gets two weeks vacation (who knows).

That’s a lot, but certainly not more than hourly employees make in a year and you can scale from there to see that statements like “more in an hour than employees make in a year” are misleading at best.

———

Discussing minimum wages and living wages is really difficult because there are some harsh realities that have to be addressed or ignored. At it’s core you’re trying to answer what a person is “worth”, which is unfortunately not really how people are paid. Each well intended, hard-working individual starts off making far less than they are worth as a person and our time is valued well below what it should be.

I’m going to use $15/hr as a “living wage” here, just for simplicity. Of course a true “living wage” is more complicated.

I think the majority of people (80%?) don’t have a problem with people who work making a living wage and I’d say most people want those they work with to be fairly compensated as well. I don’t know anyone who is happy that people are unemployed or underemployed.

At the same time, I think the resistance to a higher minimum wage, (which is the only way to get everyone a living wage), comes from two places.

1) Should it be mandated? It’s scary as hell to hire people. Even more so when a company is small. Seriously, it’s like letting someone in your house, handing them your car keys, and your wallet all at once. Their wage is really just one part of it. Employers have the power to abuse people on a massive scale, so rules are slanted to keep that from happening and that’s good, but it makes it hard to hire people without a history to base your decision on. So there is a general feeling that there are already too many mandates where someone is protected from the moment they’re hired and not all employees are good employees.

Just like there are bad companies, there are some really intentionally lame people out there, should it cost $15/hr to find out?

2) Who’s responsibility is it to earn more? Bear with me here, it’s difficult to talk about, but an honest discussion would include this. It’s not that hard for most to get off minimum wage. Most people paid under $10/hr are under 30 with no degree. So getting a higher wage is usually a question of skills, education, talent, recognition, or experience. You need something on that list to make more. I’m not an ass, I understand how that sounds, it’s not my personal feeling. I understand that there are people who are stuck at minimum wage and simply weren’t given the tools to do more. That’s not their fault. I understand more women and more minorities make the lowest wages. That’s not fair.

But the idea that someone with no experience or skills is somehow “worth” $15/hr from day one regardless of effort seems equally unlikely. It’s undoubtedly sad that there are single parents who have to work multiple jobs to make ends meet, but is it sad that high school seniors aren’t making $15/hr for bagging groceries? So can we raise the wages for those who work to improve their pay? Some would say that’s what happens as people prove themselves, get more experience, or acquire skills.

Maybe minimum wage should somehow be tied to experience? Would that make older workers less likely to be hired though? I don’t know that there’s a perfect solution, but maybe a slowly increasing federal minimum with states and cities able to raise it further to account for regional differences isn’t that bad?

That’s basically what we have now. It’s not perfect, but it is flexible, and there is considerable movement in getting the bottom wages raised.

Just from discussing this, someone is assuming that I must be in favor of sweatshops or something ridiculous. That’s not the case. I’m just trying to discuss both sides. I truly believe well intentioned people should be protected from people who would abuse them on both sides of employment.

1) That is why so many places don’t hire directly, preferring “temp-to-hire”. The fact that that often delays benefits eligibility another 90-days is just a bonus.
More to the point though, the fact that employer/employee relations are so strained that third-party intervention is required to prevent far larger problems is not out-of-the-blue. It’s the result of a very long history where employers not only had the upper hand, but had the power to slant the rules in their favor strongly enough to perpetuate their dynasty. In that regard, current employers are like sons paying for the sins of their father. If it’s legitimate to pass wealth on the the next generation, then it’s also legitimate to hold heirs liable for sins of the past. Call it Karma, call it Restitution, but I think it’s going to be a while before a multi-millenia history gets washed away.

2) Most people without a degree were not born rich enough for mummy and daddy to fund their education, and often so in-need of money to survive that they enter the workforce right out of high school instead of taking a years-long break and racking up massive debt. And since those jobs don’t pay enough to both eat and have an extra few thousand dollars to pay for college, nor are there infinite scholarships and grants, nor can we all afford to go someplace like Germany, the sad fact is that those with degrees are often the children of wealthy parents.
Get more experience…. that assumes that there is any sort of upwards mobility. And for most minimum wage jobs, that’s rather limited. Take a store with all of it’s cashiers and such, and tell me how many of them will make manager. Skilled labor can often be taught without the expense of college, but limited demand limits the number of shelf stockers and cart pushers that will have the chance to move up to the higher-paying jobs available without a degree.
So, the jobs that require a degree are easier for the rich to get, the jobs that don’t usually don’t pay enough for college, and the ones that do pay enough for college without themselves requiring college are often hard to get into. And recognition is unlikely when any ideas you have belong to your employer. That often stifles innovation as well as it removes incentive.
We’ve covered skills, education, and experience, and that leaves talent and recognition, so that leaves talent. One thing talent and wealth have in common is that some are born with it while others will work hard all their lives and never have it. When you add up all the pieces, the net result is one where one’s success is determined largely by birth.

