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crazy thought... stop subsidizing them and bailing them out.Reload this Page CEO Pay Often Not Linked to Performance
Yeah....And?
During my brief foray into working in the corporate world, almost nobody's pay was based upon performance...In fact, if you performed too well and acted like you gave a shit, you'd usually run afoul of middle management types who had become fat, lazy and complacent in the corporate bureaucracy.
So what else is new?
Aside from you defending that bullshit on a daily basis..while they play with Tax Payer dollars like monopoly money..
Not much?
There is virtually no relationship between relative CEO pay and relative corporate performance. One reason is because CEO's aren't paid based on performance. They are paid relative to how other CEOs are paid.
THOUSAND OAKS, Calif. As the board of Amgen convened at the companys headquarters in March, chief executive Kevin W. Sharer seemed an unlikely candidate for a raise.
Shareholders at the company, one of the nations largest biotech firms, had lost 3 percent on their investment in 2010 and 7 percent over the past five years. The company had been forced to close or shrink plants, trimming the workforce from 20,100 to 17,400. And Sharer, a 63-year-old former Navy engineer, was already earning lots of money about $15 million in the previous year, plus such perks as two corporate jets.
The board decided to give Sharer more. It boosted his compensation to $21 million annually, a 37 percent increase, according to the company reports.
Why?
The company board agreed to pay Sharer more than most chief executives in the industry with a compensation value closer to the 75th percentile of the peer group, according to a 2011 regulatory filing.
This is how its done in corporate America. At Amgen and at the vast majority of large U.S. companies, boards aim to pay their executives at levels equal to or above the median for executives at similar companies.
The idea behind setting executive pay this way, known as peer benchmarking, is to keep talented bosses from leaving.
But the practice has long been controversial because, as critics have pointed out, if every company tries to keep up with or exceed the median pay for executives, executive compensation will spiral upward, regardless of performance. Few if any corporate boards consider their executive teams to be below average, so the result has become known as the Lake Wobegon effect.
It wasnt until recently, however, that its pervasiveness and impact on executive pay became clear. Companies have long hid the way they set executive pay, but in late 2006, the Securities and Exchange Commission began compelling companies to disclose the specifics of how they use peer groups to determine executive pay.
Since then, researchers have found that about 90 percent of major U.S. companies expressly set their executive pay targets at or above the median of their peer group. This creates just the kinds of circumstances that drive pay upward.
Moreover, the jump in pay because of peer benchmarking is significant. A chief executives pay is more influenced by what his or her peers earn than by the companys recent performance for shareholders, according to two independent research efforts based on the new disclosures. One was by Michael Faulkender at the University of Maryland and Jun Yang of Indiana University, and another was led by John Bizjak at Texas Christian University.
Peer benchmarking has a significant influence on CEO pay, Bizjak said. Basically, you cant have every CEO paid above average without pay ratcheting upward over time.
Cozy relationships and ‘peer benchmarking’ send CEOs’ pay soaring - The Washington Post
There has been a fundamental breakdown in corporate governance in America.
The practice has persisted because corporate board members, many of whom have personal or business relationships with the chief executive, have been unwilling to abandon the practice.
At Amgen, for example, four of the six members of the board compensation committee had personal or business connections to Sharer before joining the board. In fact, he nominated at least two of the six to the board, according to a company source and reports.
These kinds of ties between chief executives and the boards that oversee them permeate corporate America. On a typical board, the chief executive considers about about 33 percent of the board of directors as friends rather than as mere acquaintances,according to a survey of chief executives at about 350 S&P 1500 corporations conducted over 15 years by University of Michigan business professor James Westphal.
More tellingly, the chief executive is likely to find even more friends on the compensation committees of corporate boards almost 50 percent.
In an advisory vote by Amgen shareholders in May, about 56 percent of votes cast approved the companys executive compensation. Many shareholders, however, are frustrated.
The members of the Amgen board are basically just rubber-stampers, said Steve Silverman, who owns one of the largest chunks of Amgen stock held by an individual investor. Kevin put most of them on the board himself. If hes getting paid too much and he certainly is theyre not going to say so.
