Yahoo: It’s Good to Be the King: CEO Pay Up Big 2010, Not So Much For the Average Worker

[Destino]

What in the world are you talking about?

Anyway, hope everyone enjoys economic imbalances growing ever-more imbalanced.

The shocking part is that people really don't seem to understand why it's a problem.

[Madison Redskin]

Is this a genuine question?

Yes. See below.

Shareholders do not vote on the pay for CEOs

That's not quite true. CEO "pay" generally consists of cash and equity-based compensation (e.g., stock options). With respect to the former, every public company must publicly disclose the CEO's salary in its annual proxy statement. With respect to the latter (which is usually the more valuable component of CEO pay), every public company listed on the NASDAQ and NYSE (not sure about the DOW) must obtain shareholder approval of equity-compensation plans. So shareholders of public companies do in fact vote on CEO pay.

and proxy rules make it almost impossible for shareholders to get their own people on the Board.

That was certainly true for a long, long time. However, late last year, the SEC adopted rules that changed the ballgame significantly. Pursuant to those rules, public companies must include director nominees proposed by a shareholder or group of shareholders that own, in the aggregate, 3% or more of the voting stock of the company, in the proxy materials.

The people on the Board, who virtually all are CEOs themselves (or aspiring CEOs or clebrity placeholders) set the pay. All members of that club setting upper level executive pay are upper level executives, and have a built in incentive for upper level executive pay to go up as much as possible. They are only "independent directors" in the sense that they run different companies, but that's ok - the guy who's salary you are raising through the roof will be the guy setting your own salary next year. They hire "corporate consultants" to help set the pay, but guess which corporate consultants get hired - the ones that recommend enormous pay increases, of course.

Well, it's certainly true that many directors are successful businessmen who are, were, or will become CEOs of other corporations. However, I don't think there is anything wrong or nefarious about that fact. Directors are charged with managing the business affairs of the corporations on whose boards they sit. I would think that most well-qualified directors would be experienced businessmen who had led, are leading, or will lead other successful companies as CEO. Boards should be and are sprinkled with a few generals, academicians, etc., but they are and should be largely comprised of people with experience at the highest levels of corporations.

The model of corporate governance is breaking down.

Well, I agree that most CEOs are overpaid. However, I think that's largely because the free market doesn't always create a "natural balance;" not because boards and officers have become too close. Boards and officers have always been close and I would argue that recent changes in the model of corporate governance have increased transparency and given shareholders a louder voice in corporate governance matters.

[TheGoodBits]

I love people defending sky rocketing overhead costs simply to staff the executive segment of the company. I'm going to compare names to those ****ing about the greedy players union.

I have no idea how it happened, but sometime in the past 50 years big business has managed to convince the American public that Unions are an evil thing.

How dare those poor workers whose wages have increased by 100x less than their Executives try to combine their efforts and make things better- and more fair- for themselves? Those greedy little ingrates! They're lucky we don't just ship all their jobs over to China! That would show them, and let us get our sweet $10 million bonus at the end of the year.

This is what I call the "Big Lie." The Big Business Republicans have managed to convince the poorest Americans that they support their interests. In fact, it's just the opposite. They'll sell out to the top 10% any day of the week and twice on Sunday while they're at the Country Club with them. They'll distract the poor, uneducated folks with other "issues"- abortion, guns, race (subtlety), so they can get away with their highway robbery. They'll pay for their huge executive tax cuts by cutting benefits received by the poorest of the poor, making welfare a dirty word. And the people still ****ing vote for them! It's a Big goddamn Lie and it's unacceptable. This is why people in Europe call us "stupid Americans." Because we've let these top 1% folks impose their wills on us without putting up any fight.

*takes deep breath*

/rant

[Duckus]

Next time people start complaining about the wages and benfits of public sector workers you should post this

:ols:

Well put.

[Prosperity]

Why should I be concerned over another mans wages?

Our society allows individuals to avoid personal responsibility by transferring it to a legal construct (corporation). Corporations exist at the will of society's legal institutions. Their structure is everyone's business, because all laws are everybody's business. I'd be more sympathetic to executives that are actually responsible for their business.

[Hubbs]

Why should I be concerned over another mans wages?

Because this...

...is bad.

[NoCalMike]

This "breaking news" seems to have become a re-occurring theme over the last 30 years. It isn't an accident. It is policy, and it has been encouraged and helped along by both political parties, regardless of what they say in public.

[deejaydana]

I hate the sour grapes theme of bemoaning CEO pay when it's taken into account against all the other excesses spread across to people on payroll who do nothing to bring in value for a company. C Level talent stands apart from worker drones. If they get it, they're likely worth it. Are there some cases where they've enriched themselves unfairly? Certainly the Enrons and Countrywides of recent years come to mind (and those excesses aren't to be forgiven) but nothing sells better then trying to make working stiffs envious of C Level pay. Move on people.

[Ancalagon the Black]

I hate the sour grapes theme of bemoaning CEO pay when it's taken into account against all the other excesses spread across to people on payroll who do nothing to bring in value for a company. C Level talent stands apart from worker drones. If they get it, they're likely worth it.

This doesn't make sense.

