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Archive for Monday, September 7, 2009

Washington needs to curb CEO salaries

September 7, 2009

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Your friendly local Fortune 500 company is dumping toxic chemicals into the river that runs through your town. You want the problem fixed. Whom do you expect to do the fixing? The company’s shareholders? Of course not.

That same Fortune 500 company, you’ve just learned, is paying a woman who lives next door to you less than a man who does the same work. Whom do you expect to end that discrimination? The company’s shareholders? That thought would never enter your mind.

No sensible American would expect shareholders, and shareholders alone, to fix problems like these. So why do we expect shareholders to fix executive pay? Just take a glance at the CEO pay reform proposals now pending before Congress, the bills getting “serious” consideration. Almost all these bills share a common theme. Empower shareholders. Give shareholders a “say on pay” decisions. Help shareholders nominate real independents to corporate boards of directors. Disclose to shareholders more corporate pay data.

All these reforms make sense. Top executives and their cronies on corporate boards shouldn’t be able to run publicly traded corporations as private preserves. And if shareholders had more power, they might even use it — to stop “poorly performing” CEOs from pocketing mega-million windfalls.

But the CEO pay problem we face today goes far beyond the windfalls that funnel to “poorly performing” execs who pocket mammoth rewards while their corporate share prices plummet. Our problem has become those mammoth rewards, in and of themselves. Outrageously high rewards, simply put, give executives an incentive to behave outrageously. They downsize, outsource and cook their corporate books. They take reckless risks. Left to their own devices, they eventually crash the global economy. In the process, they cost millions of Americans their jobs, their homes and their retirements. The kingpins of Wall Street who took all those reckless risks — before last September’s crash — actually “performed” quite well for shareholders. Year after year, they delivered rising share prices.

Shareholders have no reason to begrudge executives like these their fortunes. But the rest of us do. To grab those fortunes, after all, executives are making decisions that place our futures at risk. And that reality takes us right to the core of what’s wrong with the current executive pay reform debate’s single-minded focus on shareholders: Why should we let shareholders be the ultimate arbiters on the size of executive rewards when these rewards can and do create incentives for CEO behaviors that hurt people who aren’t shareholders? In effect, all of us have become stakeholders in executive pay decisions — and we need, consequently, a stakeholder, not just a shareholder, approach to reform.

What might that approach look like? A few bills now buried in Congress give some tantalizing hints. One bill, sponsored by Rep. Jan Schakowsky of Illinois, would extend tax breaks and federal contracting preferences to companies that meet benchmarks for good corporate behavior. Among the benchmarks: not paying any execs more than 100 times the wage that goes to their company’s lowest-paid worker.

This legislation’s basic message to Corporate America: If you overpay your CEO, you’re not going to get taxpayer dollars. A generation ago, top executives in the United States typically took home not much more than 30 times what their workers made. Last year, notes a new Institute for Policy Studies report we helped prepare, top American CEOs took home 319 times the typical U.S. worker annual wage.

Nothing that has happened within our economy, over recent decades, justifies this immense spread. High-ranking executives have neither become “smarter” than their workers over the last generation or more “productive.” They have, on the other hand, become more powerful.

Congress and the White House need to confront this power and move to start deflating, once and for all, the executive pay bubble. Until they do, reckless executive behavior will continue to threaten the economic security — and decency — that Americans hold dear.

Comments

just_another_bozo_on_this_bus 5 years, 4 months ago

Here's an easy fix-- cap CEO pay and benefits at 15 times what the lowest paid worker gets (this would still be over $100 an hour and $200,000 a year, even if the lowest paid worker gets minimum wage.) But not a completely hard cap-- just prohibit any compensation above that amount from being written off as an expense on the company's ledgers. So if some company really believes they have a "superstar" worthy of more, they can pay them whatever they want, but it will come with a hefty tax bill.

Flap Doodle 5 years, 4 months ago

Here's an easy fix, nationalize everything. 'Cause that worked sooooo well for the Soviet Union.

GardenMomma 5 years, 4 months ago

That'll never fly.

Minimum wage = $7.25/hr x 15 (your 'cap') = $108.75/hr $108.75 x 40hr/wk = $4,350/wk $4,350 x 52wk/yr = $226,200 per year.

just_another_bozo_on_this_bus 5 years, 4 months ago

"That'll never fly.

Minimum wage = $7.25/hr x 15 (your 'cap') = $108.75/hr $108.75 x 40hr/wk = $4,350/wk $4,350 x 52wk/yr = $226,200 per year."

Thanks for confirming my math. But you're right, it probably won't ever happen because CEO's making many times that amount make very large contributions to legislators and presidents to make sure that it something like that never happens.

jmadison 5 years, 4 months ago

Chuck Collins directs the Program on Inequality and the Common Good at the Washington-based Institute for Policy Studies. Sam Pizzigati, an institute associate fellow, edits Too Much, an online weekly on excess and inequality.

Is this a news story or an opinion piece?

Ryan Neuhofel 5 years, 4 months ago

"Here's an easy fix, nationalize everything. 'Cause that worked sooooo well for the Soviet Union."

Collectivist forms of government only fail because of bad leaders. Surely we could elect more intelligent, compassionate bureaucrats, right?

Practicality 5 years, 4 months ago

LOL @ comment by snap.

When Washington decides how much money it is O.K. for people to make in the Private Sector, it is time for me to leave. Seriously, what is wrong with you people?

Flap Doodle 5 years, 4 months ago

"Surely we could elect more intelligent, compassionate bureaucrats, right?" Such as the O'dude? LOLZ!

jafs 5 years, 4 months ago

Why do you think that CEO's have the right to make so much more money than their employees, especially when they mismanage their companies into bankruptcy?

puddleglum 5 years, 4 months ago

CEO's should make the most, because they do ALL of the 'heavy lifting'......big bad labor union try to scare poor little ceo into higher wages and health care and other atrocities. maybe we could just round up the workers, and other democrats into camps, where they wouldn't bother us any more. Then the country would be very productive.

jonas_opines 5 years, 4 months ago

"Is this a news story or an opinion piece?"

It's headline is clearly an opinion. So what do you think?

jonas_opines 5 years, 4 months ago

Liberty_One (Anonymous) says…

"I cannot believe people actually suggest doing such terrible things."

You always have difficulty believing that people can hold differing opinions from your own.

Tony Kisner 5 years, 4 months ago

We need a czar of what is fair. Bozo could be the first one. Each and every person who lives in the US would need to meet with Bozo tell him what they do and justify why they need money. Bozo would then distribute the wealth as he sees fit or fair. But what would we pay Bozo? Actually nothing he would be paid with bribes and kick backs.

vega 5 years, 4 months ago

Quote from the article: "Outrageously high rewards, simply put, give executives an incentive to behave outrageously. They downsize, outsource and cook their corporate books. They take reckless risks. Left to their own devices, they eventually crash the global economy. In the process, they cost millions of Americans their jobs, their homes and their retirements."

Come on, they don't do it on purpose - to crash global economy etc., they just do not think about the consequences and, frankly, they are not paid to think about the far reaching consequences of their decisions anyway. Therefore they should be given an incentive (be paid even more) to think of the ways to avoid future crashes of the economy. If it doesn' t happen they will, and already are inventing additional means to "earn" and crash the market one more time: http://www.nytimes.com/2009/09/06/business/06insurance.html?hp

commuter 5 years, 4 months ago

These CEOs pay a lot of taxes. If you reduce the amount they make, how will you make up the difference in taxes??? With you suggest cutting government spending???? Or increase taxes????/

thelonious 5 years, 4 months ago

Wall Street is a cesspool - this idea to securitize life settlements that vega pointed to should be stopped before it even gets started. Will that morning after pill work on immoral Wall Street investment ideas?

The whole life settlement idea is a scam - instead of taking 20% of your death benefit now and handing over the other 80% to an "investor", just take a loan against the policy - it will pay back at death, and then your beneficiaries get the rest of the money, not some vulture "investor" and certainly not Wall Street!

Wall Street and "investors" profiting off of terminally ill people's desperation and fears - now that is a new low, even for Wall Street.

notajayhawk 5 years, 4 months ago

When all the whiny, entitled, class-envy-filled children get done with their manifestos, perhaps they'll take a moment to ponder that they more than likely make more than someone else - and someday that someone else may decide THEY make too much.

What a wonderful country this is turning into. The wealth of others used to give everyone something to strive for, an incentive to make something better of themselves. Now those who've accepted failure for themselves demand it of others to make them feel better, simply saying 'If I don't have it, then they can't have it either.' You people are living proof of the failure of Darwin's theories when applied to humans.


just_another_bozo_on_this_bus (Anonymous) says…

"Here's an easy fix— cap CEO pay and benefits at 15 times what the lowest paid worker gets"

boohoozo, as much as I don't expect an answer other than your usual Party line, 'get the jack-booted heel off the throat of the proletariat' rant, I just have to ask:

Just who the he do you think you are that you should decide how much someone else - anyone else - can make?

