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

[kutta]

Because I have a history degree and have taught US History so many times,!I just think back to say the late 1800s and early 1900s where we often had a person found a company, become the equivalent of a Gates today and pay their workers the equivalent of about $3,000 today. I do think there is a line where it becomes obscene and totally immoral. I’m not sure where that line is but I do think it absolutely exists. Sure people can work anywhere but they do have to work somewhere. Even with our current economy having a low level of unemployment, the average unskilled worker doesn’t have much power or many options. Now yes they could get skills but we know that there will always be a large demand for certain unskilled positions.

Totally agree. Back in the day it was very very bad. I think we've gotten a lot better today, and people have way more options now.

I guess I'm saying - instead of saying "CEO salaries are out of whack," how about talking about specific examples? I also think that raising the minimum wage helps the issue on the surface, but may hurt the people it's trying to help in the long run. 

As a history teacher, you probably have a better handle on the history of this than I do - what happened between then and now to make things better? Is it the minimum wage, or something else?

 

[The Commish]

Uhhhhhh

Seriously.  This. 

Pretty much sums up everything that needs to be said about this topic.  I continue to be amazed at the lack of self awareness in a great many of our society.

 

[Ilov80s]

Totally agree. Back in the day it was very very bad. I think we've gotten a lot better today, and people have way more options now.

I guess I'm saying - instead of saying "CEO salaries are out of whack," how about talking about specific examples? I also think that raising the minimum wage helps the issue on the surface, but may hurt the people it's trying to help in the long run. 

As a history teacher, you probably have a better handle on the history of this than I do - what happened between then and now to make things better? Is it the minimum wage, or something else?

Oh we have improved a ton. No doubt. In my opinion there were probably 3 main factors. First and foremost is organized labor. That was a dangerous game, they often had to battle police, hired thugs, labels of Communism and negative press but they slowly grew and were able to negotiate better wages and conditions. Even more importantly was the role they played and the role the government played in passing laws related to things like minimum wage, workman’s comp, limits on work hours, safety regulations, child labor, etc. Finally, and this is more my personal speculation, is that the Great Depression and WW2 deeply altered the character of those generations who lived through it. It made them less greedy, more apt to look out fellow Americans, etc. Those two events did what WW1 did to Europe in disrupting the existing social structure where we accepted the wealthy as simply a better stock of people who had a better work ethic. 

Starting around the late 70s/early 80s, we have firmly regressed when it comes to that spirit (70s and 80s were the decades of indulgence and then greed) and unions have been decimated (they got overly powerful so I get the pendulum swing but we have officially swung too far imo.)

 

[Chaka]

Because the machinery of capitalism is oiled with the blood of the laborers. 

And screwing the laborers in the process of taking their blood has become normalized.

People like @TripItUp say things like "If you want to be a CEO then become a CEO." and think it is as simple as that.

The American Dream is a scam at best and an outright lie at worst.

 

[TripItUp]

Because the machinery of capitalism is oiled with the blood of the laborers. 

And screwing the laborers in the process of taking their blood has become normalized.

People like @TripItUp say things like "If you want to be a CEO then become a CEO." and think it is as simple as that.

The American Dream is a scam at best and an outright lie at worst.

The American dream is alive and well...I can personally attest to it.

 

[AAABatteries]

The American dream absolutely works for individuals but not for the masses.  The problem is the masses are getting ####ed over by unchecked capitalism.  CEO pay is a only a very minor piece of the puzzle.

 

[Chaka]

The American dream is alive and well...I can personally attest to it.

I am happy for you, sincerely I am. I am a successful business owner myself and it's a myth.

 

[Otis]

One day I’m going to get Kutta to drink and smoke cigars with me in my backyard and he’s going to tell me what he cashed out for. It must be totally awesome. 

 

[Ilov80s]

The American dream absolutely works for individuals but not for the masses.  The problem is the masses are getting ####ed over by unchecked capitalism.  CEO pay is a only a very minor piece of the puzzle.

Right. It’s all about scale.

 

[Ilov80s]

The American dream is alive and well...I can personally attest to it.

For sure but I’m a special ed teacher in a lower SES public school and can personally attest to the fact that the American Dream isn’t there for everyone. Some our kids succeed. We had a kid get a perfect SAT score last year and get a full ride to MIT. This year we have our first ever kid going to an Ivy League school. We have way way way more who are being crushed under the weight of poverty. 

