Posted on 07/19/2013 7:20:54 AM PDT by SeekAndFind
The New York Times editorialized against “lavish” executive pay this past Sunday (July 14). I agree with The Times editorial board that there are problems with executive pay, but disagree completely with their editorial. They may be right that CEO pay is excessive, but it is for the wrong reasons. In particular, their arguments against high executive pay are irrelevant and they miss the one valid argument to rein it in.
First, The Times is worried about the pay gap, the difference between CEO pay and the earnings of the average company employee. They report that average CEO is paid at least 200 times the average for other employees. This is a fact design to attract attention and stir up jealousy, but it is unrelated to the topic of CEO compensation. Whether a particular person is underpaid, fairly paid, or overpaid has nothing to do with what anybody else gets paid.
Employees (hopefully) create value for their employers by performing tasks that increase profits. Employees then negotiate to capture as much of that value as possible in various forms of compensation (salary and benefits). Some of the expected profit to be generated by an employee must be retained by the company, or there would be no point in having that employee. Note that the above explanation has nothing to do with what anybody else gets paid.
For example, a banker who makes loans is a fairly simple case. The bank can compute the profit or loss on each loan she makes and track exactly how much she is adding to corporate profits. The banker can complete the same exercise and the two sides can have a fair negotiation on her compensation with reference to the profits she produces.
CEO pay is certainly harder to justify in this manner.
(Excerpt) Read more at forbes.com ...
Obviously few people make it to these levels but should folks quit trying to advance themselves in their chosen careers? The didiots believe so, it would appear. Just do your menial task and whatever you can’t deal with, big bro is ready to step in and take care of you. Not an individuals way of thinking in my book. Like one of my co-workers dad told him, “Mike, nobody cares about you. You need to make sure you take care of you.”
IMO, some type of CEO pay cap is almost inevitable. It just holds too much populist appeal with the low-info types. Probably 9 to 10 times the amount of the company’s lowest paid employee. They will at first be “nudged” towards this with tax penalties for companies that don’t meet the target.
They will always find ways around the cap....remember why companies started providing health benefits in the first place? To get around the wartime wage controls.
I agree with most of the article but this is plainly false.
If the government can set private employment pay caps then our nation is over and revolution is inevitable.
A good point in the article is that celebrity CEO pay is screwing the shareholders. But a weak argument when he says that since many baseball players earn over 15 million, that CEOs somehow are worth that too. (ie,,if an athlete gets it, how can you dare complain about a CEO??)
The Baseball player is creating something, a product fans will watch, a product the owner can get people to watch on TV, etc. Many CEOs and bankers main success seems to be finding ways to tap the national treasury.
A baseball player is a capitalist hero compared to these others that think sucking the taxpayer teat is being a great CEO.
Not counting from Tony Romo, athletes have to perform well to get better bigger contracts. But banksters and others, Corzine for example, collect enormous pay and bonuses despite economy crashing failures.
They continue to collect bonuses when they should be seen as government employees after TARP bailouts.
I don’t want pay caps at all for Executive CEOs. However, there should be some mechanism that if the CEO does an awful job and gets fired then the”firing” bonus should be dismissed. I would LOVE to be fired and then collect 27 million.
Under communism the highest paid person made 4-8 times the lowest. (Except for the ruling party elite, which got what it wanted and did what it wanted)
dems want it that way here too.
I am not saying I agree with it. I just see momentum towards this becoming unstoppable. You don’t need a Weatherman...
“IMO, some type of CEO pay cap is almost inevitable. It just holds too much populist appeal with the low-info types”
The best way to avoid this is to remove the corporate mouth from the taxpayers nipple.
General motors? Solyndra? Booze Allen who’s only customer is the NSA? Tesla? GE? Any number of the bailout banks? Fannie, Freddie?
They all have in common, most if not nearly all of their income from the taxpayer. Most are spectacular failures. All have executive compensation packages.
If they are a private company, then pay whatever the board of directors and shareholders wish. Otherwise, why shouldn’t the leaders accept a GS rating and the proper government worker pay package? It would be more honest.
Some of the best advice a parent ever gave.
“Under communism the highest paid person made 4-8 times the lowest. (Except for the ruling party elite, which got what it wanted and did what it wanted)
dems want it that way here too.”
Ruling party elite got and did what it wanted? Hmmm,, I don’t know how to break this to you/
(just kidding)
Our capitalist nation ended with the words “too big to fail”. That recent saying of “private profits and public losses” does make sense.
We now live in an economy where businesses will be rescued no matter how badly they fail in the market. All they need are the right government connections. Also, other businesses that should have never begun, such as the solar scam, have blossomed simply because the political class grants them access to tax money.
We have all the trappings of capitalism in the boardroom, but their business model is straight out of the USSR.
The Unions have built their entire empires on this kind of baiting.
I have worked -unwillingly- in 5 different unions.
In every instance- I witnessed numerous workers who couldn’t get paid anywhere near the wages they were collecting if they didn’t have the union job.
I couldn’t get out from under the union fast enough. I also worked many jobs with NO unions. My experience was that meople worked harder & were not nearly so arrogant to supervisors as when the union ws backing up their transgressions all the time.
After getting 3+ years of night classes in accounting, I finally did bookkeeping for small businesses that didn’t need a full time person & was self employed for over 30 years. Still have 2 clients. One I have had for over 40 years. One for over 38 years. I did their books at night, after punching the time clock during the day.
If a company has 2 sales people and one sales 80% of the total sales for the company; and the other sales person accounts for the other 20%. Shouldn’t the first sales person make much more than the other one?
and misleading and self glorifying. there is a God who cares and the more one cares about God the more benefit one will see. and this isn’t necessarily great fame or fortune, this is not a prosperity gospel. but being able to be happy with what you got and being able to do things with it that you know God is pleased with will be the blessings.
There’s a very simple and major reason why CEOs are paid so well, and it’s related to profitability. A lot of CEOs are paid for their political connections and not their free market expertise. CEOs who can bring government $$$$ into their companies and who have the political connections necessary to create favorable legislation, i.e. using regulations to hammer competitors, are worth a lot of $.
Another reason why I cancelled my subscription to Forbes years ago.
Executive pay is nobody’s business except the stockholders of a company and that company’s Board of Directors.
Period.
Government is a big part of the reason why CEOs get paid so well. There’s billions upon billions to be made through government, either directly through contracts or indirectly through favorable regulations and legislation. What CEO is more valuable to a company, one who can increase competitiveness or make better products to struggle for a couple more percentage points of profit or one who can remake the entire playing field by regulating the competition out of business?
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