So you want to tie the salary of a person responsible for tens of thousands of employees, billions of dollars in sales, hundreds of facilities in dozens of countries, and the budgets of towns, school districts, counties, even whole states, to what the guy cleaning the toilet makes? Brilliant, Herr Klowne. That should work well. Then, when all those companies fail because they can't attract leaders any smarter than idiots like you, at least everyone will be equal in their poverty and squalor, which is exactly what you want, nicht wahr Herr Klowne?

Here's an alternate plan, Klownie - how about a CEO makes 10% of the salary of every employee whose welfare he's responsible for? Or one percent of revenues? Or some other amount reflective of what they actually do?

vega 5 years, 4 months ago

Quote Notajayhawk:

"So you want to tie the salary of a person responsible for tens of thousands of employees, billions of dollars in sales, hundreds of facilities in dozens of countries, and the budgets of towns, school districts, counties, even whole states..."

Note the word you have used here notajayhawk: "responsible for" - exactly, the person should be responsible. This is the point that many people miss - some of these CEO's that many commentators here are shedding tears over, are simply not responsible individuals, otherwise you wouldn' have to bail them out with YOUR tax money.

vega 5 years, 4 months ago

sorry I misquoted notajayhawk - it was another person but my point remains the same.

tangential_reasoners_anonymous 5 years, 4 months ago

neuhofel: "Collectivist forms of government only fail because of bad leaders...."

... and bad followers. Better to stick with a politico-economic scheme which appeals to the basest of human qualities. There is no greater motivator than those which begin with "self-."

notajayhawk 5 years, 4 months ago

vega (Anonymous) says…

"sorry I misquoted notajayhawk - it was another person but my point remains the same."

Um, no, it was me, and your point remains equally invalid.

How many of those corporations had to be bailed out, vega, and how many of their CEO's still have their multi-million dollar jobs?

Ford managed to stay financially sound and hasn't needed the government to bail them out - or buy them out. So should the CEO of FMC have his salary limited because the CEO of GM screwed up?

jonas_opines 5 years, 4 months ago

"If we just call it an opinion then we take all the bite out of it hmm? Make it just a little more palatable?"

Conversely, suggesting that it is more than an opinion is an attempt to artificially put righteousness on your side.

/and I don't recall ever saying that you were crazy. I have said that you were obviously intelligent and educated. I have also said that you were a zealot for your unimpeded free-market vision. A vision I happen to believe would fail so catostrophically as to make our current situation look like roses. A belief shared by, it seems, a great many other people, and the only answer you have for it is theoretical models and faith, because the system does not and has never existed in the form that you advocate. It strikes me as a little odd that you would expect to be taken seriously, considering all of that.

just_another_bozo_on_this_bus 5 years, 4 months ago

The übercapitalists here seem to be operating on a couple of assumptions. One is that it requires the prospect of greater monetary rewards to motivate anyone to want to be the top dog in a corporation. The second is that there is no point of diminishing return in the scale of those rewards. So theoretically, if the rewards are astronomical enough, that will somehow result in some sort of superhuman effort from the super-CEO.

OK, I can buy the first assumption. If I had a choice of jobs, one as a janitor making $8 an hour, or as the CEO making $120 an hour, I think I'm correct in saying that like 99.99999% of everyone else who may be capable of being the CEO I would take that position over being a janitor. And like the vast majority of people, I'd be willing to work my a$$ off to keep that job.

So what if that CEO were instead being paid $10,000 an hour? Would she/he magically have more the 24 hours in a day? Would they become smarter, better-looking and wittier and able to jump tall buildings in a single bound?

The answer, of course, is no. The massive explosion of CEO (and CFO and COO) salaries over the last 25 years has not resulted in better or smarter management of corporations. All it's meant is that corporate decisions have become very weighted towards maintaining and increasing these salaries, at the expense of every other aspect operating these corporations productively, efficiently and ethically.

notajayhawk 5 years, 4 months ago

By the way, boohoozo, how do you feel about John Edward's wealth from class-action lawsuits? Think he should have made millions when the people that were actually injured made a few grand each?

How much did Michael Moore make from his propaganda films, boohoozo? Shouldn't he have been limited to making 15 times what the coffee-guy on the set made?

"So what if that CEO were instead being paid $10,000 an hour? Would she/he magically have more the 24 hours in a day? Would they become smarter, better-looking and wittier and able to jump tall buildings in a single bound?"

Um - I know you don't understand the concepts of numbers very well, but if you're being paid $10,000/hour, klownie, why would you need more hours in the day?

And, um - it's not getting paid more that makes you smarter, boohoozo, but being smarter might just lead to better pay. Probably why you're still asking 'You want fries with that?'

jonas_opines 5 years, 4 months ago

haha. "Yarhg!! Teh demonrats makez teh moneyz too!!"

tomatogrower 5 years, 4 months ago

jmadison (Anonymous) says…

Chuck Collins directs the Program on Inequality and the Common Good at the Washington-based Institute for Policy Studies. Sam Pizzigati, an institute associate fellow, edits Too Much, an online weekly on excess and inequality.

Is this a news story or an opinion piece?

Anything on the editorial page is an opinion piece. Please no what section a story is in, then you'll know the difference.

beatrice 5 years, 4 months ago

I'm not opposed to laws limiting CEO pay for companies accepting corporate welfare. Those are our dollars paying their bills. Otherwise, it is up to the shareholders.

We also can't have laws limiting what actors, athletes, authors, or even lottery winners make.

Notajay, Michael Moore makes documentaries. Just thought you might like to know, dearie.

tomatogrower 5 years, 4 months ago

Liberty_One (Anonymous) says…

jafs, why do you think you have the right to control how much other people make?

Because these corporations have gotten to big to fail. We no longer have capitalism. Why should anyone be compensated for failure? That is not how capitalism works, is it? What really needs to happen is to force break ups of these companies. They are too close to being monopolies. They should never be too big to fail.

Newell_Post 5 years, 4 months ago

Now that the US Treasury is the largest shareholder of a number of corporations, they should vote their shares to limit the executive compensation for the corporations "we" own. GM is one example.

The general rule for government employees (including the employees of quasi-federal corporations such as Amtrak) is that no employee can have a salary higher than a US congressman. That should be the same rule for companies that have received federal bailout money. If they don't like it, they can pay the bailout money back to the Treasury, and get a loan somewhere else, if they can actually get it anywhere else.

Flap Doodle 5 years, 4 months ago

Michael Moore is closer to Leni Riefenstahl's style of film than he is to Pare Lorentz's.

BTW, relax and have a popsicle, dried. It's a cool and fruity treat on a summer day.

notajayhawk 5 years, 4 months ago

just_another_bozo_on_this_bus (Anonymous) says…

"Ah gee, it appears I made poor nota angwy again."

Typical boohoozo answer when, as usual, his tiny little pinhead has no answer.


beatrice (Anonymous) says…

"Notajay, Michael Moore makes documentaries. Just thought you might like to know, dearie."

Hahahahahahahahahahahahahahahahahahaha hahahahahahahahahahahahahahahahahahaha hahahahahahahahahahahahahahahahahahaha hahahahahahahahahahahahahahahahahahaha hahahahahahahahahahahahahahahahahahaha hahahahahahahahahahahahahahahahahahaha hahahahahahahahahahahahahahahahahahaha

You funny lady, sweetie.

jonas_opines 5 years, 4 months ago

"Typical boohoozo answer when, as usual, his tiny little pinhead has no answer."

Wonder if that has anything to do with the general pointlessness of your questions?

just_another_bozo_on_this_bus 5 years, 4 months ago

"Otherwise, it is up to the shareholders."

Actually, beatrice, shareholders have surprisingly little control over the management of the companies in which they own stock, especially when it comes to the salaries of top executives.

just_another_bozo_on_this_bus 5 years, 4 months ago

"Michael Moore is closer to Leni Riefenstahl's style of film than he is to Pare Lorentz's."

A little subtle, snap, but I call a Godwin infraction, nonetheless.

notajayhawk 5 years, 4 months ago

jonas_opines (Anonymous) says…

"Wonder if that has anything to do with the general pointlessness of your questions?"

Ah, as usual, it's pointless to the opinhead if it challenges his ideology.

The questions I asked of boohoozo (granted, it was pointless to expect an answer from Herr Klowne) were pretty simple, opie - I was asking where the clown's righteous indignation was about Democrats getting rich off the labors (or misfortunes) of others. But of course, the Democrat/liberal mantra has always been "But, that's different", hasn't it?

jafs 5 years, 4 months ago

notaj,

A simple observation:

Your posts and arguments would be better if you refrained from the silly name-calling.

They make you appear to be psychologically stuck at the age of six or seven.

Stuart Evans 5 years, 4 months ago

I tend to think that all opinions which favor of capping CEO salaries, are not from CEO's.

