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

[MattFancy]

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

Well there's a pay freeze now, so the federal salaries won't be going anywhere

[mcsluggo]

Given the FACT that the purpose of government interference in the free market is to create moral hazard for business by minimizing the possibility of marginal failure, raising barriers to entry and forcing society to use resource counter to the way society wants, why is anyone surprised? I think that the surprise, if any, is that CEO compensation grew by such a small amount.

interesting. you might find the fact that it is now autumn in Argentina to be an equally interesting and relevent factoid to this discussion.

[SnyderShrugged]

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.

if it's bull as you claim, please show me data that supports your opinion that it is beyond "whats necessary" and the definition of necessary that they used. What makes you certain that its beyond the typical salaried role expectations

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.

I'm certain that I've been around more companies than an average person since I did consulting for many years. If people arent salaried and they are covering extra shifts, etc. Then they get paid overtime wages. Correct? There is always the option to find another employer if need be. Not every job is for every person.

[Bang]

This is why I'm glad I work for myself.

Out there you're expected to do more and more for less and less.. to sacrifice your family life, your home life for the good of an entity that will just as soon lay you off so your salary can pay for the new platinum filters for the jacuzzi in the CEO's second summer estate.

Frankly, it's always been my opinion that anyone who would willingly prostrate themselves like that is a sucker and a chump.

No offense intended, of course.

~Bang

[mcsluggo]

...

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

hell ... from a stock holder position that is one of the only times they are EARNING their pay... successfully lobbying for a handout to protect stockholder value

(sucks for the REST of us, though)

generally CEOs are rewarded for their companies directly mirroring general trends, and performing exactly at market indexes... just another cork in the stream.

[mistertim]

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.

This made me lol. Are you serious or is this actually Improv hour at ES? CEOs of medium to large (to huge) companies generally have to REALLY screw up (or do it over and over again) to eventually get kicked out of that position by the board. And if they DO, it is very common for them to also get a rather large "outgoing" present in the form of a rather fat check. I have worked at a couple of companies where this happened and know many other people who have witnessed or found out about the exact same stuff going on at the companies they work for.

This whole thing isn't exactly a secret. Why are you playing a violin for CEOs as if they have this horrible situation where if they don't perform and get immediate results they will be panhandling a week from now? The most common thing that happens IF a CEO gets ousted (though it is usually in more of a "resigned" form) is he or she just goes on to be CEO or a SVP of another company. Being out of work is almost a laughable idea in the upper echelons of business. Not because of competence (though that is certainly sometimes the case), but usually because of the connections many of them have with one another and the "wink wink, nudge nudge" mentality.

[Bang]

This made me lol. Are you serious or is this actually Improv hour at ES? CEOs of medium to large (to huge) companies generally have to REALLY screw up (or do it over and over again) to eventually get kicked out of that position by the board. And if they DO, it is very common for them to also get a rather large "outgoing" present in the form of a rather fat check. I have worked at a couple of companies where this happened and know many other people who have witnessed or found out about the exact same stuff going on at the companies they work for.

This whole thing isn't exactly a secret. Why are you playing a violin for CEOs as if they have this horrible situation where if they don't perform and get immediate results they will be panhandling a week from now? The most common thing that happens IF a CEO gets ousted (though it is usually in more of a "resigned" form) is he or she just goes on to be CEO or a SVP of another company. Being out of work is almost a laughable idea in the upper echelons of business. Not because of competence (though that is certainly sometimes the case), but usually because of the connections many of them have with one another and the "wink wink, nudge nudge" mentality.

And nevermind that the poor insecure CEO has a Golden Parachute worth so much money he'll never have to work again if he gets fired for even the most egregious of offenses.

Poor fella. How will he survive?

~Bang

[mcsluggo]

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?

sorry.. but what a load of stinking poop, begining to end

i will start at the end.. you keep on pointing out zuckerberg and ellison.. i might point out that they are FOUNDERS and more importantly primary OWNERS of teir corporations. That is an entrely different bag of hammers than what is under discussion here, no?

and next... $10 million/ year (average) is to compensate for volotility in earnings!!!?? are you serious???

third.. you are correct, we have no say in their salaries...nobody does except other people in the frat. THIS IS THE PROBLEM.

you are right about the salary v hourly tradeoff... except that it isn't generally a menu that people can chose from. there aren't many salaried white-collar proffessional track positions.... i imagine many lawyers/archetects/mbas/engineers/accountants etc... would CHOOSE salaries (and a compensation schedule that encouraged a 40 hour work week) if they could, even if it meant that that they would get 50/70th of their pay for working 50 hours a week instead of 70....