 

[shadrap]

Because I have a history degree and have taught US History so many times, I see things I’m a historical perspective (which may be too outdated). I think back to say the late 1800s and early 1900s where we often had a person found a company, become the equivalent of a Gates today and pay their workers the equivalent of about $3,000 today. I do think there is a line where it becomes obscene and totally immoral. I’m not sure where that line is but I do think it absolutely exists. Sure people can work anywhere but they do have to work somewhere. Even with our current economy having a low level of unemployment, the average unskilled worker doesn’t have much power or many options. Now yes they could get skills but we know that there will always be a large demand for certain unskilled positions.

I've always felt that regardless of your position if you work harder than the guy next to you you are going in the right direction.  It's so simple that it is right.

 

[shadrap]

One day I’m going to get Kutta to drink and smoke cigars with me in my backyard and he’s going to tell me what he cashed out for. It must be totally awesome. 

so the kutta cashed out?  I'd be interested to.  always interested in a success story.

 

[Politician Spock]

I've always felt that regardless of your position if you work harder than the guy next to you you are going in the right direction.  It's so simple that it is right.

This works on a micro level, because you pass people financially.

But on the macro level, if everyone works harder, then no one passes anyone, and because prices are determined by the supply and demand, despite everyone working harder, their increase wages are simply consumed by higher prices, so everyone worked harder, but didn't gain a cent of buying power.

This has actually been occurring for decades now. The same amount of buying power today requires a lot more effort to obtain than it did decades ago. 

 

[Ilov80s]

I've always felt that regardless of your position if you work harder than the guy next to you you are going in the right direction.  It's so simple that it is right.

History often says otherwise 

 

[kutta]

One day I’m going to get Kutta to drink and smoke cigars with me in my backyard and he’s going to tell me what he cashed out for. It must be totally awesome. 

Say the word GB. I’ll bring the Cubans.

 

[kutta]

For sure but I’m a special ed teacher in a lower SES public school and can personally attest to the fact that the American Dream isn’t there for everyone. Some our kids succeed. We had a kid get a perfect SAT score last year and get a full ride to MIT. This year we have our first ever kid going to an Ivy League school. We have way way way more who are being crushed under the weight of poverty. 

I think people underestimate the amount of luck needed to succeed too. Not just luck in landing a good job or having a good mentor or starting and running a successful business. But luck being born in this country and not Syria. Luck getting the genes to allow you to succeed. Luck being raised in a white, upper middle class neighborhood.

There are a lot of people who work hard and struggle every day and never “make it.” I can’t imagine there are many really successful people who don’t think they’ve been pretty lucky in their lives.

 

[kutta]

so the kutta cashed out?  I'd be interested to.  always interested in a success story.

The cash out was about four years ago. The amount is top secret. It’s not Chet money, but it’s probably upper tier FBG dough which is pretty darn good.

 

[Zegras11]

I think people underestimate the amount of luck needed to succeed too. Not just luck in landing a good job or having a good mentor or starting and running a successful business. But luck being born in this country and not Syria. Luck getting the genes to allow you to succeed. Luck being raised in a white, upper middle class neighborhood.

There are a lot of people who work hard and struggle every day and never “make it.” I can’t imagine there are many really successful people who don’t think they’ve been pretty lucky in their lives.

My bio: Realtor, Investor and master of luck!

All this said though, most very successful people do the work to give them a chance at getting very lucky. They create a lot of their luck. 

 

[Otis]

The cash out was about four years ago. The amount is top secret. It’s not Chet money, but it’s probably upper tier FBG dough which is pretty darn good.

Such a wide range here. :sips scotch, asks again: 

 

[Ilov80s]

My bio: Realtor, Investor and master of luck!

All this said though, most very successful people do the work to give them a chance at getting very lucky. They create a lot of their luck. 

Sure but I also work with lots of kids who work hard and get very little in return for their efforts. They work hard just to get Ds. They are going to depend on a low level job to support them. They can’t just become a CEO.

 

[shadrap]

I think people underestimate the amount of luck needed to succeed too. Not just luck in landing a good job or having a good mentor or starting and running a successful business. But luck being born in this country and not Syria. Luck getting the genes to allow you to succeed. Luck being raised in a white, upper middle class neighborhood.

There are a lot of people who work hard and struggle every day and never “make it.” I can’t imagine there are many really successful people who don’t think they’ve been pretty lucky in their lives.

yea, hard to imagine a kid being born in Somalia climbing the ladder of success.  Really good point.

 

[rockaction]

As Tolstoy said, How Much Land Does One Man Need?

Seems appropriate here.