If the left really wants the right to get off the term "Socialism", then you've really got to quit acting like socialists. it seems like every week is another grand socialist idea. It's highly doubtful that this one ever comes to fruition, but jeez, give us a break.

maybe we should reinstate the door to door tax collectors too.

jafs 5 years, 4 months ago

And, I just have to speak to the "class envy" retort that seems to pop up here a lot.

I can't speak for anyone else, but I am and always have been quite happy with my material prosperity, and have always had more than enough to live well.

My concern about the drastic differences between average salaries and CEO salaries is one based on my concept of fairness and my observations about what it does to our society.

As far as I can tell, CEO's are not working harder or smarter by anywhere near the salary multiplier (fairness).

This is clear from the massive corporate scandals (Enron, etc.) and the recent bailouts.

And, when you continue to make the middle class smaller, you divide the country into rich and poor. Most people will never be rich, so more and more people will have less and less. This creates a lot of stress among hard-working folks.

When my wife and I went to Canada, we noticed several interesting things. One is that most people seemed far less stressed there. That was nice, and created a much calmer feeling. They were also more inclined to be helpful. Also, when we asked someone what their tax rate was (ie. how much was taken out in taxes from their check), they didn't even know! I guess they lived well enough on what they took home, and weren't overly concerned with the tax rate (can't imagine anyone in the US not knowing that).

We spoke with a married couple, both doctors, who had lived and practiced in both countries. Their take on health care was that those with lots of money could do better in the US, but those without could do better in Canada.

And, I don't see anything wrong with the government providing basic care, and the private sector providing upgrades when desired.

jafs 5 years, 4 months ago

For whoever asked about the taxes that CEO's paid - if the revenue were split differently - ie. more to lower-level employees and less to CEO's - the tax revenue would probably remain about the same.

just_another_bozo_on_this_bus 5 years, 4 months ago

"Tearing down the wealthy won't make anyone else better off."

Who's talking about tearing them down? Even if CEO's were limited to making 15 times the lowest paid workers, they would still be wealthy.

" In a completely fair race, Usain Bolt would beat me by 30 meters. "

What does a mostly useless freak skill have to do with allowing CEOs to suck their companies dry, leaving workers in the lurch?

Flap Doodle 5 years, 4 months ago

Psst, bozo, you need to start using the "running dogs of capitalism" phrase more often if you want to earn your Order of Lenin by the end of the year.

jafs 5 years, 4 months ago

LO,

I have no problem with faster people winning races.

The problem, again, is that the folks who are making such absurdly higher amounts of money are not working harder, smarter, or contributing more in those kinds of proportions.

If they were, we wouldn't have seen the recent mess of our financial systems.

just_another_bozo_on_this_bus 5 years, 4 months ago

Maybe you can help me out with that, snap. Where did you get your lobotomy and your special training that allows you to speak in only mindless cliches?

just_another_bozo_on_this_bus 5 years, 4 months ago

"So you think reducing their salaries would have anything to do with it either?"

Of course it would. The extreme concentration of wealth has dramatic (and negative) effects on the economy, politics and society.

just_another_bozo_on_this_bus 5 years, 4 months ago

"You can find anyone to flip burgers. You can't find just anyone to successfully run a company."

What's your point? Are you saying that if CEO's can't get $10,000 an hour, they'll just pout and go off and flip burgers?

salad 5 years, 4 months ago

Glad to see all the conservatards are still on board with the "no billionaire left behind" program perfected under Bush/Cheney.

BigPrune 5 years, 4 months ago

If Washington curbs CEO salaries, will anyone have any incentive to get ahead in life? Bozo, I know janitors that make $100 an hour.

puddleglum 5 years, 4 months ago

notajay- you are sounding too much like bill o'reilly with your frequent insults.

like a kid in a sandbox, pouting

just_another_bozo_on_this_bus 5 years, 4 months ago

" There can be no concentration of wealth under capitalism, it is only when people steal wealth that it becomes concentrated."

By that definition, the current level of pay to CEO's IS theft.

" I know janitors that make $100 an hour."

I highly doubt it. You may know someone who owns a janitorial service that makes that much, and I can guarantee you he doesn't pay his janitor employees anything close to $100 an hour.

tbaker 5 years, 4 months ago

There are a lot of people who think rich people cheat. They don't pay their taxes. They exploit people. They're holding the rest of us down. There is no way they got to where they are in life without standing on the backs of poor, oppressed people. A good education, hard work, risking everything they have, and devoting their lives to making their business successful could never, ever be the reason they've enjoyed so much success. Its just not fair to the rest of us that a single person could amass so much wealth. They should be forced to share - right? Our country isn't about everyone having an equal opportunity to make the most of their lives, it's about the equality of the outcome of our lives - isn't it?

Wealth envy is a sad thing to watch. The last time it was this rampant, congress passed the 16th amendment, and levied an income tax on the wealthiest 1% of the country. Hows that working out?

georgiahawk 5 years, 4 months ago

The article is talking about limiting taxbreaks to those companies that give their CEO's too much. What is the problem with that? Nobody is limiting what someone can get paid, just whether or not the taxpayers have to be a part of it.

nytemayr 5 years, 4 months ago

Private companies should not be restricted. Publicly traded companies may need additional rules when the salary of the CEO becomes a significant portion of after tax net income. The real weakness lies in the ability of the shareholder to communicate to other shareholders and and build support or opposition of board policy. Something like a two party structure may be needed. Prove to the SEC that your company has a fairly brokered two party control system in place. The internal competition being the basis for internal checks and balances. For every major financial decision an opposition plan must be aired to shareholder and/or opposition leadership structure considered proposed. The inpower CEO must be forced by this process to created the real business opportunity for a no confidence vote and change in leadership. This is real risk and accountability.

Flap Doodle 5 years, 4 months ago

I (heart) bozo when he gets all testy & righteous & stuff.

just_another_bozo_on_this_bus 5 years, 4 months ago

I'm so happy that your lobotomy didn't leave you emotionally incapable of (hearting) me, snap.

just_another_bozo_on_this_bus 5 years, 4 months ago

"The level of pay wouldn't determine that. It is the source of the pay that determines whether it is theft or not. "

Interesting-- first you say that in a capitalist society, extreme concentration of wealth can only happen as a result of theft, and yet, when presented with a clear example of extreme concentration of wealth, you say that the high pay that creates it is not theft.

You make be OK with that contradiction, but pardon me if it leaves me unconvinced.

just_another_bozo_on_this_bus 5 years, 4 months ago

That should read, "You MAY be OK with that contradiction...."

notajayhawk 5 years, 4 months ago

jafs (Anonymous) says…

"For whoever asked about the taxes that CEO's paid - if the revenue were split differently - ie. more to lower-level employees and less to CEO's - the tax revenue would probably remain about the same."

Three words: Incremental tax brackets.

"And, when you continue to make the middle class smaller, you divide the country into rich and poor. Most people will never be rich, so more and more people will have less and less. "

Your powers of observation could use some honing. The middle class is indeed shrinking - because the wealthy class is growing, not the poor.


vertigo (Jesse Crittenden) says…

"It's claimed that these golden deals are the incentive used to recruit the best… but what incentive is there to ensure your company is profitable if you know you are going to walk away with $XX million even if you run the company into the ground?"

Not saying whether this right or wrong, but there's another reason for 'golden parachutes.' The jobs in question are rather high profile and affect whether you are going to find another job. If you mess up on the fryers at BK, you can likely still get a job at McD's. But if your latest failure was front page news in the Wall Street Journal, it doesn't exactly make you a hot commodity.

Again, that's not a justification for paying the bonus for failure. On the other hand, CEOs getting canned isn't always due to their own ability or actions, and you'd have a hard time attracting the best people to bail out an ailing company if there was a chance it might be their picture next to that WSJ article, unless there were some guarantees.

beatrice 5 years, 4 months ago

Snap, if you think Pare Lorentz's films were less about propoganda than Michael Moore, then you haven't watched his films closely enough. He was working for Roosevelt after all, and was part of the New Deal.

Funny, but I've found most people who criticize Moore's films usually haven't even seen them.

By the way, though a liberal and a fan of Moore's films, I'm on the side that is against the idea of limiting pay, unless the company is being funded by our taxes through corporate welfare. Then it is another issue.

notajayhawk 5 years, 4 months ago

beatrice (Anonymous) says…

"By the way, though a liberal and a fan of Moore's films, I'm on the side that is against the idea of limiting pay, unless the company is being funded by our taxes through corporate welfare. Then it is another issue. "

The problem with that, bea, is that the bailed-out companies (I assume that's who you meant by corporate welfare recipients, excuse me if I'm incorrect) need the best executives they can find to get back on their feet. The very reason they were in need of a bailout is the same reason they should do whatever it takes to attract the best leadership. At least, that's the case if the goal is for the company to regain it's financial health and for the government to divest itself of their interests in the company (not to mention to get any of their money back). It's kind of hard to attract a top CEO to a multi-billion dollar conglomerate, a position whose last occupant made $25 million, with a salary offer of $200K.

beawolf 5 years, 4 months ago

I normally sit out conversations like this because there is no endgame. But, in regards to how much or how little a CEO earns does, it does not equate as to how well the CEO performs. If an idiot makes $100K or $100M he's still an idiot. The success or failure is a direct result of the group (board of directors) who hired the clown, who in turn ARE elected by the stockholders. I believe the current events have made stockholders, and the public in general, more aware of the excess paid to CEO's who perform poorly.

jafs 5 years, 4 months ago

If it's the board of directors that determines whether a company succeeds or fails, why are we paying CEO's so much?

jafs 5 years, 4 months ago

You can't have it both ways - that the CEO is responsible for the success of a company, and therefore deserves an outrageously high salary, but if the company fails, it's somehow not their fault.

