Are CEO's Overpaid?

Not all companies are the same. However, when i see a company that pleas to the government for a bailout (i.e. Airlines, Auto Manufacturers, etc) then proceed to layoff 200k people while the CEO remains at the same salary or proceeds to give themselves a higher salary, I have a problem.

All to often there are many CEO's that play the game of snatch and grab with Fortune 500's. They turn a company around with short term investments that yield quick results but ultimately leave a company in far worse shape in 5 years then when they started with the CEO. By then the guy/girl has moved on to another company and proceeded to "turn it around." The ones that get screwed in those large companies are the employees. they make the same wages even if they are union or they get fired due to poor growth. Yet the CEO remains at the same salary.

Everyone deserves the pay that someone is willing to give them and in a corporation, the shareholders need to wield the power and not allow a BOD to manipulate control. Those that don't deserve the losses they recieve. However, when a CEO and a BOD has the power to pay themselves whatever they deem fit, thats a misuse of power. ITs the same as congress voting themselves raises whenever they feel like because there is little accountability for it.
 
KarlMarx said:
One thing I learned recently when it comes to economics, there is a difference between the price of something and its value. People are paid what the market dictates.....

Take the majority of the public school teachers, all of the pro basketball players (all high paid "sports" figures from any sport),, all the corportate CEOs who earn 30x, or more than their employees, and send them to some place like Somalia, Ethiopia, Iraq, IRan,. They have done so much for us we should share.
 
Working Man said:
Take the majority of the public school teachers, all of the pro basketball players (all high paid "sports" figures from any sport),, all the corportate CEOs who earn 30x, or more than their employees, and send them to some place like Somalia, Ethiopia, Iraq, IRan,. They have done so much for us we should share.

Do you think you can play sports as well a high paid sports figure?
 
Ahh, the good old Labor Theory of Value fallacy. It's like that one last chunk that just won't flush, but keeps floating back up.

No one gets paid a certain wage for working hard. Labor is a commodity and it's price is determined just like any other commodity--supply and demand. You can bust ass making wooden wagon wheels by hand, but the guy who cranks out aluminum wheels by pushing buttons on a CNC lathe will make more money, because there is more demand for his product, and he produces more.

If any old Mexican day laborer could do what the president of my company does, that position would pay minimum wage. Sure, you can point out specific examples of poor performing CEO's being paid extravagant amounts, but that's just anecdotal evidence. Besides, the company in question might have fared even worse with some guy being paid a "reasonable" salary. Ben and Jerry (the ice cream guys) learned this the hard way IIRC, and had to go through seven presidents or so before they broke down and offered a higher salary.
 
Frankly, the CEO has the toughest job in the company, because ultimately, it is his responsibility to make the company succeed. He has to understand all aspects of the company, he has to keep the BOD happy with profits, he has to deal with labor unions (if he is unfortunate), he has to deal with stockholders (if he works for a publicly held company)... it's his show to run. So yeah, he deserves the compensation that he gets, along with the credit when the company does good and the blame when the company does bad.
 
It's pretty disgusting though when a board bankrupts a company with golden parachutes for themselves and nothing and no retirement for the workers. It's evil.
 
gop_jeff said:
Frankly, the CEO has the toughest job in the company, because ultimately, it is his responsibility to make the company succeed. He has to understand all aspects of the company, he has to keep the BOD happy with profits, he has to deal with labor unions (if he is unfortunate), he has to deal with stockholders (if he works for a publicly held company)... it's his show to run. So yeah, he deserves the compensation that he gets, along with the credit when the company does good and the blame when the company does bad.



Get real GOP Jeff...most Ceo's of today run the company into the ground...lay off the work force...outsource the jobs...then collect a big "Bonus" after the the anniliation of middle America's work force is completed...Yeah Walmart and Cosco rocks...Yes they are way overpaid...they produce nothing but outsourcing!
 
archangel said:
Get real GOP Jeff...most Ceo's of today run the company into the ground...lay off the work force...outsource the jobs...then collect a big "Bonus" after the the anniliation of middle America's work force is completed...Yeah Walmart and Cosco rocks...Yes they are way overpaid...they produce nothing but outsourcing!

CEOs are responsible to produce profits, not jobs.
 
gop_jeff said:
CEOs are responsible to produce profits, not jobs.


Ya have no profits...what business that 'produces' has no employees? My beef is with outsourcing...It is my opinion and you have yours....simple really!
 
archangel said:
Ya have no profits...what business that 'produces' has no employees? My beef is with outsourcing...It is my opinion and you have yours....simple really!

Well, you said it yourself, CEOs outsource. And why not? If a CEO can outsource his labor requirements, then he's cutting labor costs and improving profits. Good for him - and the stock holders!
 
gop_jeff said:
Well, you said it yourself, CEOs outsource. And why not? If a CEO can outsource his labor requirements, then he's cutting labor costs and improving profits. Good for him - and the stock holders!
Exactly. A worker shouldn't be getting mad at a CEO; he should be figuring out how to make himself more competitive with the guy who just had his job outsourced to him.
 
YES! YES! YES! YES!

CEOs are ridiculously overpaid.