[Goskinz0721]

if it's bull as you claim, please show me data that supports your opinion that it is beyond "whats necessary" and the definition of necessary that they used. What makes you certain that its beyond the typical salaried role expectations

What makes me certain? I've never been told in an interview that I will have to work extra hours on a regular basis. I've never had salaried coworkers tell me they were told in their interview they would have to work extra hours on a regular basis. Special circumstances? Sure. But it's not the norm as you stated "All of that is normal and expected as a regular part of a job". Show me the data to support your opinion.

If people arent salaried and they are covering extra shifts, etc. Then they get paid overtime wages. Correct? There is always the option to find another employer if need be. Not every job is for every person.

Yes, if peoplle aren't salaried and they cover extra shifts they get paid overtime. Many times, however, these extra shifts are covered by salaried workers who get nothing. Workers, salaried and hourly, pick up the duties of associates who are not at work. Period. If the payroll clerk is out today, and today is payday, someone steps in to fill the role in addition to performing their own duties. Rarely have I seen the person get extra pay (as in overtime pay) because they had to do 2 jobs for the day. Mostly, they are encouraged to take the work home and do it on their own time or stay late and not get paid for it.

[SnyderShrugged]

This made me lol. Are you serious or is this actually Improv hour at ES? CEOs of medium to large (to huge) companies generally have to REALLY screw up (or do it over and over again) to eventually get kicked out of that position by the board. And if they DO, it is very common for them to also get a rather large "outgoing" present in the form of a rather fat check. I have worked at a couple of companies where this happened and know many other people who have witnessed or found out about the exact same stuff going on at the companies they work for.

This whole thing isn't exactly a secret. Why are you playing a violin for CEOs as if they have this horrible situation where if they don't perform and get immediate results they will be panhandling a week from now? The most common thing that happens IF a CEO gets ousted (though it is usually in more of a "resigned" form) is he or she just goes on to be CEO or a SVP of another company. Being out of work is almost a laughable idea in the upper echelons of business. Not because of competence (though that is certainly sometimes the case), but usually because of the connections many of them have with one another and the "wink wink, nudge nudge" mentality.

being out of work in the upper echelons of business is rare because they have a very unique skillset that few can actually do.

You are kidding yourself, and I mean seriously flawed in your thinking to claim that a CEO job is secure. Feel free to actually use data to prove me wrong. I'm open minded.

---------- Post added April-13th-2011 at 10:41 AM ----------

And nevermind that the poor insecure CEO has a Golden Parachute worth so much money he'll never have to work again if he gets fired for even the most egregious of offenses.

Poor fella. How will he survive?

~Bang

The fact that golden parachutes even exist is proof of the nature of job security for CEO's

---------- Post added April-13th-2011 at 10:46 AM ----------

sorry.. but what a load of stinking poop, begining to end

i will start at the end.. you keep on pointing out zuckerberg and ellison.. i might point out that they are FOUNDERS and more importantly primary OWNERS of teir corporations. That is an entrely different bag of hammers than what is under discussion here, no?

and next... $10 million/ year (average) is to compensate for volotility in earnings!!!?? are you serious???

third.. you are correct, we have no say in their salaries...nobody does except other people in the frat. THIS IS THE PROBLEM.

you are right about the salary v hourly tradeoff... except that it isn't generally a menu that people can chose from. there aren't many salaried white-collar proffessional track positions.... i imagine many lawyers/archetects/mbas/engineers/accountants etc... would CHOOSE salaries (and a compensation schedule that encouraged a 40 hour work week) if they could, even if it meant that that they would get 50/70th of their pay for working 50 hours a week instead of 70....

You havent shown at all where what I said was inaccurate. I pointed out Zuckerberg once, never mentioned ellison. Founders are often also CEO's. In fact Zuckerberg is the CEO... http://www.facebook.com/press/info.php?execbios

You and I have no say in what a private company feels its leaders are worth paying. It's none of our business and it shouldnt be unless you are a shareholder of the company.