If you have failed spectacularly at running a company, why should you be protected from the consequences of that failure (eg. having trouble getting another extremely high-paying job)?

jafs 5 years, 4 months ago

And, if you're fired for other reasons, then you have to explain/justify that to potential new employers, just like everyone else.

imastinker 5 years, 4 months ago

I like how everyone talks about CEO pay but doesn't recognize that these people often fill very valuable roles that other people can't fill.

Let's take Bill Gates - should his salary have been capped at Microsoft? He revolutionized the computer industry and brought Microsoft so far that competitors are still struggling to catch up.

What about Warren Buffett? He's managed Berkshire Hathaway and done better than any other company that I know of. His performance has been beyond incredible. As a side note, he makes millions of dollars and is one of the richest people in America, but he still lives in a somewhat modest house and gives very generously to charity.

What about Steve Jobs? He retired from Apple, and Apple nearly lost all their business. His return to Apple has brought the innovation that has allowed them to regain their status as an Industry leader?

Or there's Alan Mulally. He saved Ford fromt he same fate as GM and Chrysler. They are not doing stellar, but much better after he came from Boeing.

Is there really anyone here that does not believe that these people are worth every penny they make? They have managed their companies well and made shareholders money. They make profits that pay taxes to goverment and employ lots of workers.

notajayhawk 5 years, 4 months ago

jafs (Anonymous) says…

"You can't have it both ways - that the CEO is responsible for the success of a company, and therefore deserves an outrageously high salary, but if the company fails, it's somehow not their fault."

I said sometimes, and also that sometimes their firing isn't a result of their own ability or actions - meaning sometimes they get replaced even if the company isn't failing. And also that I wasn't arguing that it was either right or wrong. There are no absolutes, which is why talk of limiting every CEO's salary is unwarranted. As I mentioned earlier in response to another poster, should the CEO of Ford be punished because the CEOs of GM and Chrysler ran their companies into the ground?

Flap Doodle 5 years, 4 months ago

Much as Rush did, Moore has become rich by identifying a particular audience and then shamelessly pandering to their lowest instincts.

jaywalker 5 years, 4 months ago

Why'd it take two people to write this article?

beatrice 5 years, 4 months ago

snap, have you watched Moore's films? Have you seen "Bowling for Columbine"? How is questioning the assumptions about heavy metal music as somehow driving kids to kill pandering to anyone's lowest instincts? How is pointing out that despite gun ownership in Canada they don't have the same levels of violence there as we do here pandering? How is, in "Farenheit 9/11," his actually showing us President Bush just sitting there for seven minutes after being told "The nation is under attack," meant to be pandering? He didn't lie, he just shows us what Bush did. While I know you don't want to see it, it is factual and it isn't just pandering. Rush, on the other hand, just makes stuff up out of thin air. You would be better off comparing Rush to Howard Stern.

nota: "It's kind of hard to attract a top CEO to a multi-billion dollar conglomerate, a position whose last occupant made $25 million, with a salary offer of $200K."

Is it really that hard to attract someone intelligent who has the skills to be a CEO for, say, $2 million? Heck, look at what happened to companies when they were paying people $25 million. Were they actually "qualified?" They lost billions, and still made their millions. Are you saying someone couldn't have screwed the pooch just as badly making just 10 percent of that?

Think about what you suggest qualifies someone to be a "top CEO." You couldn't get someone just as qualified for far, far less than $25 million? I don't believe it.

If you do disagree, then we should make sure we pay our elected officials $25 million as well, since we want the best working for us rather than for private companies. Correct? Ready to give the okay to pay Senators $20 million? So what should a state legislator make -- $4 million?

No, people aren't getting paid based on their skills, but rather on what they can convince others to pay them.

commuter 5 years, 4 months ago

driedoregano (Anonymous) says…

the tax structure since 1980 only benefits the top 10%. _______-- Are you kidding??? The top 10% get phased out of a lot of the benefits. Exemptions, Child Tax Credit, Itemized Deductions.

The lower tax folks don't and some of them get an Earned Income Tax Credit- free money if they qualify- could be up to $2500.

notajayhawk 5 years, 4 months ago

beatrice (Anonymous) says…

"Is it really that hard to attract someone intelligent who has the skills to be a CEO for, say, $2 million?"

The benchmark mentioned in the article amounts to about $1.45M (assuming there must be at least one employee, a mail clerk or janitor or someone, that makes minimum wage. And as you can see from our dear Klowne's posts, there are those that think the cap should be much lower. Who decides, bea?

And based on what? Should the CEO of GM, Exxon, or Wal-mart be limited to the same salary as the CEO of a much smaller corporation?

I have no problem with that $2M figure - but then, it's not likely anyone's going to make me a better offer! :) But if GM is trying to recruit a successful, proven CEO - say Ford's - and they're already making $2M, what does GM offer them?

"Heck, look at what happened to companies when they were paying people $25 million. Were they actually “qualified?” They lost billions, and still made their millions."

How many corporations give their top executives multi-million dollar compensation, bea?

How many of those 'screwed the pooch?'

As I said (a couple of times) earlier, should Ford's CEO be limited in his pay because GM's was an idiot?

What about Bill Gates, as someone else asked? Or Warren Buffet?

Of course, Gates and Buffet made their money because they own the companies. But then, many (most) CEO's compensation is from stock options, not salary. Is there something wrong with that? If the CEO makes lousy decisions and the stock tanks, they lose out. If they make good decisions and the stock takes off, they're rewarded.

"If you do disagree, then we should make sure we pay our elected officials $25 million as well, since we want the best working for us rather than for private companies. Correct?"

Now tell me - with a straight face, bea - that our elected officials are the best we could have.

(I wouldn't buy a used car from Nancy Pelosi, let alone have her in charge of GM!)

Kawatchi 5 years, 4 months ago

Nobody should make more than $50,000 per year. In fact, everyone should make exactly $50,000 per year. And we should all get the same haircuts. And they should all cost the same. And kids that fail math should get into MIT just the same as the kids who are good at math. Everyone should be in a band. All of those bands should get the same amount of exposure on the radio. I mean, we have to make sure everything is fair.

notajayhawk 5 years, 4 months ago

Nobody wants to be a CEO. Nobody. First you do it for the girls ...

Flap Doodle 5 years, 4 months ago

Good one, notajayhawk! That never gets old.

jafs 5 years, 4 months ago

There's an interesting article this morning about how many top CEO's completely ignored signs of trouble and predicted everything was/would be fine shortly before the imminent collapse of the financial sector.

beatrice 5 years, 4 months ago

nota, would we get better people in public office if we paid them $25 million a year? That is my point, not arguing that we have the best now. No, the way politicians and their families are torn to shreds by the media and the opposing political party means we only have those in office who are willing to subject themselves to such scrutiny, lies and personal attacks. I have no doubt that the best just walk away from politics. If we offered $25 million pay to be a senator however...? Is that what you are arguing for?

As far as how many CEOs are making the big, big money, the average compensation among the top 500 companies was $12.8 million. Several are making far in excess of $25 million a year. http://www.forbes.com/2008/04/30/ceo-pay-compensation-lead-bestbosses08-cx-sd_0430ceo_land.html

As far as how many of the CEOs screwed the pooch, see jafs comment. Which CEOs ignored the signs of an economic disaster? How many of these CEOs were running with the false premise that the economy was "fundamentaly sound," as John McCain put it, when it clearly was not?

Finally, to your question of should the CEO of Ford be penalized for the mistakes of the CEO of GM, I ask, did Ford take the bailout money? No. Did GM? Yes. So lets start with who is being covered on our dime, and who isn't. If we aren't willing to pay top dollar for those who are elected to work for us, why should we pay top dollar for those hired at companies operating on tax dollars?

gl0ck0wn3r 5 years, 4 months ago

If you want to see CEO salaries decline, reverse the SEC decision that forced companies to publish CEO salaries.

(waits for stupid replies)

just_another_bozo_on_this_bus 5 years, 4 months ago

"If you want to see CEO salaries decline, reverse the SEC decision that forced companies to publish CEO salaries."