Around here (Seattle area), $15 is about right if you plan to have an apartment and still have luxuries like electricity and food with a little left over to have at least some medical care. It’s about the same in New Hampshire as home heating is neither cheap, nor included in the rent/mortgage. It may not be sad to see a grocery bagger not make $15/hr in a place where rents are only $500 but most places I’ve lived have median rents considerably higher. No matter where you live, it is sad to see a person work full-time and not be self-sufficient enough to get the things that most UN members consider human rights without resorting to suckling at the government’s teat no matter how many dollars an hour that is.

Take the cost of education though, and you will have upwards mobility limited more by drive than by DNA. Take out housing costs and you will negate much of the need for minimum wage. Do something about our healthcare system and you will reduce a leading cause of personal bankruptcy, possibly leading to people more able to afford college, or at least to purchase more goods/services which leads to employment in manufacturing, transportation, and retail sectors due to increased demand.
I would favor cost controls for housing, education and healthcare, but that would be enough like what Europe, Australia, and parts of Asia have done to be considered Socialism and thus it is our duty as Americans to do the exact opposite. However, the unwillingness to do anything about those costs has led us to where the only option left is raising minimum wage. Like government intervention protecting workers, this is one of those things where a history of greed has caused it’s own pain.

@funkdaddy (The, should it be mandated?)Of course because we all know if a corporation could get away with paying 5cents an hour and treating their employees like dirt they most definitely would.
Same as to why there has to be mandated safety regulations, and protection against getting injured at work, companies would abuse that big time if it wasn’t mandated,they did it in the past when it wasn’t.
A living wage is complicated, I totally agree and Federally mandated, probably not some body in the lower wage in Alabama wouldn’t need the same as the low wage earner in say Manhattan . But yeah sorry it does have to have some form of Government mandated, to leave it in the private hands, is the same as letting a three year old guard the cookie jar.
And yes there are lax employees, but if companies follow the correct procedure they can be dealt with, not just a YER OUTA HERE type thing.

@SQUEEKY2 – You’ve peaked my interest. If I have an employee stealing cash from the drawer, what exactly is the correct procedure? I keep running this through in my mind and all I can come up with is sewing his pockets shut. Otherwise I fire them.

Do you ever pause and think for a few seconds before posting these retarded strawmen?

Got to hand it to you @Jaxk it’s always to the extreme, of course some action warrant a full blown YOUR FIRED!
But I don’t think that was what @funkdaddy was getting at,I was talking about more lax workers slacking off ya know puppy makers .
I do like your extreme thing though sorta like if your country ever adopted universal health care,the next day you all would be communists, just like all the other free countries in the world that have it for their citizens type thing right?

Good responses. Unfortunately firing offenses usually are reasonably extreme and unfornately common place. I suppose I could have used the guy that came to work drunk and when it was time to close out his drawer, he couldn’t figure it out so he destroyed the register. That one cost me a pretty penny. I’ve always told employees that selling liquor or cigarettes to minors was a firing offense But I’ve been understanding a couple of times when the employee sold to the inspector. I got fined but the employees were prosecuted in court and I believed their excuse (I’m a real dummy sometimes). I figured that was good enough.

Firing someone for being a little lax, now that is extreme. After 50 years in management, I’ve never seen that.

@Jaxk If an employee is slacking off, then management needs to communicate what isn’t being done. If the employee continues to do an insufficient job, then they can be written up and ultimately fired. It doesn’t seem that extreme.

Let’s review how we got here. @funkdaddy brought up the issue of small businesses handing over the car keys. It’s scary but that’s what I do when I hire some one. They handle thousand of dollars of my money. The @SQUEEKY2 brought up the idea that they shouldn’t be fired if they’re a little lax. So I started thinking about what would be reason for immediate dismissal. Sub par performance is not one them. That takes time and several discussions. I’ve never seen it happen any other way and even then I can’t recall ever seeing anyone fired for just being a bit lax or slow. Its typically part of a larger pattern of absentee or other such offenses..

I know this is a thread for bashing businesses but sometimes a little dissent can shed some light.

Maybe people should take it on ourselves for one week to see what’s involved?