Are you saying corporations are very poor at weeding out misallocation of funds at a lower level (to "people on payroll who do nothing to bring in value") but really, really good at allocating funds at a higher level (to people who "are likely worth it")?

That doesn't seem to hold water - both from a theoretical standpoint and based on empirical observation.

[SnyderShrugged]

Because this...

...is bad.

It sucks for anyone but them. But again I must ask why should I be personally worried about CEO pay? The top one percent consists of many more people than CEOs and the CEOs I've worked with certainly earn their wage.

I think income disparity is a topic worthy of discussion but I don't believe CEO pay is the root of the problem. Like it or not someone has to run a company and its not anyone's business but the company's how much they choose to pay them

I will add a caveat however, the only scenario where I might be convinced that oversight of another mans wage is appropriate would be where that CEO is leading a failing company that goes on to take corporate welfare to maintain a false portrait of profitability. Heck, Id even be irked if it were a profitable company taking federal largesse

[mardi gras skin]

As I understand it, companies are getting larger too. I wonder what percentage of company productivity goes to CEO salaries now as compared to the past. The percentage of company resources the CEO consumes may have decreased even as CEO salaries rapidly increase. If this is the case, the problem isn't (directly) CEO salaries but that too-big-to-fail companies have secondary negative effects on the economy.

I'm not advocating for rapidly rising CEO salaries. I don't think you need to pay a CEO stupid high salaries and if I were on the board of a company I would try to buck the trend. I'm just trying to figure out the reason behind it.

[NoCalMike]

The issue is not the CEO salaries on their own. It is the fact that the disparity is increasing. Your average worker is being asked to put in more hours, do more work, cover the shifts of laid off workers etc etc....workers limits are being pushed, yet their resolve is actually raising productivity in the company, but is this getting them raises or bonuses? Nope. Who is reaping the rewards? The CEOs.

Today's over-stretched worker is basically what is expected of tomorrow's worker. I went through the same experience working in a warehouse. We had productivity quotas to meet, and anytime we met them with consistency our reward was for the quotas to be raised on us as a mark of appreciation, however it wasn't like our wages reflected the fact that we were then being asked to do more work. Someone was reaping the benefits of the fact that I was continually being asked to do more work, and it wasn't me.

[Thiebear]

it seems to me that would be a good indicator that business' are coming back.

I'm not a 'free range chicken" fan of corporations and think there should be basic rules of civility and safety, but if you want to drive your company into the ground.. sobeit.

We are getting new laptops and a couple of hires a long time in the coming.

[Burgold]

it seems to me that would be a good indicator that business' are coming back.

I'm not a 'free range chicken" fan of corporations and think there should be basic rules of civility and safety, but if you want to drive your company into the ground.. sobeit.

We are getting new laptops and a couple of hires a long time in the coming.

I think that's key. If the CEO increases are in conjunction with corporate prosperity and all down the line are flourishing that is one thing. If the CEO needs to make major layoffs, close plants, or if the company is losing money and the CEO still it getting big ole raises.... well then, it's America so they're free to do it, but it kind of stinks.

[SnyderShrugged]

The issue is not the CEO salaries on their own. It is the fact that the disparity is increasing. Your average worker is being asked to put in more hours, do more work, cover the shifts of laid off workers etc etc....workers limits are being pushed, yet their resolve is actually raising productivity in the company, but is this getting them raises or bonuses? Nope. Who is reaping the rewards? The CEOs.

Today's over-stretched worker is basically what is expected of tomorrow's worker. I went through the same experience working in a warehouse. We had productivity quotas to meet, and anytime we met them with consistency our reward was for the quotas to be raised on us as a mark of appreciation, however it wasn't like our wages reflected the fact that we were then being asked to do more work. Someone was reaping the benefits of the fact that I was continually being asked to do more work, and it wasn't me.

We have a 40 hr work week and overtime rules in place federally. What instances are workers being asked to exceed those limits without just compensation and what specific companies are engaging it it without ramifications legally? While I understand your perspective and even why you might believe this to be true, I also think its mainly hyperbole.

[pointyfootball]

Should we also say doctors and lawyers make too much, therefore we need to somehow cap their income ceiling? I see the CEO pay issue as financial jealousy more than anything. Just because a worker-bee works as many hours (doubtful) as a CEO, doesn't mean he deserves anywhere near the salary as the CEO. If that worker bee wants more money he/she needs to make theirself more valuable, as the CEO did.

Just because a few high-level corporate execs got committed fraud while being compensated richly, doesn't mean others should be punished for it. There will always be a select few that are much more wealthy than the rest of us, no matter how much we may dislike it. Trying to legislate around that is crazy talk, IMO. They'll still get their money, and most of us will still have to live on a budget for life.

[pointyfootball]

We have a 40 hr work week and overtime rules in place federally. What instances are workers being asked to exceed those limits without just compensation and what specific companies are engaging it it without ramifications legally? While I understand your perspective and even why you might believe this to be true, I also think its mainly hyperbole.

