CEO pay

#124
#124
rjd970 said:
I still contend my point that when it comes to making the company successful and increasing shareholder value, the CEO isn't 300x more important than the guys that come up with the ideas and implement them. I would also say the mid level range managers have more at stake on a relative level. If they don't perform they get canned. If the board decides the CEO doesn't perform he gets his golden parachute and moves on.

That doesn't make sense, super-secret performance evaluations or not.

...I feel like I am coming across as complaining about the pay, which I'm not.

I work at a pretty big company, with multiple divisions and business sectors. Each division and business sector names employees of the quarter and employees of the year, based on individual contributions to company performance, and they are not always execs and managers. The CEO made $20+ million last year with bonuses.

It would be interesting to me to see what would happen with productivity and shareholder value if a portion of those huge bonuses were divided among those top performers as significant bonues (10's to 100's of thousands of dollars a piece). Seems to me it would create incentive and create true competition across the company to really make a difference to the company's bottom line.

I refuse to believe this hasn't been thought of before. Instead, boards are paying huge amounts to a single guy, and besides secret evaluations, has little to do with making the stockholders money.
Click to expand...

I don't get the "secret evaluations" part. I'm saying they are not observable to the public the way a QB's individual game stats are. It doesn't mean there aren't ways that CEOs are evaluated besides absolute revenues and profits and it doesn't mean they are secret.

Here's the market forces explanation - the market is willing to pay these CEOs "x". It is the same with actors/athletes/etc.

Why are athletes so highly paid? It's because they have great agents that have negotiated up salaries and a union that has done likewise. Did A-rod deserve a 1/4 billion contract from the Rangers? Was his performance exactly equal to the multiple he made compared to an athletic assistant trainer for the Rangers? Who knows?

Value is determined by the buyer. Nothing is stopping a company from paying a CEO 200K except that a person won't do it for that. Likewise, nothing is stopping an NFL team from paying the franchise QB 200K except for the same reason.

Companies are free to offer what they like but there is no entity or organization setting minimum pay. If you think about it, athlete salaries are less market force driven since players unions and league rules have dictated minimums and maximums.
 
New posts
You must log in or register to reply here.

VN Store



Back
Top