In the end, nothing you claimed as "poop" is in fact..."poop"

---------- Post added April-13th-2011 at 10:50 AM ----------

What makes me certain? I've never been told in an interview that I will have to work extra hours on a regular basis. I've never had salaried coworkers tell me they were told in their interview they would have to work extra hours on a regular basis. Special circumstances? Sure. But it's not the norm as you stated "All of that is normal and expected as a regular part of a job". Show me the data to support your opinion.

You said that people are "regularly expected" to go beyond "whats necessary". I asked you for the proof which apparently you cant provide. I am asking you to prove that it's now "the norm" as you claim. I didnt make a claim that was errant, you did. back it up.

Yes, if peoplle aren't salaried and they cover extra shifts they get paid overtime. Many times, however, these extra shifts are covered by salaried workers who get nothing. Workers, salaried and hourly, pick up the duties of associates who are not at work. Period. If the payroll clerk is out today, and today is payday, someone steps in to fill the role in addition to performing their own duties. Rarely have I seen the person get extra pay (as in overtime pay) because they had to do 2 jobs for the day. Mostly, they are encouraged to take the work home and do it on their own time or stay late and not get paid for it.

If the salaried people are "forced" to perform roles outside of their own and are not compensated for it, they should pursue legal action. They can be "encouraged" all they want, doenst mean that it isnt an unfair labor practice and regulated by our federal masters accordingly.

[endzone_dave]

being out of work in the upper echelons of business is rare because they have a very unique skillset that few can actually do.

You are kidding yourself, and I mean seriously flawed in your thinking to claim that a CEO job is secure. Feel free to actually use data to prove me wrong. I'm open minded.

---------- Post added April-13th-2011 at 10:41 AM ----------

The fact that golden parachutes even exist is proof of the nature of job security for CEO's

---------- Post added April-13th-2011 at 10:46 AM ----------

You havent shown at all where what I said was inaccurate. I pointed out Zuckerberg once, never mentioned ellison. Founders are often also CEO's. In fact Zuckerberg is the CEO... http://www.facebook.com/press/info.php?execbios

You and I have no say in what a private company feels its leaders are worth paying. It's none of our business and it shouldnt be unless you are a shareholder of the company.

In the end, nothing you claimed as "poop" is in fact..."poop"

---------- Post added April-13th-2011 at 10:50 AM ----------

The CEO's pay is high not because of their unique skillset, it's because they can essentially set their own pay. They give a minimal amount of the profit to employees and split the rest between shareholders and top executives. He/she gets rewarded for doing that with huge compensation packages.

[SnyderShrugged]

The CEO's pay is high not because of their unique skillset, it's because they can essentially set their own pay. They give a minimal amount of the profit to employees and split the rest between shareholders and top executives. He/she gets rewarded for doing that with huge compensation packages.

No, in most corporations, the CEO does not set their own compensation. (maybe in the case of a founder/CEO?) Why do you think they do?

[endzone_dave]

No, in most corporations, the CEO does not set their own compensation. (maybe in the case of a founder/CEO?) Why do you think they do?

They don't directly set their own compensation but they indirectly do. The less they pay their employees, the more profit the company makes, the higher the stock price, and the more they get compensated.

Profit would seem like the correct goal but it is really just short term profit they are being rewarded for. That's why they all have their golden parachutes. They come in, get their quick profit by only focusing on the short term, then they move on.

[Madison Redskin]

Profit would seem like the correct goal but it is really just short term profit they are being rewarded for. That's why they all have their golden parachutes. They come in, get their quick profit by only focusing on the short term, then they move on.

Actually, companies offer CEOs golden parachutes for a variety of reasons. Some companies offer golden parachutes to CEOs as part of their antitakeover defenses. The idea is that potential hostile acquirers will be potentially dissuaded from acquiring a target company if it has provided top officers with golden parachutes upon a change of control transaction.

Other companies offer golden parachutes to top executives to entice them to leave their current employment. For example, suppose Steve Mobs is the CEO at Orange Computers, where he earns $10M per year. Further suppose that Orange Computers was on the brink of bankruptcy prior to Steve’s arrival and, after he “righted the ship,” Orange Computers became one of the most successful and valuable companies in the computer industry.

Now, suppose that Acme Computers is struggling and wants to hire Steve to be its new CEO and it’s willing to pay Steve $11M per year. Steve might be reluctant to take the job offer because he doesn’t know whether he’d be a good fit at Acme. If he leaves Orange Computers, he’ll be walking away from $10M per year and pretty good job security for a company that pays $11M with no promise of job security.

