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Why do people complain about CEO compensation? (1 Viewer)

Because it's 90% schooltie bull#### and more about self-promotion or corruption than innovation or administration. When one adjusts for lack of profit motive in the latter, i'll venture to say that the Fortune 500 is at least as poorly administered as the federal government.

 
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Ilov80s said:
I have no issues if the company is making money and the employees are well compensated. It’s hard for me to  meld my Christian values with the idea of a CEO making $20 million a year while he employees workers at poverty levels or is closing stores because the company is failing. Jesus was pretty clear on wealth and greed.
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I’m not religious, but agree with everything else in this post. 

Why should CEO’s earn hundreds of times the salary of their employees? Are they that much smarter, talented or harder working? Are CEOs getting better over time to reflect the gap between their pay and their workers’? 

 
Capella said:
Yes. Lesser public education for black communities is a great place to start. 
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Not sure how that gives somebody motivation to ##### about CEO compensation. 

Complain about inadequate educational opportunities all you want as that is a real problem that should be addressed.

 
Terminalxylem said:
I’m not religious, but agree with everything else in this post. 

Why should CEO’s earn hundreds of times the salary of their employees? Are they that much smarter, talented or harder working? Are CEOs getting better over time to reflect the gap between their pay and their workers’? 
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Think of CEOs as the difference between you and Michael Jordan.

 
Zow said:
Then how do you explain the disproportionately lower number/percentage of women and/or black CEOs?
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I am not going to touch the question about black CEOs other than to say there is racism and sexism in corporate America that any reasonable person would like to eradicate.  Outside of that, here are a couple of reasons that there are more male CEOs than female CEOs.  To be the CEO of a Fortune 500 company, you have to be incredibly smart (women and men score equally on IQ tests) but you also have to devote your life to your work.  Men have been more willing to do that than women. Also, men and women are different psychologically and some of the traits (aggressiveness, disagreeableness etc) that men score higher than women on lead them to advance further and be paid more in a corporate setting 

 
Otis said:
PS — successful white male checking in.  I’d love to be able to put all the credit of my successes on my brilliance and amazing work ethic.  The reality is, as a white guy who grew up in a middle class household, I had boatloads of advantages over lots of other folks.  And a black kid from the ghetto, for a variety of reasons, some complicated and some not, were never on a level playing field with me.  Hell, a black kid from the middle class wasn’t on a level playing field with me.

That said, things have changed.  In the current workforce, diverse candidates are unicorns.  It’s a huge emphasis.  We push harder to recruit them.  We push harder to advance them. Our clients demand it and the business demands it.  Sitting here today, and I’ve seen this in managing in a corporate environment, when comparing an equally talented back woman and white man, the black woman will get a huge leg up.  And if she’s not given all the opportunities she wants, she can move on to the next place and get those opportunities.  I’m not complaining about that—I think it’s the right thing to do.  It’s the right thing to do to correct for centuries of history.  But my point is that I think in 10 or 20 or 30 years, this won’t be an issue anymore.   
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Poor whites face barriers as well. The So Boston housing projects of the 50s/60s was one of the  largest, if not largest, white urban slums in the country.   Appalachia has been impoverished for generations. 

 
Dinsy Ejotuz said:
Because CEOs are often enriched not on the basis of talent, but due to their power and connections.

And workers are often paid low wages not because they aren't adding value, but because they lack the power to capture the value they're adding.
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I would argue that much more often than not CEOs have worked harder and have more unique talents than average "worker" guy.

Like 99% of the time more often.

 
TripItUp said:
I would argue that much more often than not CEOs have worked harder and have more unique talents than average "worker" guy.

Like 99% of the time more often.
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Probably 100% of the time.  Absolutely no one here is making an argument otherwise.

 
Juxtatarot said:
I’m not sure I buy the hard work argument.  There are an awful lot of CEOs that don’t work very hard at all.
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not very many in the Fortune 1000...most of those guys bust their ###.  And had to bust their ### to get there.

 
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They certainly haven’t shown that they have deserved gone raise

the median American’s wages have risen only 11.2 percent since 1978, when adjusted for inflation. CEO pay has grown 937 percent, according to federal data.

The real kicker is that CEO compensation has risen seven times faster than the stock market’s value over the same period. In other words, CEO pay raises have had nothing to do with shareholder return. CEOs get raises in good times and bad.

https://www.houstonchronicle.com/business/columnists/tomlinson/article/CEOs-don-t-deserve-THAT-much-more-than-workers-13733081.php

Does anyone have data that shows the CEO makes a significant difference in the prosperity of a company? 

 
The CEO of my company (a very big one) made about 170X what I made last year. He's undoubtedly a bright guy, but he almost certainly wouldn't be where he is had it not been for some VERY unique advantages.   (even more so than pretty much any other CEO I would think)

I certainly wouldn't say that CEO compensation bothers me. I sure know that I wouldn't want to deal with the stress and time commitments that those guys have to deal with. I just look at the numbers and can't help but think "Is there anything he's doing with $20 million that he couldn't do with $10 Million".  So in that sense, it just seems obscene and unnecessary. But I respect the fact that its a free market and if a good CEO is "only" making $10 Mil at one fortune 500, there's probably another one that will pay him $20 M to jump ship.

If they do a good job, (stock holders make money without the company doing anything legally or too ethically wrong) then fine.  I guess they earned it. But the part that just kills me is the golden parachutes for the guys that #### it up and "resign". That's straight up disgusting.

 
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TLEF316 said:
If they do a good job, (stock holders make money without the company doing anything legally or too ethically wrong) then fine.  I guess they earned it. But the part that just kills me is the golden parachutes for the guys that #### it up and "resign". That's straight up disgusting.
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I'm on board with this.

 
Politician Spock said:
Steve Jobs.