If they aren't published, how can we see it?

just_another_bozo_on_this_bus 5 years, 4 months ago

From this link

http://www.cab.latech.edu/~mkroll/510_papers/fall_05/Group6.pdf

Country Ratio of CEO pay to average worker pay Japan 11:1 Germany 12:1 France 15:1 Italy 20:1 Canada 20:1 South Africa 21:1 Britain 22:1 Hong Kong 41:1 Mexico 47:1 Venezuela 50:1 United States 475:1

gl0ck0wn3r 5 years, 4 months ago

Not seeing it is the solution, although it would take a while. By forcing public companies to disclose executive compensation all the SEC has done is strongly contribute to an increasingly upward spiral in executive pay. Pay is all about context, comparisons and anchoring. One can see this in virtually any industry in which salary is a known quantity.

Example: athletics directors. If KU hired a new athletic director tomorrow, KU would have to compete in a market based upon what other ADs are making at similar (or slightly larger) schools because that information is public. If KU didn't, it would be seen as significantly downgrading because no hot AD is going to work for less than whatever everyone else is making.

So, back to the executive. Say he's been successful managing a $250 million dollar corporation but a $500 million dollar company in a somewhat similar industry wants to hire him as CFO. All things equal, he's going to base his salary demand not on what he was making or really even his potential. Instead, his demands will be based on what other CFOs are making in similar sized businesses.

If the information wasn't published, it would much more difficult for people to anchor their salary demands much in the same way it is difficult for most employees to anchor salary demands in situations in which they have no idea what their co-workers are making.

just_another_bozo_on_this_bus 5 years, 4 months ago

From the same link--

http://www.cab.latech.edu/~mkroll/510_papers/fall_05/Group6.pdf

Sorry that the forum software doesn't allow for decent display of such tables.

This table is an international comparison of CEO pay: International Comparison of CEO Pay Col 1--Country Col 2--Average CEO Pay Col. 3-- % change since 1988 Col. 4-- Foreign CEO to 2003 pay relative to U.S. (U.S.=100)


-----------1988 ------------------------------ 2003 Japan ------------ $437,655--------------- $456,937 -4%20%
Belgium ----------- $361,591---------------$697,030**9331 France -----------$381,015---------------$735,363***9333 Sweden -----------$221,138---------------$700,290**21731 Netherlands -------$373,545---------------$675,062**8130 New Zealand -------------------------------$449,414**20 Switzerland --------$481,125---------------$1,190,567147**53 Germany -----------$388,486---------------$954,726146**42 Spain --------------$331,708---------------$620,08087**28 Australia ------------$170,336---------------$694,638308**31 Italy ----------------$322,743---------------$841,520161**37 Canada -------------$398,946---------------$889,898123**40 UK ------------------$427,335---------------$830,22394***37

United States -------$759,043---------------$2,249,080**196100 Non-U.S. avg. -----------$360,969-----------$748,904**12933

Source: Economic Policy Institute, State of Working America 2004/2005, Ithaca, NY: Cornell University Press.

just_another_bozo_on_this_bus 5 years, 4 months ago

The ready availability of that information may have some impact, glock, but the fact is that the incestuous nature of the boards that award these outrageous compensation packages (CEO's, CFO's, COO's all serve on each others' boards) means that they are all well aware of what the "going rate" is, because they created it. Even if the publication of those salaries stopped, they'd still know it.

gl0ck0wn3r 5 years, 4 months ago

Not really. It becomes much more difficult to gauge one's value when one doesn't know the market. It also becomes more difficult to know the going rate when one doesn't know how much the guy made at his last place of employment. You might have some idea, but I think you'll find that people with money are pretty reluctant to talk about their compensation unless they are forced to do so. There are some exceptions (new money), but in general that statement holds true.

I think you underplay the impact of readily available information. I do not know where you work - and since it is Lawrence, there is a good chance your salary is public - but if it isn't, what do you think the reaction would be at your workplace if everyone's salary was published? Most likely people would reconsider their employment or current salary when they discovered what people in similar positions were making.

tkeagleblog 5 years, 4 months ago

How about this. Cap all politicians’ wages and total income allowed in one year. That means no 2nd or 3rd side jobs work for big corporations. You work all year for the people. Do your job to the best of your ability. No more trying to line your pockets will bills passed or be bought off by lobbyist. Anything made over a certain amount goes back into the general fund. This way we might get ppl in office that care and enjoy the job, rather than trying to get rich off of it.

beatrice 5 years, 4 months ago

glock, that is an interesting proposal. You may be right.

just_another_bozo_on_this_bus 5 years, 4 months ago

There may be something to it, but given the fact that no other country in the world comes even close in the compensation CEOs get here, I think the most obvious explanation is also the most plausible-- unbridled greed.

gogoplata 5 years, 4 months ago

Washington needs to get out of our lives.

Richard Heckler 5 years, 4 months ago

Shareholders won't fix much. Soooo many of those shareholders are elected officials who also receive special interest campaign money.

Politicians as shareholders: http://www.washingtonpost.com/wp-dyn/content/article/2009/06/12/AR2009061204075.html

Insurers Wrongfully Charging Consumers Billions = BIG TIME CORRUPTION http://www.washingtonpost.com/wp-dyn/content/article/2009/06/24/AR2009062401636.html

=====================================

Lets’s demand a new system. Fair Vote America : http://www.fairvote.org/irv/ Demand a change on the next ballot.

The big money ELECTED OFFICIALS ARE MORE BEHOLDEN than ever to corporate special interests due to the very long nature of campaigns. How do they have time to do the job they were elected to do? They blow off the voters. Officials live in glass houses!

We need public financing of campaigns. Citizens cannot afford special interest money campaigns for it is the citizens that get left out. Let citizens vote on this issue. http://www.publicampaign.org/

Who would be against Public Funding? The special interest money providers and their bought and paid for politicians!

Demand all presidential candidates participate in debates NOT only those selected by the media and two parties.

Is it time to take upon ourselves to implement term limits? How you ask? Replace 90%-95% of incumbents each election period? You know the ones taking american jobs away courtesy of corporate america and special interest campaign money.

Then we talk sensibly on many matters.

Meanwhile BOYCOTT!

KS 5 years, 4 months ago

Washington needs to stay out of it. Everyone on this post has the opportunity in this country to earn as much or as little as they want. Work hard, make a lot. Be lazy and make little. I really don't want that right taken away.

jgrass56 5 years, 4 months ago

why not curb every single citizen's salary? Oh wait... that's what Cuba does....

beatrice 5 years, 4 months ago

gogo: "Washington needs to get out of our lives."

However, when they do get out of the way and we see things like deregulation of banking rules, for instance, look at the results. What about those companies that pollute the environment, should there be no government recourse? Monopolies okay? Child labor? Of course there should be government regulation, but what there needs to be is a balance and that balance will need to be routinely adjusted to fit the times.

If we just do the Reagan/Bush/GOP ideal of government getting out of the way of business, we have the major economic crashes as we are currently experiencing.

I agree that pay shouldn't be limited in most cases, although I do think there needs to be some control on pay for those companies living off of taxpayer funds. That is part of the balance necessary. If you don't like it, then become a CEO and don't let the company sink to such a level where a government bailout is necessary.

just_another_bozo_on_this_bus 5 years, 4 months ago

No, Pil, the problem isn't that it's unfair (although it is unfair.) The problem is that it's damaging to the companies who pay these exorbitant salaries, especially to their employees and stockholders, and to the consumers struggling to pay for the products or services they provide, quite often as monopolies or duopolies.

If a tech firm is paying it's CEO $10 million a year, that's at least $9 million that would be much better spent finding the best and brightest engineers and programmers, or myriad other things that a corporation requires to function properly. Multiply that idiocy across the entire US corporate landscape, along with all the other idiocies that cripple this society and economy, and it's no wonder it's grinding to a halt.

just_another_bozo_on_this_bus 5 years, 4 months ago

For one $million a year, I think a company has a right to expect a great deal from anybody on the receiving end. If they choose to pay $10 million (or even $50 million) for that instead, they do it at precisely the expense I've already described.

gl0ck0wn3r 5 years, 4 months ago

"Richard Heckler (Anonymous) says…Shareholders won't fix much. Soooo many of those shareholders are elected officials who also receive special interest campaign money."

Says the lawn mower. That statement is meaningless because the vast majority of people in this country hold shares in any given company. It would be difficult to find an elected official who doesn't hold shares in a company. But hey, basically you are saying that a senator is a shareholder and, as a senator, he benefits from campaign money and thus is unmotivated to change regulation as a senator or as a voting shareholder because he benefits both directly (share prices) and through campaign finance. However, if I understand your argument, CEO salaries are actually bad for business and thus wouldn't it follow that personal greed (as a shareholder) would motivate the senator?