 

[kutta]

My bio: Realtor, Investor and master of luck!

All this said though, most very successful people do the work to give them a chance at getting very lucky. They create a lot of their luck. 

Agreed. But they didn’t pick their genes. They didn’t pick where they were born. They didn’t pick the teacher that ultimately inspired them.

Dont get me wrong. I’m not saying it’s all luck at all. There’s tons of hard work and grinding. But if I was born autistic, I probably wouldn’t be posting on FBG as a CEO in the CEO thread.

 

[Chaka]

I've always felt that regardless of your position if you work harder than the guy next to you you are going in the right direction.  It's so simple that it is right.

Is it that simple? Seems like there a lot of people in positions of power who got there through relationships and not through any form of hard work.

 

[jvdesigns2002]

The American dream is alive and well...I can personally attest to it.

Not trying to disagree or be abrasive. I do think that there are aspects of the American dream that are alive and well. With that said--out of curiosity---are you a Caucasian male that was born in America? Also--would you say that you were born into a lower, middle, or upper class family?  What is your approximate age (30's, 40's 50's..etc) Lastly--where were you raised (not asking for an address--just a city/region.etc)? 

 

[Zegras11]

Agreed. But they didn’t pick their genes. They didn’t pick where they were born. They didn’t pick the teacher that ultimately inspired them.

Dont get me wrong. I’m not saying it’s all luck at all. There’s tons of hard work and grinding. But if I was born autistic, I probably wouldn’t be posting on FBG as a CEO in the CEO thread.

I agree with what you're saying, but all that stuff doesn't make you a CEO.  Just gives you a slightly better shot at it.

No matter what your circumstances are, you're a major success if you improve your life and the lives of your family, and help out those less fortunate than you. 

 

[James Daulton]

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. 

This is the reason CEO pay is so out of whack.  CEO pay is set by their boards.  The boards are made up of other CEOs largely.  It's an incestuous relationship at best.

And just lol at comparing Shaq's talent difference at hoops to the CEO's talent difference to the normal worker.  People put CEOs on a pedestal for some reason like they're these gods of wisdom and work.  Are they smarter than they typical worker, usually, do they "work longer hours", usually, are they worth 300x the normal worker based on their being smarter and more "hard working"?  

Note even close.

 

[Ilov80s]

Is it that simple? Seems like there a lot of people in positions of power who got there through relationships and not through any form of hard work.

If only those slaves in 1800 worked harder they could have got promoted and got a sugar plantation of their own. 

 

[Gally]

Is it that simple? Seems like there a lot of people in positions of power who got there through relationships and not through any form of hard work.

Developing relationships and being thought well of does take hard work.  Many times people throw the hard work card out there but the definition isn't clear cut.  There are many types of hard work and what constitutes hard work varies from person to person.  I know plenty of people that if they had to work to develop good business relationships and "play the game" they would be miserable and would think that to be the hardest work in the world.  Then there are some where the physical labor of work would be extremely hard for them.   My point is "hard work" does not have simple one size fits all definition. 

 

[Chaka]

If only those slaves in 1800 worked harder they could have got promoted and got a sugar plantation of their own. 

Doesn't even need to be that extreme of an example.  The single mother busting her hump working 2-3 jobs and still getting her kid to school on time etc.etc.etc. She won't get ahead unless she also has a significant amount of luck.  Luck that her car doesn't break down, luck that she or her child doesn't incur medical expenses, luck that her landlord doesn't jack up the rent to drive the tenants out so they can sell the building to Starbucks. Lots of luck is also required to get ahead nowadays.

All the hard work in the world won't do #### if you don't also get lucky every now and again.

 

[Ilov80s]

Doesn't even need to be that extreme of an example.  The single mother busting her hump working 2-3 jobs and still getting her kid to school on time etc.etc.etc. She won't get ahead unless she also has a significant amount of luck.  Luck that her car doesn't break down, luck that she or her child doesn't incur medical expenses, luck that her landlord doesn't jack up the rent to drive the tenants out so they can sell the building to Starbucks. Lots of luck is also required to get ahead nowadays.

All the hard work in the world won't do #### if you don't also get lucky every now and again.

I know, I went for the tomahawk slam. Maybe it was too much. I have lots of students who are always missing class because their parents car breaks down or they force their kid to stay home to babysit. It sucks for them. Many persevere and still graduate but with lower grades then they could have had. That means less money for college, less college options, etc. 