So, how can Orange Computers entice Steve to join them? Well, they could offer him a golden parachute that provides that if things don’t work out and he is kicked out of office within 5 years, Orange Computers will pay Steve $25M. Steve might then leave Orange Computers for Acme and Orange Computers will get "it's man" and hope it will never pay out on the golden parachute because Steve will be around for a long time.

^This is exactly what happened several years ago at Disney with Eisner and Ovitz. Ovitz wouldn't leave his job without substantial "downside protection," Disney offered Ovitz a massive severance package, things didn't work out with Ovitz, Disney paid Ovitz his severance package, and everyone (except Ovitz) got hosed.

I’m not defending every golden parachute. I certainly acknowledge that CEOs can and do get golden parachutes that are obscene. However, companies typically don’t offer golden parachutes just to scratch the back of the CEO because they like him, he’s good looking, or a part of the good ole’ boys club.

[LadySkinsFan]

According to Ayan Rand, the ones who are better than the rest of us are "geniuses" that rise to the top and in the case of business, it's CEOs who are the "geniuses." The rest of the salaried are just "looters" who are there to be exploited by the "geniuses" because after all "looters" just take from the "geniuses."

When I was a salaried employee, I factored in "unstated but expected overtime" into my salary demands because I knew the reality was that I'd never be working 40-45 hours weeks. One canard that managers use to placate workers who routinely work uncompensated overtime (and yes, that's a real business term) is to offer comp time, which is rarely taken because after all people are expected to be at their jobs all the time. And businesses have made hourly wage workers work overtime without compensation by subtly threatening their employment if they report they are not being allowed to record overtime. Since most hourly wage earners are at the low end of the wage scale for a company and will suffer significantly if they are fired, especially in at will states where no reason for firing needs to be given, then you have human beings taken advantage of by predatory companies.

And if salaried employees are regularly working 50-60 hours per week, then that IS understaffing. Remember, every employee hired negatively affects the bottom line, and every employee lost positively affects the bottom line. If a company can get its salaried workers to work sigificantly more hours, then said company increases its bottom line by not hiring personnel. And if someone burns out, oh well, there is always someone else to take their place.

I'm a self-employed consultant. I get paid the same hourly rate for every hour I work. True I don't get overtime (time and a half), but unlike salaried persons, I get paid for every hour I work. Much better situation all around.

[mcsluggo]

the root problem is that the current system does a very poor job of aligning incentives. that is a clear market failure.

the question is what can be done to better align incentives, and make the market function more efficiently?

on one side of the debate (in this thread) you have people shrieking that interferience will just disturb the delicate perfection of the market solution... which seems like clear rubbish in this case.

on the other side of the debate (in this thread) you have some people shrieking that things just aren't fair this way... which may be true, but isn't what is actually important in the long run.

I want efficiency even more than fairness in this case... the current market framework offers neither.

[Goskinz0721]

You said that people are "regularly expected" to go beyond "whats necessary". I asked you for the proof which apparently you cant provide. I am asking you to prove that it's now "the norm" as you claim. I didnt make a claim that was errant, you did. back it up.

No, what I said was " Being expected to work "extra" time on a regular basis is not part of the typical salaried employees comp plan." I never said it was now "the norm". And I never said people are "regularly expected to go beyond whats necessary". I believe it's you making the errant claims.

If the salaried people are "forced" to perform roles outside of their own and are not compensated for it, they should pursue legal action. They can be "encouraged" all they want, doenst mean that it isnt an unfair labor practice and regulated by our federal masters accordingly

Yeah, that'll work. The old "Pursue Legal Action". Pretty much the definition of a CLM not only where currently employed but potentially at future employers.

[December90]

http://finance.yahoo.com/blogs/daily-ticker/good-king-ceo-pay-big-2010-not-much-20110411-085325-820.html

Not from the article, from me:

Worker pay only went up 2%. So at least we know where Obama's stimulus funding has gone - right into the pockets of the company executives. As workers become more and more productive, the top brass is reeping the rewards.

As companies demand more from their employess, is there a point where we decide it's not worth it. If your reward for busting your ass at work all year is an extra 1/2% in your salary increase, why bother. I think there will become a point where people are going to feel like suckers for working hard.

If you don't like what the CEO of your company makes and think you should earn more, then go into business for yourself. Work to become the class that you are so envious of. I fail to see how punishing success and rewarding failure is supposed to reap more success.

[SkinsHokieFan]

the root problem is that the current system does a very poor job of aligning incentives. that is a clear market failure.