As an example, could you please tell me how many of the 10.6 billion shares of GE are held by senators? That should be fairly easy since you no doubt hate GE and it is widely held. If this shareholder influence thing holds true, your argument should be pretty easy to prove.

gl0ck0wn3r 5 years, 4 months ago

"just_another_bozo_on_this_bus (Anonymous) says… The problem is that it's damaging to the companies who pay these exorbitant salaries... If a tech firm is paying it's CEO $10 million a year, that's at least $9 million that would be much better spent finding the best and brightest engineers and programmers, or myriad other things that a corporation requires to function properly..."

Really? Could you provide statistical evidence proving this causal relationship? You seem to assert that CEO salary is directly tied - somehow - to a decline in revenue and an increase in pricing. If such a causal relationship exists, it should be pretty easy to prove across cases given that there are literally thousands of international businesses with in hundreds of different sectors.

just_another_bozo_on_this_bus 5 years, 4 months ago

"Could you provide statistical evidence proving this causal relationship?"

Statistics have nothing to do with it. It's basic arithmetic. At any given point in a budget cycle, a corporation's budget is a zero-sum game. They only have so much to spend. Anything they spend on the CEO's salary is money that can't be spent anywhere else. If they're being paid 500 times the average salary of that company, that requires a belief that they are 500 times more productive than the average worker. I'm sorry, but such an absurd belief is quite simply an indication of insanity and/or a mind incapable of logical thought.

gl0ck0wn3r 5 years, 4 months ago

So I'll take it that you can't prove any negative causal relationship between CEO salary and company performance thus making your previous statements indicating a causal relationship totally invalid and your argument is not logical. For example, in your last post, you are conflating "productivity" (however one measures that) with value.

I would further assume that you can not prove any sort of causal relationship between the ratio of worker (whatever that is) pay and CEO pay to company performance? Really, if the "basic arithmetic" is so easy, it should be relatively easy to prove.

I contend that it isn't "basic arithmetic" and that CEO salary is almost entirely based on what the market will pay. What the market will pay is, in turn, based on information about that market (see previous posts). I also contend that CEO pay - within a normal range - has absolutely no negative causal relationship with company performance.

just_another_bozo_on_this_bus 5 years, 4 months ago

Oh yea, when logic fails, fall back on the "magic" of the market. How come the market allowed the sub-prime debacle to happen, and why did the federal government have to bail the market's and all those market-approved CEO's a$$es out of the fire? (and we're not done bailing yet.)

gl0ck0wn3r 5 years, 4 months ago

"just_another_bozo_on_this_bus (Anonymous) says…Oh yea, when logic fails, fall back on the “magic” of the market."

Liberty dissected your logic more effectively than I can. The market is not magic and I am not "falling back" on anything. I am simply suggesting very orthodox economic realities and you are arguing very unorthodox theories that are not grounded in any sort of evidence. I've asked you to prove a negative causal link between CEO salary and company performance to back your claim that the two are related. You have not. Indeed, almost everything you have posted has proved to be either totally irrelevant or evidence to counter your own argument.

just_another_bozo_on_this_bus 5 years, 4 months ago

" If you have a restaurant with 40 tables, there is some point between 1 waitress and 40 that the cost of hiring one more waitress will not be worth the added marginal productivity. "

We're not talking one restaurant with 40 tables. We're talking about throwing $million at one person-- $million that do not buy any marginal utility. It's just a money grab and give away, and those who do it do so merely because in this horribly corrupt and inefficient corporate culture, they can.

And you financial geniuses want to claim that that is some sort of immutable Law of the Economy, not just a bunch of greedy bastards who don't understand the meaning of "enough" slopping at the trough.

just_another_bozo_on_this_bus 5 years, 4 months ago

"lol"

Does that mean you've run out of unsupported (and unsupportable) assertions?

just_another_bozo_on_this_bus 5 years, 4 months ago

"Again, your ignorance of the utility an executive brings to a corporation is showing."

I guess the rest of the world is ignorant of it, too, since they regularly purchase it for 1/3 or less of what US companies do.

just_another_bozo_on_this_bus 5 years, 4 months ago

"My worldview is that everyone is greedy and that some are just more successful than others. "

That's a serious case of projecting you got there.

gogoplata 5 years, 4 months ago

Government should protect ones life, liberty, and property. Not determine how much people get paid. Liberty isn't perfect because people are not perfect but I'll take the problems that accompany too much liberty any day over the ones that go along with liberty being trampled on by a bloated government.

Danimal 5 years, 4 months ago

This is one of the dumbest editorials I've ever read. I vote that we cap Chuck Collins and Sam Pizzigati's pay at $12K a year.

This is the kind of thinking that led to UAW owning 55% of GM when it comes out of reorganization, literally letting the inmates run the asylum.

just_another_bozo_on_this_bus 5 years, 4 months ago

"The rest of the world doesn't follow the Anglo-American model of corporate governance."

Then that model is badly broken, which is kind of the whole point, now isn't it?

just_another_bozo_on_this_bus 5 years, 4 months ago

Oh, come on, Pil, your approval of this obscenity has nothing to do with whether they "deserve" it. You openly worship greed, and truly believe in a race of superhumans (to which you think you belong) who "deserve" whatever they can suck out of the poor working bastards you so despise.

notajayhawk 5 years, 4 months ago

beatrice (Anonymous) says…

"nota, would we get better people in public office if we paid them $25 million a year? That is my point, not arguing that we have the best now."

Maybe that would be some kind of apples-to-apples comparison, bea, if 150,000,000 nearly evenly-divided shareholders elected the CEO. You can not compare politics to business. (For one thing, businesses don't stay in operation running a $1.6 trillion annual deficit.)

"If we offered $25 million pay to be a senator however…? Is that what you are arguing for?"

Um, not quite - I wouldn't pay them 25 cents. But then, neither would I let any of them run a major corporation.

"As far as how many CEOs are making the big, big money, the average compensation among the top 500 companies was $12.8 million. Several are making far in excess of $25 million a year. http://www.forbes.com/2008/04/30/ceo-…"

And your point is? (Just as a point of curiosity, bea, what does that $12.8M represent as a share of revenues? Or profits? Or total dividends?)

"As far as how many of the CEOs screwed the pooch, see jafs comment."

Saw it, Neither of you answered the question. "How many" generally requires a numerical answer, not a confirmation that there were 'some.' Even among the top 500 you referred to - again, how many?

"Finally, to your question of should the CEO of Ford be penalized for the mistakes of the CEO of GM, I ask, did Ford take the bailout money? No. Did GM? Yes. So lets start with who is being covered on our dime, and who isn't. If we aren't willing to pay top dollar for those who are elected to work for us, why should we pay top dollar for those hired at companies operating on tax dollars?"

Except that's not what the proposed legislation/regulations mentioned in the article this thread is attached to is talking about, is it? Getting tax breaks available to any other corporation is not 'getting taxpayer dollars,' despite the class-jealous rants to the contrary. And witholding those same tax breaks available to other companies just because you decide to reward your CEO for tremendous performance is unwarranted and indefensible government manipulation of private business.

By the way, I notice you seem to have omitted any reference to my question about stock options. From your linked-to story:

"The top earner of 2007 was Oracle chief Larry J. Ellison. Ellison drew just a $1 million salary, but realized $182 million from the exercise of vested stock options last year. ... The next four top-paid chief executives also earned most of their pay from exercised stock options"

Is there something wrong with a CEO making money because the company he runs makes money?

notajayhawk 5 years, 4 months ago

just_another_bozo_on_this_bus (Anonymous) says…

"Statistics have nothing to do with it. It's basic arithmetic. At any given point in a budget cycle, a corporation's budget is a zero-sum game. They only have so much to spend. Anything they spend on the CEO's salary is money that can't be spent anywhere else."

No wonder boohoozo is so anti-business - he has absolutely no understanding of it.

Your rather naieve statement is predicated on the assumption that revenues remain constant. It's simply untrue that the corporation has only so much to spend - they can spend more if they bring in more revenue, and a top CEO can accomplish that.

"If they're being paid 500 times the average salary of that company, that requires a belief that they are 500 times more productive than the average worker. I'm sorry, but such an absurd belief is quite simply an indication of insanity and/or a mind incapable of logical thought."

It's only absurd or insane to someone is completely consumed by the belief that it's the production of the proletariat that brings in the money.

Just one of the many things Herr Klowne forgets is that some of these CEOs founded the companies. Bill Gates may not write as many lines of code as 500 of his programmers - but then, if it wasn't for Bill, those 500 programmers would be writing open source apps for Linux distros.

The CEO of a car company can have a multi-billion dollar effect on not only tens of thousands of employees, but entire towns, counties, states, school districts, etc. (as we have already seen). If the CEO of a car company makes the right moves to bring into being a new product line that takes off, it can put thousands of employees back to work, restore life to a dying town with a closed factory, stimulate the economy in dozens of other towns where they make sub-assemblies, etc., etc., etc. That CEO may not be getting his hands dirty on the production line turning 500 times as many bolts as his line workers, but again, those workers would be drawing unemployment if it had not been for that CEO.

