Do we have a problem?

[Mondo]

Or is everyone else wrong...

[slngsht]

Couple of questions for you:

1. What companies are included in the list? I have a hard time believing CEO pay is that crazy if you include privately held companies, including smaller businesses.

 

2. Question worth considering... why do companies pay their CEOs so much?

[lucky dawg]

I think what's wrong here are the statistics. If the average US worker makes $40k a year, that means the average CEO is paid $19mil. Not too likely, that is still quite rare. Perhaps the poll is only of the 10 or 25 highest paid CEOs or something like that. Or maybe its just plain bad analysis, can't really tell since it's orign is unattributed.

 

According to Forbes, $19 mil would put a CEO at about #50 for the highest paid CEOs http://www.forbes.com/lists/2011/12/ceo-compensation-11_rank.html . And if you go by the five year average (to eliminate a particularly good year), that $19mil would move you even further up the list.

[speedwagon]

Right on! this is a case of adjusted statistics. But we do indeed have a problem in our publicly held companies, and it is all too easy to see where the board of directors (and CEO) are not acting in the best interest of the owners. For the most part I can locate an Indiana farm boy who can run your corporation better than most of the hyped CEOs. Invest carefully so you can buy more sevens.

[Mondo]

I think this demonstrates how the stats may have been manipulated a bit (you know what they say about stats...). Notice it's not compared to CEO & his company's workers but rather the "national average income".

Even with the slant, it still seems to be a trend that can't be good.

 

 

"...CEOs at top companies earned 380 times the average worker's income in 2011

So how do CEOs stack up against ordinary workers? Well, the average CEO of a company on the S&P 500 Index earned 380 times the average American worker's wage, with average CEO pay having increased 13.9 percent in 2011.

 

The highest-paid CEO in the country was Apple's Timothy Cook, whose total compensation was nearly $378 million. That's more than 11,000 times the average worker's income of $34,053. The 100th highest-paid CEO, Heinz's W.R. Johnson, had total compensation of more than $18 million, 543 times the average worker's income.

 

What we can't know is how much CEOs make compared with the workers in their own companies; however, that's something the Dodd-Frank Wall Street reform bill will soon require companies to disclose.

Edited April 24, 2012 by Mondo

[Guest Terry]

Of course you have a problem, you're American :smash:

[slngsht]

I think this demonstrates how the stats may have been manipulated a bit (you know what they say about stats...). Notice it's not compared to CEO & his company's workers but rather the "national average income".

Even with the slant, it still seems to be a trend that can't be good.

 

 

"...CEOs at top companies earned 380 times the average worker's income in 2011

So how do CEOs stack up against ordinary workers? Well, the average CEO of a company on the S&P 500 Index earned 380 times the average American worker's wage, with average CEO pay having increased 13.9 percent in 2011.

 

The highest-paid CEO in the country was Apple's Timothy Cook, whose total compensation was nearly $378 million. That's more than 11,000 times the average worker's income of $34,053. The 100th highest-paid CEO, Heinz's W.R. Johnson, had total compensation of more than $18 million, 543 times the average worker's income.

 

What we can't know is how much CEOs make compared with the workers in their own companies; however, that's something the Dodd-Frank Wall Street reform bill will soon require companies to disclose.

 

Even after buying that argument, you're talking about a couple hundred people in the largest economy in the world. We have much bigger problems than that.

 

Read this, and tell me where the CEO compensation problem ranks compared to this problem http://www.nydailynews.com/life-style/health/study-hospitals-billings-shocks-researchers-appendix-removal-cost-1-500-180-000-depending-surgery-article-1.1066207

[ayseven]

Nobody else pays those CEO's that much money. They pay THEMSELVES that much. How it ended up this way is all basically human dishonesty and greed. Pretty sad if it wasn't so infuriating.

[rnr]

The highest-paid CEO in the country was Apple's Timothy Cook, whose total compensation was nearly $378 million. That's more than 11,000 times the average worker's income of $34,053.

 

Again not a fair stat as the Apple average is driven down by the thousands of retail employees that they have. The average engineer at apple makes well over 100k a year and that's without the stock bonuses which have created hundreds of apple millionaires in the last 5-10 years. The better judge in my opinion is that do the employees of the company feel the CEO is over compensated and I'll wager that hardly any of them feel Tim Cook is overpaid. Steve Jobs was probably equally well paid and regularly got approval ratings > 90%.

 

Edit: On the other hand you have people like Carol Bartz who got $39 million a year and most Yahoo employees felt was not pulling her weight.

 

One final point on Tim Cook - I'm pretty sure that he was not given $378 million check. IIRC he was given 1 million restricted stock units which vest in 10 years which at the time worked out to ~$35 million a year but only if he lasted all 10.

Edited April 24, 2012 by rnr

[jimrankin]

A CEO who comes in and saves a company is certainly worth just about anything he is paid, but there is usually a catch to landing them. Just because someone was sucessful at discerning the problems at the company they saved does not mean that they are going to do the same for yours, and even the CEO's know this and that is why they demand either lucrative guaranteed contracts or Golden Parachutes.

My brother in law is friends with a mega billionair who made his money buying underperforming companies who were mostly unprofitable due to overpaid, undertalented or family management. He says only Russia is worse at over layering and overpaying for no talent top management than the USA, and there it's a hangover from the political system and the Mobs having too much interest in private companies. He always seems to find plenty of cheaper more talanted top managers to replace what's there and ties what they are GOING to make with the results they provide. He does well, they do well. Not always the case with how most companies compensate. Seems like Apple has the better idea, keep the company healthy and your stocks will be your big pay.

[slomove]

The CEO pay is only a facet (although a pretty bad one) of a wealth and power distribution trend that has been going on for the last 30 or so years.

 

People and organizations with serious money (earned, inherited or from investments) have the opportunity nowadays to invest in public policy, be it through lobbying, PACs, or media power. Actually, they don't have to bribe anymore: the politicians compete for their attention (I just heard that most politicians spend more time peddling than legislating). That allows these people a) to stack the rules to siphon off most of the wealth created by increased productivity (see CEO pay), b) pay lower taxes than what they paid for the last 50 years c) watch the government spend over their reduced means with a smile or encourage it d) make up for the shortfall by loaning the government money they siphoned off and that was not taxed, e) getting income from the loans, paid by other folk's taxes, f) repeat.

 

Naah, that does not happen in a democracy, just joking.......:jester:

[rnr]

Seems like Apple has the better idea, keep the company healthy and your stocks will be your big pay.

 

Actually that doesnt always work either as the stock targets for the CEOs are often quite short term which means they will (subconsciously or not) try to keep the stock price high even at the expense of the companies long term health. The 10 years vest is a great idea as then the ceo in theory at least will optimize for long term growth and not short term profit.

[speedwagon]

most companies are owned to a very large degree by mutual funds whose managers are looking for short term gains to attract new investors and they in turn encourage short term gains in stock price at any cost. "We" get what we ask for with some rare exceptions. In a perfect world the "free market" (which do not exist) would determine the amount of CEO's salary. In a private the owner takes all the profits and usually no more and an excessive amount will either doom the business or sprout competition. Most of us here are by owning a 7 judged as paying far too much for goods. Once upon a time you could build one for far less than 1 k that might even out perform.