In my first job out of college there were unwritten rules that you better put in at least 8-5 daily (eating @ your desk, or 15 minutes in cafeteria), travel on your own time (Sundays, Friday late or Saturday morning), and if you weren't on travel, come in to work on the weekend for at least a few hours. One employee asked about overtime and was gone a few weeks later for "other reasons". Overtime is done a lot, and in today's job environment, questioning it is risky to your career at the company.

[DRSmith]

Should we also say doctors and lawyers make too much, therefore we need to somehow cap their income ceiling? I see the CEO pay issue as financial jealousy more than anything. Just because a worker-bee works as many hours (doubtful) as a CEO, doesn't mean he deserves anywhere near the salary as the CEO. If that worker bee wants more money he/she needs to make theirself more valuable, as the CEO did.

Just because a few high-level corporate execs got committed fraud while being compensated richly, doesn't mean others should be punished for it. There will always be a select few that are much more wealthy than the rest of us, no matter how much we may dislike it. Trying to legislate around that is crazy talk, IMO. They'll still get their money, and most of us will still have to live on a budget for life.

I think any company that recieves bailouts of subsidies can and should be subject to government saying something about the pay scheme just as a welfare recepient is also subjected to certain things.

[SnyderShrugged]

In my first job out of college there were unwritten rules that you better put in at least 8-5 daily (eating @ your desk, or 15 minutes in cafeteria), travel on your own time (Sundays, Friday late or Saturday morning), and if you weren't on travel, come in to work on the weekend for at least a few hours. One employee asked about overtime and was gone a few weeks later for "other reasons". Overtime is done a lot, and in today's job environment, questioning it is risky to your career at the company.

All of that is normal and expected as a regular part of a job. If you choose to work in a salary role and accept the benefits that come with it, then one should expect to have to put in "extra" time (which is often assumed will occur and is included in the compensation determination)

Earlier, I was responding to what I believe is an unfounded claim, that "Your average worker is being asked to put in more hours, do more work, cover the shifts of laid off workers etc etc..". yet without being compensated for it. I dont believe this is true, and I also dont believe that if it were true, that one would be forced to remain working for that employer.

[Burgold]

Why do you think he has to work late, come in on the weekend and be at his desk from 8 to 5? Yes, lots of employees do free overtime. I do and I do because I care deeply about the quality of my work but also because newsrooms have shrunk and so you still have to produce the same amount of content, but with less bodies. This happens in many, many places. It's routine for IT guys to work insane hours.

[SnyderShrugged]

Why do you think he has to work late, come in on the weekend and be at his desk from 8 to 5? Yes, lots of employees do free overtime. I do and I do because I care deeply about the quality of my work but also because newsrooms have shrunk and so you still have to produce the same amount of content, but with less bodies. This happens in many, many places. It's routine for IT guys to work insane hours.

It's not "free" overtime. It comes with the territory for a salary role and that expectation is assumed in the salary figures. Salaried staff also get paid when they do not work as well. If its an hourly role, they get overtime.

[Burgold]

You're missing the point... intentionally?

Why are all these extra hours necessary? Possibly because of understaffing. An understaffed office is often not rewarded for tightening its belt and doing extra... but the CEO is.

[SnyderShrugged]

You're missing the point... intentionally?

Why are all these extra hours necessary? Possibly because of understaffing. An understaffed office is often not rewarded for tightening its belt and doing extra... but the CEO is.

There is no "point" you are making. It's simple.

A salaried employee accepts the fact that "casual overtime" is an expectation for your salary. I have never seen it otherwise in 20 years of corporate life among 4 different large companies. If one does not find that an acceptable trade off, they should work hourly and capitalize on the overtime rules instead. I know lots of people, especially in manufacturing, that find an hourly situation more attractive financially for them personally.

The CEO earns what the CEO earns. It is the most insecure role in a company and they get paid to accept that risk. They also work many, many more real work hours than virtually any subordinate or front line worker.

We have no say in their pay. period. If they dont succeed, they get replaced with someone who might do better.

let me ask you, what should YOUR income cap be? How about highly successful people like Zuckerberg from FB? What should his cap be and who should be the determining party for both of you?

[Goskinz0721]

All of that is normal and expected as a regular part of a job. If you choose to work in a salary role and accept the benefits that come with it, then one should expect to have to put in "extra" time (which is often assumed will occur and is included in the compensation determination).

That's complete bullcrap. Going the extra mile and working extra hours when necessary is one thing. Being expected to work "extra" time on a regular basis is not part of the typical salaried employees comp plan.

Earlier, I was responding to what I believe is an unfounded claim, that "Your average worker is being asked to put in more hours, do more work, cover the shifts of laid off workers etc etc..". yet without being compensated for it. I dont believe this is true, and I also dont believe that if it were true, that one would be forced to remain working for that employer.

You haven't been around a lot of companies, have you? Every non-union company that I have been to in the past 10-15 years operates exactly like this. People not only cover the shifts of laid-off workers, they cover the shifts of people on vacation, out sick, on jury duty etc. And I don't believe anyone said "that one would be forced to remain working for that employer". But in current times, one is forced to eat a very large bag of crap handed to them from an employer because jobs are extremely hard to find.

[SonnySide]

More sickening to me is the fact that Federal pay has increased while the salary of the average worker has not....