As glock put it, boohoozo, it's the marginal utility, not how much someone 'produces.' I know that in your little world, only those people who get their hands greasy are really earning anything. Tell you what - gather up a few hundred of your friends with a little mechanical ability and go out and start your own car company. Let us know how it works out for ya'.

notajayhawk 5 years, 4 months ago

By the way, I find it endlessly amusing that klownes such as boohoozo are so quick to lay the entire blame for a company's failings squarely on the head of the CEO, while denying even the possibility that same CEO might contribute to the company's successes.

BigPrune 5 years, 4 months ago

No bozo, the janitor I mention is a one man (or woman) show. $100 an hour. Not too shabby for cleaning toilets.

jafs 5 years, 4 months ago

It is certainly possible that CEO's can be responsible for companies' success to some degree, as are all of the people who work for the companies.

If all CEO compensation were directly related to the company's success AND failure, it might be much fairer and more reasonable.

However, when companies start to have problems, the usual response of CEO's is to shut down plants and lay people off.

And, really, 500 times more valuable? Come on.

If they were really bringing in that much more business, etc. then we wouldn't have seen the recent financial mess. That was clearly a result of stupidity, greed, and mismanagement.

When someone tells you that a bundle of sub-prime mortgages is a AAA rated investment, you should know better.

When the rating agencies are being paid by the issuers of the securities, you should know better.

When the details of financial instruments/investments are too complicated to understand, you should know better.

Especially if you are being paid millions of dollars to exercise good judgement.

And, there are many other ways that money could be spent other than hiring more people. You could give current workers raises. You could create a fund that would keep plants open and keep people employed if management decisions lowered revenues. You could offer better benefits. You could purchase shares of stock for workers so that they could share in the company's success. You could use the money to invest in improving/expanding the business. Etc.

gl0ck0wn3r 5 years, 4 months ago

No, bozo, I gave up. I don't have time to waste on trying to get you to back any one of your assertions when it is quite clear you can't.

gl0ck0wn3r 5 years, 4 months ago

Agreed Liberty. Also, I think CEO pay is somewhat akin to the pay a professional athlete earns. A professional athlete - if he is smart - builds in enough pay to cover the years he will not be able to play because of the short playing life of anyone in a rigorous profession. Is a professional basketball player worth $100 million? Maybe not, but he has to negotiate his contract as if that year could be his last. Similarly, CEOs tend to fly high and fall hard for some of the reasons you mentioned. To be successful, he has to take risks that may or may not pay off and the downside is that his career could end at any time.

jafs 5 years, 4 months ago

Anybody's career can end at any time if they make spectacularly bad mistakes - but most of us don't have guaranteed severance pay and benefits to fall back upon.

If someone needs $100 million or more to set themselves up for life, they're living pretty large. I could set my wife and myself up for life comfortably with $1 million.

notajayhawk 5 years, 4 months ago

jafs (Anonymous) says…

"If someone needs $100 million or more to set themselves up for life, they're living pretty large. I could set my wife and myself up for life comfortably with $1 million."

Good for you. I probably could, too. But I'm not b****ing because someone else wants, believes he needs, or earns more.

jafs 5 years, 4 months ago

nota,

glock argued that CEO's might be like professional athletes, and need to bargain accordingly.

He seems to think that they might need $100 million because they won't always be playing professional sports.

I question that argument.

Nobody "needs" $100 million for that reason.

And, again, I'm not "b****ing", merely commenting.

jafs 5 years, 4 months ago

My problem with the way money is distributed in our society is that it seems to be distributed according to no reasonable guidelines.

It makes no sense to me that teachers start out making about $25,000/yr and that professional athletes make millions.

It makes no sense to me that social workers start out making about $25,000/yr and that successful actors make millions.

It makes no sense to me that many who work hard and contribute in concrete ways make so much less than entertainers.

And, of course, it makes no sense to me that CEO's make almost 500 times as much as an average employee, and manage to get contracts including guaranteed severance pay/benefits regardless of performance.

jafs 5 years, 4 months ago

That's exactly my point, Liberty - wages should be based on things like the usefulness to society, or the difficulty of the work.

And, I'm not sure how "supply and demand" are operating in the areas I've mentioned.

It's getting harder to find people who want to be teachers, yet the pay isn't rising that much, for example.

And, of course, it seems absurd to me that scarcity is a determinant of price, regardless of utility.

jafs 5 years, 4 months ago

In fact, it seems to me that supply and demand are not the determinants of salaries.

It's simply that people who can demand high salaries do so, and get them. The reason that actors, for example, make lots of money is that networks charge advertisers lots of money and want people to keep tuning into the shows.

So popular actors can command higher salaries.

CEO's get high salaries largely because they sit on each others' boards of directors and play the "I'll scratch your back..." game.

I would prefer to see wages tied to importance of the work, skill/competence, etc.

gl0ck0wn3r 5 years, 4 months ago

Question for those arguing that CEOs should be capped at a certain percentage or total pay rate:

1) What is a "fair" rate of pay for a CEO and how are you determining that rate?

2) The three largest public corporations in the US are:

Exxon - 104,000 employees - $442,000 Walmart - 2,100,000 employees - $405,000 Chevron - 67,000 employees - $263,000

The last number is revenue in millions. Given these figures, how would you determine CEO salaries for the three companies listed above?

gl0ck0wn3r 5 years, 4 months ago

By the way... if you haven't yet, I urge you to skim the document that informs some of bozo's posting on this topic. I assumed it was a serious academic paper. Instead, it's an undergraduate management group project from Louisiana Tech that would, at best, get a marginally passing grade.

notajayhawk 5 years, 4 months ago

jafs (Anonymous) says…

"It makes no sense to me that teachers start out making about $25,000/yr and that professional athletes make millions."

"In fact, it seems to me that supply and demand are not the determinants of salaries."

"It's simply that people who can demand high salaries do so, and get them. The reason that actors, for example, make lots of money is that networks charge advertisers lots of money and want people to keep tuning into the shows."


I demand a billion-dollar per year job that I only have to work 15 hours per week and I don't have to produce anything!!!

[crickets]

Hmmm, not working.

Maybe demand doesn't count for s**t without supply?

The part you're missing, jafs, is that it doesn't have to make sense to you (or to me, or to any other particular person). 'Demand' refers to the demand of the entire market, not just what you (or I) think is more important to society. Society decides what's more important. And whether or not I agree with you that a teacher is more valuable to society than an NFL quarterback, society evidently believes otherwise.

See, the reason networks can charge a lot of money for advertising (to in turn be able to meet the demands of the actors) isn't because they want people to tune in - it's because people ARE tuning in. You may think (and I might agree) that a particular TV show is complete crp - but if millions of people are tuning in every week, and* going out to buy the advertisers' products, what we think is inconsequential.

The reason Larry Ellison made $183M is because enough of Oracles customers purchased its product to be able to afford that, and the board of directors gave him enough of the credit that he could demand that much. You don't have to like it. I don't have to like it. Oracle's customers have to, and apparently they do.

notajayhawk 5 years, 4 months ago

gl0ck0wn3r (Anonymous) says…

"The last number is revenue in millions. Given these figures, how would you determine CEO salaries for the three companies listed above?"

You know, gl0ck, that there are plenty of people who post to these boards that will think you just proved their point - that the oil companies and Wal-mart are perfect examples of companies that have no real worth to society - the hundreds of millions of American customers who buy their products notwithstanding.

jafs 5 years, 4 months ago

notaj,

That's right - if advertising didn't work, the whole equation would shift, which would be a good thing in my view.

Advertising manipulates demand, as long as people are stupid enough to believe it.

glock,

It was suggested that CEO salaries be capped at a certain multiplier of average employee salaries. That's just one idea, of course.

And it's interesting that Wal-Mart has only slightly less revenue than Exxon, but employs 20 times as many people. Does that mean that Wal-Mart employees are making much less than Exxon ones, in general?

The idea that CEO's "provide" jobs is a bit strange as well. They (or their companies) actually employ people, who provide labor essential to the functioning of the company.

I think this is my last comment on this thread - it's an interesting topic, but I don't think we'll get much further. It's clear that some people think the current set-up is fine, and others see some significant problems.

just_another_bozo_on_this_bus 5 years, 4 months ago

If paying CEO's piles of cash means that they are more productive than they would be otherwise, then it follows that if their incomes are halved next year (to an average of about $1.5M) then they will only do half as much work. And conversely, if their average income is doubled (to about $6M) their productivity will double.

By the same logic, if we double the salaries of teachers, students will learn twice as much next year. And if they are halved, then students will learn half as much.

Of course, there is no logic in that logic. In the case of CEO's, whether their income is halved or doubled, they would still be extremely wealthy, and therefore adequately compensated for doing their jobs. Even if their incomes were halved, they'd have no incentive to transfer to the mail room.