Salaries are pretty public these days. Would anyone here be willing to make sure everyone they employ indirectly makes a living wage for one week? Just one week out of the year.

So you’d need to either

1) only use goods and services from companies that pay a living wage

or

2) bring the person’s wage up to whatever you consider the minimum for the hour you’re involved

So grocery shop at a grocer who requires a living wage, tip restaurant employees to make sure they receive a fair wage for one hour, make your purchasing decisions based on your beliefs rather than price. If you have kids, make sure their caretakers and school employees get a fair wage for that week. Ride the bus? Make sure the driver is paid adequately for one hour. Buy gas? Make sure the attendant gets enough for one hour.

For the $15/hr range discussed here, you’ll need to make sure everything is made in the US or Canada, because that sort of wage will put someone in the top 3% or so of earners worldwide and transport overseas won’t meet the minimum. Anything manufactured elsewhere will be out.

Has anyone tried it? Would you be willing to keep track of the added costs for one week, even if you don’t actually spend the money?

Maybe it’s not that much, but I think it would be pretty substantial. I’ll track it this week and see where that leaves us. Anyone else?

@Jaxk “Firing someone for being a little lax, now that is extreme. After 50 years in management, I’ve never seen that.”

I have, and it’s particularly common in the lower-end jobs like most retail/service. While you personally may be willing to have generally-good people stay in your employ long enough to gt things like benefits and the occasional raise, there are many who will terminate employment for the least little thing in order to “justify” reaping the cost-cutting benefit of high turnover.
As grumpy as you may be, you are still a nicer guy than many employers. I doubt you’ve ever been just around the corner as the business owner asks the manager why you haven’t been fired citing the benefits eligibility argument, and I had a lot of co-workers last 89 days on the dot. There have been enough little things like that for long enough that “guilt by association” takes hold, and all business owners wind up demonized even if they are saints.
And, of course, there are higher-paying jobs where being a little lax truly is a fireable offense. Miss a clamp when loading a part in to a CNC milling machine? Congratulations, you caused $350,000 in damages and about another $500,000 or so worth of downtime. I don’t know about you, but even I think that’s worth at least considering on-the-spot termination. It’s truly hard to make a law that covers all possibilities or one that is truly fair to both sides, and therefore nearly impossible to do both at the same time.
Oddly enough, the ones that tend to do this the best are the smaller companies. Once you get large enough to where the high muckamuck (owner, CEO, President, or whether title The Big Boss holds in that particular organization) cannot be on a first name basis with all of their employees seems to be about as big as a company can get without running into problems.

@funkdaddy Where I am, most of the supermarkets are union shops, and the bus drivers are all union too. They definitely get paid. And the non-union businesses are mostly either small, local businesses that are almost Socialist (Farmers markets, co-ops…) or major chains notorious for their abuses (like Walmart), with a few oddballs like Costco. To show you how we’re a little different, look at one of Seattle’s fast food joints and how they hire. Fresh out of high school, a Dick’s burger-flipper gets 100% employer-paid medical and dental, scholarship program, and starting pay that is 75 cents above minimum wage…. despite WA already having a minimum wage far higher than the Federal Minimum Wage.
But $15/hr is considered enough even here. Let’s look at fair market rents. An Efficiency apartment here runs around $972/month. It’s $1071 in Boston. Go to Austin Texas and that’s what you’d pay for a 3-bedroom; a mere Efficiency is only $497 there. Pay an Austinian $15/hr and he’ll be living large, able to have enough left over after bills to not only eat and see the doctor, but also make payments on a brand new Escalade and still have enough left over to support a coke habit. In other words, the ones you hear howling most about wanting $15/hr are those that live in areas where that really is about the minimum that allows for living on 40 hours a week without being subsidized by others while many of those opposed seem to be from areas where (or eras) even part-time fry cooks can afford an apartment.

“Would you be willing to keep track of the added costs for one week, even if you don’t actually spend the money?”

What added costs? It’s how I’ve ALWAYS lived. And trust me, if it actually would save money to live like a welfare hillbilly and do all my shopping at Walmart, I would, but the savings are false. (Costco has better deals; better enough that the annual membership fee is actually an investment.) Then again, most of my expenses are from non-retail things like rent, medical care, insurance premiums, and the like; the spending I have more discretion over is relatively small. For instance, the cost of a quick bit at McDonald’s is close enough to the local alternative that there is no real financial difference between getting a scarfing down a Big Mac and eating a bag of Dick’s. In fact, the local alternative with the better compensation for it’s employees costs less. However, like rents, I’m sure that the differences will vary a bit by area as certain places have fewer alternatives than others.