.

Only a true economist uses the term "market failure" I love it

Simple solution for me- tax CEOs, millionaires and billionaires with a surcharge and use that surcharge for deficit/debt reduction.

Hell, it was Donald Trump in 1999 who suggested a one time "14.25 percent levy" on billionaires to pay off the entire national debt (which at the time was 5.6 trillion)

[mcsluggo]

According to Ayan Rand, the ones who are better than the rest of us are "geniuses" that rise to the top and in the case of business, it's CEOs who are the "geniuses." The rest of the salaried are just "looters" who are there to be exploited by the "geniuses" because after all "looters" just take from the "geniuses."

When I was a salaried employee, I factored in "unstated but expected overtime" into my salary demands because I knew the reality was that I'd never be working 40-45 hours weeks. One canard that managers use to placate workers who routinely work uncompensated overtime (and yes, that's a real business term) is to offer comp time, which is rarely taken because after all people are expected to be at their jobs all the time. And businesses have made hourly wage workers work overtime without compensation by subtly threatening their employment if they report they are not being allowed to record overtime. Since most hourly wage earners are at the low end of the wage scale for a company and will suffer significantly if they are fired, especially in at will states where no reason for firing needs to be given, then you have human beings taken advantage of by predatory companies.

And if salaried employees are regularly working 50-60 hours per week, then that IS understaffing. Remember, every employee hired negatively affects the bottom line, and every employee lost positively affects the bottom line. If a company can get its salaried workers to work sigificantly more hours, then said company increases its bottom line by not hiring personnel. And if someone burns out, oh well, there is always someone else to take their place.

I'm a self-employed consultant. I get paid the same hourly rate for every hour I work. True I don't get overtime (time and a half), but unlike salaried persons, I get paid for every hour I work. Much better situation all around.

1. Ayn Rand is a turd

2. you are ABSOLUTELY correct in the second and third paragraphs.. completely. I had several friends starting at Arthur Anderson right before the collapse. inthe early 90s they paid their junior accountants hourly, and paid overtime. In the mid 90s they made the decision to change it to salary... and offered this calculation (actual numbers made up):

"over the last 5 years, the average AA junior accountant worked 48 hours in an average week, and got 8 hours of overtime. we will change you to salary and increase your base pay by the equivelent of 10 hours of overtime... yay a pay raise! congratulations!"

of course, what that did was remove any incentive on the part of mgmt to limit overtime (as was of course KNOWN a-priori), and average work-week immediately began an inch up to 60 plus hours/week.

incentive compatability, people... in the end it is BY FAR the single most important factor. When incentives don't align, the system breaks.

[Madison Redskin]

If you don't like what the CEO of your company makes and think you should earn more, then go into business for yourself. Work to become the class that you are so envious of. I fail to see how punishing success and rewarding failure is supposed to reap more success.

In fairness, I think a lot of people have a problem with the fact that many CEOs are being rewarded with huge salaries, benefits packages, and severance packages notwithstanding the fact that they did ****y jobs managing their companies. So, I think a lot of people have a problem with the marketplace "rewarding failure."

[LadySkinsFan]

Dupe post. Apologies.

[mcsluggo]

If you don't like what the CEO of your company makes and think you should earn more, then go into business for yourself. Work to become the class that you are so envious of. I fail to see how punishing success and rewarding failure is supposed to reap more success.

this is such a canned turd of an answer. THe whole issue that people that are actually PARTICIATING in the discussion here are actually debating is whether or not current ceo compensation packages do in fact do a good job of rewarding success or punishing failure. Clearly they actually do a fairly crappy job at that--- unless you very narrowly limit your definition of "success" to "successfully getting yourself hired as a CEO", which is, of course, and obvious indicator of succes... but shouldn't be the END of it!

[Bang]

[/color]

The fact that golden parachutes even exist is proof of the nature of job security for CEO's

When you can collect tens of millions and even more for getting canned, who needs job security?

~Bang

[mcsluggo]

and the real question as it has been debated here hasn't been

what do you do if "...you don't like what the CEO of your company makes and think you should earn more...? "

it could be better described as:

what do you do if ".... you don't like what the CEO of the company YOU HAVE INVESTED IN makes, and you think more of the profits should go to share holders... ?"

given the current cabal of board directors, there really isn't an alternative in listed corporations... they are all paid obscenely by the same failed compensation scheme models.