But those kind of examples seem to be more the exception than the rule. 
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No doubt Apple fell when he left and rose upon his return but it’s also been crushing it since he passed away. Even if we say Jobs definitely had a positive impact that’s one person and as you allude to that doesn’t “prove” anything. I’m pretty sure I’ve read a few studies that showed there was no relationship between the CEO and the success of the company. 

Results seem mixed from what I am looking at. It’s bit over my head though to analyze the studies.

 
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American CEOs have drastically outpaced the average worker, the stock market, the economy, GDP and Japanese/European CEOs. So I think a lot of the issues are that people just don’t understand why they have gotten these large raises- it’s confusion and the feeling of being had. Certainly there is also jealousy.

 
NutterButter said:
To think that in the 50's the average CEO made something like 20x more than his/her average worker while today is over 300x.   That's crazy how much that's grown.
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Right. Getting paid a lot is one thing. Keeping such a disproportionate amount of a company’s earnings at the workers’ expense is another.

 
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This topic seems to be less about CEO pay and more about white Male CEO pay.  Seems this is the bigger issue. 

 
elguapo07 said:
Poor whites face barriers as well. The So Boston housing projects of the 50s/60s was one of the  largest, if not largest, white urban slums in the country.   Appalachia has been impoverished for generations. 
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Agreed.

 
I think the comparisons with elite athletes like Shaq or Tiger miss a key point which is that I suspect many rank and file workers could convince themselves that they, too, could run a company (especially when looking at a CEO who runs a company into the ground) but in their heart of hearts, they know they can never do what Shaq does or what Tiger. If only for a different circumstance at birth or a stroke of luck or whatever, that could have been me earning billions. Lots of non-CEOs are as smart as CEOs and work very hard (I'm not sure that they work as much or as hard as CEOs but they probably believe that they would, given that salary.) So it looks unfair that those lucky folks got the plum job when it could just as easily have been me. And I don't disagree with some of these sentiments. There are plenty of very smart people doing work well below the pay of CEOs and I bet there are some not-so-bright CEOs so they may have a point.

 
pecorino said:
I think the comparisons with elite athletes like Shaq or Tiger miss a key point which is that I suspect many rank and file workers could convince themselves that they, too, could run a company (especially when looking at a CEO who runs a company into the ground) but in their heart of hearts, they know they can never do what Shaq does or what Tiger. If only for a different circumstance at birth or a stroke of luck or whatever, that could have been me earning billions. Lots of non-CEOs are as smart as CEOs and work very hard (I'm not sure that they work as much or as hard as CEOs but they probably believe that they would, given that salary.) So it looks unfair that those lucky folks got the plum job when it could just as easily have been me. And I don't disagree with some of these sentiments. There are plenty of very smart people doing work well below the pay of CEOs and I bet there are some not-so-bright CEOs so they may have a point.
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Also people tune in to see Lebron or Tiger Woods. Nobody buys a Coke because James Quincey is the CEO. Patrick Mahomes and Lionel Messi are the product.

 
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Ilov80s said:
They certainly haven’t shown that they have deserved gone raise

the median American’s wages have risen only 11.2 percent since 1978, when adjusted for inflation. CEO pay has grown 937 percent, according to federal data.

The real kicker is that CEO compensation has risen seven times faster than the stock market’s value over the same period. In other words, CEO pay raises have had nothing to do with shareholder return. CEOs get raises in good times and bad.

https://www.houstonchronicle.com/business/columnists/tomlinson/article/CEOs-don-t-deserve-THAT-much-more-than-workers-13733081.php

Does anyone have data that shows the CEO makes a significant difference in the prosperity of a company? 
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Well you dropped the hammer on this thread.  Great post.

 
Pipes said:
Well you dropped the hammer on this thread.  Great post.
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He might have me blocked though after I told him his idea that health insurance should not cover costs related to pregnancy and child birth was a very bad idea. 

 
Ilov80s said:
He might have me blocked though after I told him his idea that health insurance should not cover costs related to pregnancy and child birth was a very bad idea. 
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Costs associated with pregnancy and child birth over the last 10-20some years has already made it unaffordable for a not insignificant portion of the population. I'm trying to be more open minded to ideas that dont fit my preconceived bias, but this one is going to test some limits. 

 
I don't have a problem with CEO compensation in a vacuum.  I have a problem with the CEO to worker compensation ratio which has grown and grown over time.  The line level workers by in large do not seem to share in the success they work to provide the companies they work for.

 
TripItUp said:
This question isn't for Chet, but why would anybody believe that? 

The last Presidential election had a black man and  Midwestern woman as the final candidates.  

The path to CEO is typically one of two 1) you are an amazing entrepreneur that doesn't require a formal education like (Zuckerberg/Gates etc.) or 2) Ivy League MBA 

I don't see any racial or gender requirements for either of those paths.
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As a general matter, Fortune 100 CEOs are selected by Boards. And those Boards have been historically comprised of a pretty homogenous group that generally support their own inner circle of contacts. Things are changing, albeit slowly. 

 
bigbottom said:
As a general matter, Fortune 100 CEOs are selected by Boards. And those Boards have been historically comprised of a pretty homogenous group that generally support their own inner circle of contacts. Things are changing, albeit slowly. 
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IMHO, Boards pick the candidate they think will do the best job.  

 
TripItUp said:
IMHO, Boards pick the candidate they think will do the best job.  
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Right. And they think the people they know from their inner circle of contacts will do the best job. I’ve been involved in representing Fortune 100/500 Boards on executive searches - seen it countless times. 

 
bigbottom said:
Right. And they think the people they know from their inner circle of contacts will do the best job. I’ve been involved in representing Fortune 100/500 Boards on executive searches - seen it countless times. 
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I don't disagree with that.

 
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