CEO Pay

#1
volinbham

volinbham

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#1
A current campaign issue is the gap between rich and poor with a common target being overpaid CEO's - the argument goes that they make such a huge multiple over the lowest paid worker in the organization - it is out of control.

No doubt there are overpaid CEO's. Here's a list of Fortune 500 CEO's and their pay.

http://www.forbes.com/2005/04/20/05ceoland.html

Now here's a list of the "Celebrity 100". It's amazingly similar in terms of numbers. Clearly, these people are making huge multiples over low paid workers in the entertainment business.

http://www.forbes.com/lists/2006/53/Compen_Salary.html

The same argument could be made for athletes. Compare a QB salary to the guy that paints the stripes on the field (or whatever).

Why are CEO's the only bad guys/gals in this situation?
 
#2
#2
CEO's are made the bad guys because of the public perception that they only support Republican causes. It is the same with a lot of country music stars.

CEO's with a public perception of being left leaning, like Steve Jobs, are given a pass along with most of Hollywood. And while I can't really tell where his politics lie, Bill Gates is vilified as satan himself despite the fact that he donates millions to charity.
 
#3
#3
IMO, if they can make the money. Good for them. My treasure is in Heaven....:thumbsup:
 
#5
#5
Jasongivm6 said:
I think most people have a problem with their severance package.
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#7
#7
Hmmmm........gas corporations get 8 cents a gallon, the goverment receives an average of 42 cents a gallon.

Any one see a problem with that?
 
#8
#8
Well because there are shareholders who wouldn't mind having that money trickle down to them. When you have a few thousand mini-CEO's out there all wanting their stocks to soar, they don't like hearing the bottom line being affected by millions going to just one person up top.
 
#9
#9
CSpindizzy said:
Well because there are shareholders who wouldn't mind having that money trickle down to them. When you have a few thousand mini-CEO's out there all wanting their stocks to soar, they don't like hearing the bottom line being affected by millions going to just one person up top.
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Therein lies the problem with the "CEOs are overpaid" argument. The shareholders have the power, through their representaves on the board, to hire, fire, and set the compensation for the CEO, who is, after all, only an employee. If shareholders do not believe they are getting value from their current employees (or their current board, for that matter,) they should fire them or sell the stock.

What is needed is transparency, not compensation limits. If the shareholders believe there is value in paying Jack Welch a kajillion dollars to run a company plus a kajillion more once he retires, then they should pay him that. The only problem is when a CEOs package is not transparently reported to the owners of the company.
 
#10
#10
volinbham said:
The same argument could be made for athletes. Compare a QB salary to the guy that paints the stripes on the field (or whatever).

Why are CEO's the only bad guys/gals in this situation?
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Wrong comparison being made with the QB vs the guy that paints the lines on the field. How about comparing the salaries of QB's to the income of the team owners. Much better comparison.
 
#11
#11
cotton said:
Therein lies the problem with the "CEOs are overpaid" argument. The shareholders have the power, through their representaves on the board, to hire, fire, and set the compensation for the CEO, who is, after all, only an employee. If shareholders do not believe they are getting value from their current employees (or their current board, for that matter,) they should fire them or sell the stock.

What is needed is transparency, not compensation limits. If the shareholders believe there is value in paying Jack Welch a kajillion dollars to run a company plus a kajillion more once he retires, then they should pay him that. The only problem is when a CEOs package is not transparently reported to the owners of the company.
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FASB assures that everything is reported accurately, but how many stock owners will sit down and read through 30+ pages of financial statements per stock each quarter? What percentage of investors have the proper education to understand what they are reading?
 
#12
#12
First&Tenn said:
FASB assures that everything is reported accurately, but how many stock owners will sit down and read through 30+ pages of financial statements per stock each quarter? What percentage of investors have the proper education to understand what they are reading?
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If the owner's of the company aren't paying attention, is it the government's duty to monitor company information and set spending limits for them? I really don't think that is a good way to run a capitalist society.
 
#13
#13
FASB is the Financial Accounting Standards Board. They only set standards for how a company has to document and report financial information.

Other than that, there are government entities that watch the heads of corporations to keep them honest, but they are just looking for Enron or Tyco type irregularities.

I actually think that our system is setup pretty well at this point, with the exception of some recent media deregulation.
 
#17
#17
Jasongivm6 said:
Anyone think Sarbanes-Oxley has hurt some corporations?
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SOx should have stopped at requiring CEOs, CFOs, and COOs to sign off on the financial reports. After that, SOx is utterly worthless and fails to address any of the problems with Enron, WorldCom, Arthur-Anderson, etc. Regardless of how well internal control is, if the highest level managers want to commit fraud, they are going to do it.

Now, focusing on CEO pay, for public companies. If the lower level employees are upset, then they should go get a job for higher wages elsewhere. If they cannot find a job for a higher wage, they should be grateful that they have their current job, at that wage.

If the stockowners feel they are not getting a good enough cut of the profits, then they should actually attend shareholder meetings and voice their opinion or sell the stock and earn better returns elsewhere. If they cannot earn better return on investment, then they should be grateful that they are earning their current return.
 
#18
#18
therealUT said:
SOx should have stopped at requiring CEOs, CFOs, and COOs to sign off on the financial reports. After that, SOx is utterly worthless and fails to address any of the problems with Enron, WorldCom, Arthur-Anderson, etc. Regardless of how well internal control is, if the highest level managers want to commit fraud, they are going to do it.

Now, focusing on CEO pay, for public companies. If the lower level employees are upset, then they should go get a job for higher wages elsewhere. If they cannot find a job for a higher wage, they should be grateful that they have their current job, at that wage.

If the stockowners feel they are not getting a good enough cut of the profits, then they should actually attend shareholder meetings and voice their opinion or sell the stock and earn better returns elsewhere. If they cannot earn better return on investment, then they should be grateful that they are earning their current return.
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There is also the option of electing a board that will run the company the way the shareholder's want it run, but other than that, a good assessment.

In my experience with Sarbanes-Oxley, it mainly provides a bunch of red-tape hurdles that in effect cause the few remaining large accounting firms to require their clients to accept responsibility for any accounting done by the firms, which sort of mitigates the purpose in having one of those large firms audit the books in the first place. It also now takes an incredibly long amount of time to get any actual audited statements back from said firms, as every department, from tax to audit to janitorial, now must sign off that every other department hasn't made any actual decision, as those could potentially expose the firm to liability.

As you can probably tell, I am not very happy with KPMG at the moment.
 
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