In the case of teachers, doubling their salaries would almost certainly have the effect of making the profession more attractive to more people, thus improving the quality of the pool of potential teachers. Although it's unlikely that it would result in students learning "twice as much," however that is defined, student performance would almost certainly improve. However, halving the average income of teachers would almost certainly force many if not most of them out of the profession, and those who replaced them (if they could be replaced) would not be highly qualified, and student performance would suffer greatly.

Bottom line is that extremes of wealth and poverty distort the economy and society-- the greater the extremes, the greater the distortions.

gl0ck0wn3r 5 years, 4 months ago

So basically no one can answer the question? I thought this would be fairly simple for the ratio/cap folks but instead it's either been ignored, the corporations have been denigrated or it's been followed by a question that makes no sense.

It's a serious question if you think capping/ratio is a good way to go. How much would you pay those CEOs given that those companies are the top three companies in the US by revenue?

just_another_bozo_on_this_bus 5 years, 4 months ago

"It's a serious question if you think capping/ratio is a good way to go. How much would you pay those CEOs given that those companies are the top three companies in the US by revenue?"

From my first post on this thread--

"Here's an easy fix— cap CEO pay and benefits at 15 times what the lowest paid worker gets (this would still be over $100 an hour and $200,000 a year, even if the lowest paid worker gets minimum wage.) But not a completely hard cap— just prohibit any compensation above that amount from being written off as an expense on the company's ledgers. So if some company really believes they have a “superstar” worthy of more, they can pay them whatever they want, but it will come with a hefty tax bill."

This would force the company to seriously consider just how much that CEO is really worth, and would at least provide funds to the government to allow them to pay for the welfare subsidies required by the company's otherwise underpaid employees.

just_another_bozo_on_this_bus 5 years, 4 months ago

BTW, the reasoning behind that idea is that obscenely high salaries are not a legitimate business expense-- they are nothing more than a vanity.

gl0ck0wn3r 5 years, 4 months ago

So your solution has absolutely nothing to do with how many people work at a corporation or their revenue? Fascinating.

Can you explain why it is that countries with lower pay ratios have far fewer top 500 companies by revenue?

just_another_bozo_on_this_bus 5 years, 4 months ago

"So your solution has absolutely nothing to do with how many people work at a corporation or their revenue?"

The assumption here appears to be that the job of a CEO at a company with 30,000 workers is 10,000 times as difficult as the CEO of a company with 3 workers, and ten times as difficult as one at a company with 3000 workers. That's just too simplistic to be accurate. At any rate, under the proposal I gave above, a company like Wal-Mart would likely find it very easy to cover the tax liability of paying its CEO $30,000,000 a year as easily as a company 1/10th the size could cover the tax liability of paying a $3,000,000 salary.

And if they want to cut down on their tax liability, all they have to do is raise the salaries of their workers.

"Can you explain why it is that countries with lower pay ratios have far fewer top 500 companies by revenue? "

I'd say that in an economic system dominated by monopolies and corporations that are "too big to fail," the rather small, isolated, insulated folks that make up our ruling class, and who populate corporate board rooms, believe the same hype about themselves that you've been parroting here.

"bozo, in your 10:19 post you demonstrate an understanding of how a change in price (salary) will affect the supply of quality teachers."

What if we paid all teachers $1M a year? Would each and every student suddenly become a Rhodes Scholar. This is really not rocket science-- there is a point of diminishing return to raising salaries, and extreme damage done by lowering them below a livable wage-- the two phenomena are unavoidably linked.

fancy80 5 years, 4 months ago

no, Washington needs to keep America safe, uphold the constitution, and fix the economy (stupid).

Flap Doodle 5 years, 4 months ago

In Soviet Union, CEO's were happy to have extra gruel once a week.

gl0ck0wn3r 5 years, 4 months ago

Bozo, I'm curious - what do you do for a living? I'm not specifically asking where you work - just a general description.

jumpin_catfish 5 years, 4 months ago

This is not the function of government and it won't stop with CEOs folks. They're lookin at your pay check too and don't be shocked when they tax the hell out of us. Oh, the bozos are already doin that aren't they.

commuter 5 years, 4 months ago

The authors comment about " A generation ago, top executives in the United States typically took home not much more than 30 times what their workers made." is incorrect.

  1. The disclosure of CEO pay did not include many of the other benefits - golden parachute & stock options. These type of comp was not disclosed until Jack Welch's divorce proceeding.

  2. The accounting for stock options were changed. Before the stock options were not disclosed until they were vested, now they are disclosed when they are granted. There could be two to four years difference between these two dates.

Also, if we want to have Congress regulate CEOs salaries, thet should also do the following:

  1. No cost of living increase for Congress unless it is the only bill and it would take effect until the next year after passage.

  2. Welfare reform- get people of welfare. Government should give a temporary help - there are two many people who are on welfare for more than 5 years. I don't have a problem with elderly or disabled people receiving assistance but there are too many people on welfare who should really work.

  3. Add another tax rate- Have athletes, actors/ actoresses, and mucicians pay an additional 1% more.

  4. Start making some not for profits pay 5% tax rate- this would include KU Endowment, KU Athletics etc

Kawatchi 5 years, 4 months ago

So let's say you start a company. You are OK with the government telling you how much you can make? The government should only control how much its own employees make.

notajayhawk 5 years, 4 months ago

jafs (Anonymous) says…

"Advertising manipulates demand, as long as people are stupid enough to believe it."

Pretty dim view you have of the intelligence of consumers, jafs. Advertising and promotion is an integral part of business, any business, even if it's a kid that mows lawns or babysits posting a flyer on the bulletin board at the grocery store. Most people are bright enough to understand what's true and what isn't - and you can't sell a product nobody's ever heard of.


vertigo (Jesse Crittenden) says…

"Point noted- then make the golden parachute contingent on making the company profitable."

No problem. As long as you can guarantee that same CEO won't be terminated for circumstances beyond his control. How are you going to accomplish that?


just_another_bozo_on_this_bus (Anonymous) says…

"If paying CEO's piles of cash means that they are more productive than they would be otherwise..."

and

"The assumption here appears to be that the job of a CEO at a company with 30,000 workers is 10,000 times as difficult as the CEO of a company with 3 workers..."

You're really obsessed with this whole concept of working harder or producing more or whatever, aren't you, boohoozo? If you'd ever been capable of getting a job that didn't involve dropping baskets into a deep fryer, perhaps you'd understand.

Does a school principal work 'harder' than a teacher, boohoozo? Does a medical director at a hospital 'produce' more, i.e. treat more patients?

gl0ck and I have both tried to explain to you the concept of utility. Read a book sometime, try learning about how business works. I doubt that will change much, since I'm sure your Party handbook says it's only the sweat and toil of the proletariat that brings money into any company. Maybe some day you'll grow up and realize that those people quite possibly wouldn't have a place to toil and sweat without the people at the helm. (But I doubt it.)

jafs 5 years, 4 months ago

nota,

Yes, I think most Americans are extremely susceptible to the manipulations of advertising, otherwise businesses wouldn't spend millions of dollars on it.

Of course, one needs to know what products etc. are available, but advertising goes way beyond that function, as I'm sure you know.

And, the owners, managers, etc. of businesses wouldn't be able to run their businesses without employees at all levels.

It may not be simple to evaluate what fair compensation would be based on differing contributions, but to simply keep claiming that the folks at the top are worth much more than everyone else isn't very convincing.

just_another_bozo_on_this_bus 5 years, 4 months ago

It's interesting that the "counter-arguments" from folks like nota depend on the straw-man that I, and others here, have declared that there can be no differential in pay rates-- that somehow we're arguing that everyone must make the same $16.50 an hour, no matter the job, the training required, the experience or skill level required, the difficulty, etc. Anyone with fifth-grade reading skill can see that we are saying nothing of the sort.

But here's a few questions for them. Is there any rate of compensation that's excessive? And by excessive I mean could it significantly reduce the amount of capital available for other vital corporate functions? Is a CEO who gets $4M always better than one who only makes $1M? What are the criteria for rating just how good a CEO is, and the pay-out that that warrants? If doubling the pay of a CEO means doubled production (or utility,) why doesn't a doubling of the income of an average worker have the same effect?

BTW, glock, I'm Bill Gates's unemployed, bastard half-brother (but I'm much better looking.)

just_another_bozo_on_this_bus 5 years, 4 months ago

"But we have accurately interpreted your comments that government should establish an artificial ceiling on the potential earnings of company CEOs and those who would become a CEO."

Read the very first post on this thread, Pil-- what I proposed there would very clearly place no ceiling on a CEO's salary-- it would merely make it taxable above a certain ceiling, and otherwise the company could pay them whatever they want.

"And still living in mommy's basement."

Yes, but in this interest of keeping my true lineage a tightly held secret, my unacknowledged relatives provide me with a very finely appointed basement with a clear view of the gopher holes of Alvamar.

"there have been several pertinent questions asked of you regarding comparisons between foreign corporations and those in the United States"

I did respond to those, although the response came with questions of my own that you clearly have no answers for.

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