 

[Chaka]

Developing relationships and being thought well of does take hard work.  Many times people throw the hard work card out there but the definition isn't clear cut.  There are many types of hard work and what constitutes hard work varies from person to person.  I know plenty of people that if they had to work to develop good business relationships and "play the game" they would be miserable and would think that to be the hardest work in the world.  Then there are some where the physical labor of work would be extremely hard for them.   My point is "hard work" does not have simple one size fits all definition. 

Those people are called salesmen (persons) been there, done that and it can be work. But there are simply too many examples of unqualified people falling ### backwards into a cush job just because someone liked them. When a familial relationship is involved or because he did the best keg stands at Phi Kappa Dip####.

And that's even before we get into the notion of personal biases impacting business decisions.

 

[Chaka]

Okay, raise your hand if you have ever had to report to a lazy idiot?

 

[Gally]

Those people are called salesmen (persons) been there, done that and it can be work. But there are simply too many examples of unqualified people falling ### backwards into a cush job just because someone liked them. When a familial relationship is involved or because he did the best keg stands at Phi Kappa Dip####.

And that's even before we get into the notion of personal biases impacting business decisions.

Sure there are people that don't deserve what they have everywhere......good and bad.   But "hard work" is different for everyone.  Too many people crap on certain jobs as being easy without really understanding what it is that you have to be good at to excel in the "easy" job. 

 

[Chaka]

Sure there are people that don't deserve what they have everywhere......good and bad.   But "hard work" is different for everyone.  Too many people crap on certain jobs as being easy without really understanding what it is that you have to be good at to excel in the "easy" job. 

I am not knocking hard work or calling certain jobs easier or harder.  My point is that very rarely will hard work by itself be all that it takes to advance in this world.

Far too many people think they are "self made men" when, in reality, they have been extraordinarily lucky along the way.

 

[Gally]

I am not knocking hard work or calling certain jobs easier or harder.  My point is that very rarely will hard work by itself be all that it takes to advance in this world.

Far too many people think they are "self made men" when, in reality, they have been extraordinarily lucky along the way.

Completely agree!  You are in the minority.  Many people call certain jobs easier than others and it's just not that simple in most cases.  But regardless in order to succeed you do need luck to play a role and supplement the hard work (whatever that may be). 

 

[Terminalxylem]

My bio: Realtor, Investor and master of luck!

All this said though, most very successful people do the work to give them a chance at getting very lucky. They create a lot of their luck. 

How did you orchestrate being born healthy in the US, likely to a stable household with some financial resources?

ETA I see multiple people already pointed out all the luck involved most of us take for granted.

 

[Zegras11]

How did you orchestrate being born healthy in the US, likely to a stable household with some financial resources?

One out of three.

House was incredibly unstable due to alcoholic mom.  Her dad, mom, sister and brother were also alcoholics.  I chose to not become one.

I was on my own at 17.5 .   No resources other than being a busboy and a boxboy to pay for college/rent/food. Another choice I made.  These created better opportunities down the road.

I am very lucky, and have always been extremely grateful that I live in a country that allows me to make choices and choose a better path if that's what i desire.  I wake up almost everyday with my first intentional thought  being thankful for what I have.  I have had a lot of advantages that others don't/didn't have.  I get that. I still had to make choices to make the most of those advantages.

I'm extremely grateful to be able to give back at this point in my life. My RE biz is built around that concept as I help hard working, first time home owners get ahead in this life financially.

 

 

[Terminalxylem]

One out of three.

House was incredibly unstable due to alcoholic mom.  Her dad, mom, sister and brother were also alcoholics.  I chose to not become one.

I was on my own at 17.5 .   No resources other than being a busboy and a boxboy to pay for college/rent/food. Another choice I made.  These created better opportunities down the road.

I am very lucky, and have always been extremely grateful that I live in a country that allows me to make choices and choose a better path if that's what i desire.  I wake up almost everyday with my first intentional thought  being thankful for what I have.  I have had a lot of advantages that others don't/didn't have.  I get that. I still had to make choices to make the most of those advantages.

I'm extremely grateful to be able to give back at this point in my life. My RE biz is built around that concept as I help hard working, first time home owners get ahead in this life financially.

 

Two out of four, if you include the healthy part.

Regardless, good for you. I don’t want to diminish the importance of hard work in attaining success, and believe most people who do and make good choices can attain a decent standard of living. I don’t think the vast majority of people have a shot at being a CEO, however, including many with the necessary talent and work ethic.

 

[Zegras11]

Two out of four, if you include the healthy part.