Over the past 10 years, US profits have grown about 70%, or 6% per year, in line with long-term averages. During that time, CEO compensation has risen about 250%! That is outright ridiculous! What the hell have these guys done the past decade to deserve such a pay raise? They've been taking from the stockholders to line their pockets. Its disgusting.

Perfect example of the agency problem.
 
The ClayTaurus said:
Exactly. A worker shouldn't be getting mad at a CEO; he should be figuring out how to make himself more competitive with the guy who just had his job outsourced to him.

How does one compete with a country where the cost of living is like 2,000 per year? Honestly.
 
BaronVonBigmeat said:
Ahh, the good old Labor Theory of Value fallacy. It's like that one last chunk that just won't flush, but keeps floating back up.

No one gets paid a certain wage for working hard. Labor is a commodity and it's price is determined just like any other commodity--supply and demand. You can bust ass making wooden wagon wheels by hand, but the guy who cranks out aluminum wheels by pushing buttons on a CNC lathe will make more money, because there is more demand for his product, and he produces more.

If any old Mexican day laborer could do what the president of my company does, that position would pay minimum wage. Sure, you can point out specific examples of poor performing CEO's being paid extravagant amounts, but that's just anecdotal evidence. Besides, the company in question might have fared even worse with some guy being paid a "reasonable" salary. Ben and Jerry (the ice cream guys) learned this the hard way IIRC, and had to go through seven presidents or so before they broke down and offered a higher salary.

Sometimes it seems like you're the only intelligent person here.

If your financial planner can get you $1 million, but a monkey throwing darts at a stock chart can get you the same, then your financial planner is worth nothing.

The CEO is not entitled to a huge share of the profits, he does his job and gets paid for it.
 
This is a free market economy. The value of any given thing is equal to exactly what the free market is willing to pay for it, and no less. If fish laid eggs by the ton and chickens laid 1 egg a year, caviar would be in kid's school lunches or even dog food and millionares would splurge on a $1000 omelette from time to time.
 
Kathianne said:
Based on what, in generalities?

Mmmmmmmm....based on companies like Enron and General Motors which, even when they're in huge trouble, over pay their CEO's.

If it were reward-based, wouldn't be so bad. But do you really think that compensation for the top tier should be so high that it keeps everyone else from having things like decent health care and pension plans? Isn't there enough for them to be VERY well paid while still acknowledging that a publicly owned company isn't run for the benefit of a few guys?
 
jillian said:
But do you really think that compensation for the top tier should be so high that it keeps everyone else from having things like decent health care and pension plans?

They also kick kittens for fun.
 
jillian said:
Mmmmmmmm....based on companies like Enron and General Motors which, even when they're in huge trouble, over pay their CEO's.

If it were reward-based, wouldn't be so bad. But do you really think that compensation for the top tier should be so high that it keeps everyone else from having things like decent health care and pension plans? Isn't there enough for them to be VERY well paid while still acknowledging that a publicly owned company isn't run for the benefit of a few guys?

General Motors' pension plan is already too generous, which is one main reason they're in so much trouble, but back to the topic.

The free market fixes itself. If a company 'overpays the CEO,' as you state, and does so by so much that it cannot afford benefits for employees, then those employees will find a company willing to give them more benefits. Every problem liberals seem to have with corporations is fixed by competition.
 
Hobbit said:
General Motors' pension plan is already too generous, which is one main reason they're in so much trouble, but back to the topic.

The free market fixes itself. If a company 'overpays the CEO,' as you state, and does so by so much that it cannot afford benefits for employees, then those employees will find a company willing to give them more benefits. Every problem liberals seem to have with corporations is fixed by competition.

Not really. Read some Upton Sinclair. The Jungle is what happens when corporations are unchecked. Again, we don't have a purely capitalist system.

And right now what the "free market" is doing is raising the average compensation for CEO's and the like. So every other corporation, in an effort to prove they're doing better than the next guy, pays their own CEO over the average...so the average goes up and up and up.

What's wrong with GM is that its product sucks compared to foreign manufacturers and their models are lackluster and boring. They can't compete with European and Japanese cars.
 
jillian said:
Not really. Read some Upton Sinclair. The Jungle is what happens when corporations are unchecked. Again, we don't have a purely capitalist system.

And right now what the "free market" is doing is raising the average compensation for CEO's and the like. So every other corporation, in an effort to prove they're doing better than the next guy, pays their own CEO over the average...so the average goes up and up and up.

What's wrong with GM is that its product sucks compared to foreign manufacturers and their models are lackluster and boring. They can't compete with European and Japanese cars.

I have a Saturn (made by GM). It's 7 years old, has never had any major problems, and has better fuel efficiency than most hybrids. However, the GM welfare state, if it stopped paying shareholders and gave no more employees a pension, would have to stay in business 30 more years to pay off their pension promises.

As for the rest of the post, the free market would have fixed the problems in The Jungle. With public outcry came a group to check up on how these places were run. Those willing to live up to what the public thought was acceptable stayed in business while those that didn't were shut down. If it was just a 'whistleblower' organization, like the health report columns in the newspaper, it would have ultimately had the same effect, except the places would have gone out of business rather than be shut down. The only regulations needed to keep the free market going is competition and freedom of information. As long as those two factors are present, the market will check itself.
 

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