Ah, a teachable moment here.Except that the personal responsibility shouldn't be applied at the executive level......When a share holder finds out that management has failed then that's the time to STOP trusting. People who work in a free market need to count their change and read their contracts. What needs to continue (or start) here is a sense of personal responsibility for one's actions. It's true in the market, it's true in a marriage, and it's true in the voting booth.
We're talking about people having a sense of responsibility for their own actions, as in you can deal with the consequences of your actions if you want, and the adults here will expect to deal with the consequences of their actions. It means don't expect me to clean up after your bad money and voting choices.
Ah, a teachable moment here.Except that the personal responsibility shouldn't be applied at the executive level......When a share holder finds out that management has failed then that's the time to STOP trusting. People who work in a free market need to count their change and read their contracts. What needs to continue (or start) here is a sense of personal responsibility for one's actions. It's true in the market, it's true in a marriage, and it's true in the voting booth.
We're talking about people having a sense of responsibility for their own actions, as in you can deal with the consequences of your actions if you want, and the adults here will expect to deal with the consequences of their actions. It means don't expect me to clean up after your bad money and voting choices.
There is virtually no relationship between relative CEO pay and relative corporate performance. One reason is because CEO's aren't paid based on performance. They are paid relative to how other CEOs are paid.
You do realize this happens with many jobs across the board don't you. XYZ Co. that build widgets checks and keeps their pay scale in line with ABC Corp. that makes widgets too. No one wants to be under or over so they talk to one another about what they pay. Now, what they do to reward performance is use a pay scale within each range where the bottom might be $30 and the top is $35k.
Who was for and who was against the Wall Street bankster bailouts, comrade hyperboleski?Reload this Page CEO Pay Often Not Linked to Performance
Yeah....And?
During my brief foray into working in the corporate world, almost nobody's pay was based upon performance...In fact, if you performed too well and acted like you gave a shit, you'd usually run afoul of middle management types who had become fat, lazy and complacent in the corporate bureaucracy.
So what else is new?
Aside from you defending that bullshit on a daily basis..while they play with Tax Payer dollars like monopoly money..
Not much?
It all boils down to what the conflict is. It's really not better corporate governance that you want, but rather the end of all private corporations.if you had another six brains......don't expect me to clean up after your bad money and voting choices.
People keep flaking from one topic to another like little kids. The topic's supposed to be CEO pay vs performance, which I'd have thought would point to how those of us that are doing the paying can stop if we want. Now you're jumping to corporate laws to fight others with the idea that all is lost and everyone's picking on you. Like little kids with their Marx and Lenin.Ooh, deflection. In the meantime, we still have lousy corporate governance laws......We're talking about people having a sense of responsibility for their own actions, as in you can deal with the consequences of your actions if you want, and the adults here will expect to deal with the consequences of their actions...
People keep flaking from one topic to another like little kids. The topic's supposed to be CEO pay vs performance, which I'd have thought would point to how those of us that are doing the paying can stop if we want. Now you're jumping to corporate laws to fight others with the idea that all is lost and everyone's picking on you. Like little kids with their Marx and Lenin.Ooh, deflection. In the meantime, we still have lousy corporate governance laws......We're talking about people having a sense of responsibility for their own actions, as in you can deal with the consequences of your actions if you want, and the adults here will expect to deal with the consequences of their actions...
It is, and the question goes to 'which gov't work' and 'what performance'.Government work NEVER linked to performance
From our "ooooo SNAP!" file...Government work NEVER linked to performance
Just seniority and I can vouch it's true cuz I do a much better job than many of my union bretheren and they still make more than me cuz of seniority. Plus, if the public doesn't like em there's no penalty, or they cut corners doing the job, they get up to 16 chances before they're terminated.Union workers' pay isn't linked to performance either.
Hey guy, this constant switching from CEO pay to me just won't wash. OK, everyone likes to talk about himself and I'll admit I'm no exception, but when I talk about me I even bore myself. We started off with an economics thread and if it's being hijacked into one on personality politics I'll have to sit it out....You should stop with the...
Hey guy, this constant switching from CEO pay to me just won't wash. OK, everyone likes to talk about himself and I'll admit I'm no exception, but when I talk about me I even bore myself. We started off with an economics thread and if it's being hijacked into one on personality politics I'll have to sit it out....You should stop with the...
Not that there's anything wrong with personality politics, but I'm not very good at it.