Regardless, good for you. I don’t want to diminish the importance of hard work in attaining success, and believe most people who do and make good choices can attain a decent standard of living. I don’t think the vast majority of people have a shot at being a CEO, however, including many with the necessary talent and work ethic.

Anyone can be a CEO if they start their own company . 

 

[Terminalxylem]

Anyone can be a CEO if they start their own company . 

Fair enough. I guess that’s what Tripitup means...

 

[Andy Dufresne]

Why CEOs Actually Deserve Their Gazillion-Dollar Salaries

 

[TripItUp]

Fair enough. I guess that’s what Tripitup means...

I also am driving home the point that everybody is allowed to apply to Harvard business school.  

If you didn't do the work to be able to get in, or if you are not talented enough to get in...that's on' you, not on those that did do the work or those that do have the talent.  

I don't think people realize that A) They don't have the IQ required to get into Harvard and B) they haven't worked as hard as IVY league CEO types to get there

CEO's are responsible for a company's performance objectives as defined by the Board and shareholders.  They are not responsible for paying employees a certain salary, unless it fits their objectives.

 

[Gawain]

There were 3 black CEOs in the Fortune 500 last year. 16 total since 1999. You’re either blind or ignorant if you don’t think it is a disadvantage to be a black person trying to become a CEO. 

What's the racial population of the "Qualified to be CEO" group? Does it deviate from the representation given above?

Out of the 100 largest school districts in the USA, Baltimore spent the fifth most per student. https://www.bizjournals.com/baltimore/news/2018/05/21/five-maryland-school-districts-rank-among-top-10.html

For that spend, Baltimore got the results below: https://foxbaltimore.com/news/project-baltimore/13-baltimore-city-high-schools-zero-students-proficient-in-math

Digging further, we found another six high schools where one percent tested proficient. Add it up – in half the high schools in Baltimore City, 3804 students took the state test, 14 were proficient in math.

Baltimore city schools are 79.4% Black. http://www.marylandpublicschools.org/about/Documents/DCAA/SSP/20172018Student/2018EnrollbyRace.pdf

If people are self-selecting out of the population of "Qualified to be CEO" this early, can you blame the population of CEOs for not being diverse?

 

[shadrap]

Is it that simple? Seems like there a lot of people in positions of power who got there through relationships and not through any form of hard work.

well of course there is those sort, but it's no good to figure whether they deserve it or not.  Counter-productive to your scheme in life.  IMO.   It is simpler than people here make it. IMO.

believe in your self & work harder than those in your profession.

 

[Terminalxylem]

I also am driving home the point that everybody is allowed to apply to Harvard business school.  

If you didn't do the work to be able to get in, or if you are not talented enough to get in...that's on' you, not on those that did do the work or those that do have the talent.  

I don't think people realize that A) They don't have the IQ required to get into Harvard and B) they haven't worked as hard as IVY league CEO types to get there

CEO's are responsible for a company's performance objectives as defined by the Board and shareholders.  They are not responsible for paying employees a certain salary, unless it fits their objectives.

I’m not disputing that CEOs are intelligent and talented, nor am I suggesting everyone has the skills to become one. But even among those who could get accepted and thrive at an Ivy League school, not all have the opportunity to become CEOs.

But more importantly regarding your original question, I think the disparity between pay for top CEOs and their workers is morally reprehensible - even if they earned every penny of their salary.

 

[ren hoek]

Look, it's not like I hate CEOs.  I'm sure they taste good with A1.

 

[Ilov80s]

Why CEOs Actually Deserve Their Gazillion-Dollar Salaries

The more CEOs are paid, the worse the firm does over the next three years, as far as stock performance and even accounting performance

 

[Terminalxylem]

The more CEOs are paid, the worse the firm does over the next three years, as far as stock performance and even accounting performance

Yep, higher pay is pretty meaningless in terms of productivity/performance after a certain point. https://m.youtube.com/watch?v=u6XAPnuFjJc

So we pay CEOs a gazillion dollars because they’ve “earned it”, the company performs worse and the average worker struggles to make ends meet. Not sure why anyone thinks this is a good idea, except the CEOs.

 

[hagmania]

The term CEO has lost meaning in this thread. Simply put, I think most folks (including myself) have an issue that anyone beyond [insert conceptual threshold here] is making the mega millions per year and that income/wealth disparity exists in the dire state such that it does today.

This ire gets focused on the c-suite because one can compare what they make to other workers in the same company and actually quantify one's outrage.

There, you have my answer to the thread's question.