CEOs earn 361 times more than the average U.S. worker
 

https://www.reuters.com/article/us-u...KCN1IN2FU?il=0

Not surprisingly, the differences have been great for many years.

It is my understanding that CEO salaries are set by either the board of directors or the stockholders. If either group chooses, and it is their choice to pay the CEO that much, that's their decision.

A big problem is most of the Boards of Directors are populated with CEOs and other high-ranking executives of other corporations and the whole salary/benefits package determination process has become a mutual back-scratching situation where board members will vote for very high compensation with the expectation CEOs on their corporate boards will return the 'favor'...

The one thing I find quite puzzling is how the shareholders don't seem to take into account how much the overloaded salary/compensation packages are eating into the shareholders own return on investment; in some cases, with the very largest corporations, scaling back the cost of the packages would yield a noticeable per share return; it is almost like they are giving tacit acceptance of their pockets being picked...











<O>

Found your enterprise - and keep owning it. No shareholders. No board of CEOs. If you give the market what the market wants, you sell your stuff and become rich. If you fail to find out what the am rket wants, you ruin ourself. Fair deal.



A unique characteristic of the German economy is that more than in any other country you have a high rate of family-owned companies here. This is one of the reaosn why sly fioxes and the Donald attack it so much, for here they cannot make easy gains by just buying stocks. Many of these comopanies also get managed very well, becasue thoise managing it are also the owners - and thus have stuff to lose if they mess the business up. Having your own skin in the fire teaches better thasn anythign else to act respnisbly and make wise, well-thjoght out decisions. Top manager-mercenaries of today that wander from one company to the next, maximise their inco9me and when thing sget hot just jump off the train, do not have this sense of obligation and respnisblity, nor do they stay long enough to gain a real senbse of comoetence for the branch they are currently working in.



I think this modern misculture of managment does more bad than good to the overall economies around the globe. It also ruins the loyalty of the workers to their employer .


Also, many do not correctly understand what "invetsing" really means, they< think it is a nice casiuono gamble to place a bet and win a profit, in other words: they are exlcusively thinkling in self-focussed terms. Originally, the school of clasiscal national economics as wel,las the Austriansa chool knew this, it means to act due to understanding that you make y profit if you helkp to foster tzhe genrral econmic climate - by keeping prospering businesses alive and suzpporting the,m, while sortiung the mismanaged, fialig n ones out. The profit from stocks came as a (welcomed) side-effect - it was not the main goal alone, however. Investing means to do your share in supporting the national economy - and getting a reward for that.


This today is understood only by professional fond managers who have maintained a minimum of sense of ethical responsibility for themselves. And most lack that, I think. With investment bankers, its even worse.



They term "making money" is terirbly misunderstood these days. It has nothing to do with how Ayn Rand understood the term in her thinking system. If these modern predators claim they base their working mind on Rand, then they make mockery of her.

Vendor I just did the math on that, that's a shockingly low pay packet for the average worker when you work it out. Sub $40k is not going to go very far in this day and age.

Wish some CEOs/boards would reward the workers who show loyalty to the company. But its always back scratching and rewards to the higher end managers/bosses before it even hits the average workers...shame really.

Executive compensation is even more puzzling and infuriating when you think of their packages as being in multiples of the average US worker's income. There was one case several years ago where a CEO was earning 30+ times the average US Worker's income, begging the question of exactly what was that CEO actually doing/contributing that was equivalent to 30+ time the efforts of the average worker? In my decades of work in a wide variety of businesses across several different fields, I have seen astonishing incompetency at the executive level rewarded while actual productiveness and innovation at the lower levels either ignored, under-compensated, or having the productive efforts of the lower levels attributed to the credit an executive who had little to do with the gains other than being in their office. I once made the suggestion at a company I where I was working on an HR project that it would be interesting to give the executives the same employment tests lower level employees had to take when seeking their positions (not required of executive levels), just to see if they could actually pass the same tests. Although the suggestion was made in half-jest, the reactions from the HR execs was near apoplectic, in itself an indicator of how even they knew how the results would probably go...


Sometimes, though, justice is served. There was one company I worked for where the executive in charge of operations was incompetent, but managed to keep it covered by the efforts of his administrative assistant, a young man who was creative, meticulous, and dedicated to the quality of his work. The executive did, eventually, commit a real bonehead error and an inquiry into the executive's activities starkly pointed out the real talent and effort was in the admin assistant. The top executives did something very impressive: they didn't fire the executive, they demoted him - to the position of admin assistant, and they promoted his admin assistant to the post of executive in charge of operations, effectively reversing their roles. I remember the newly appointed executive, a very decent young man, confiding to me he felt a bit awkward about now giving orders to the person who used to boss him; I told him the old exec got what he deserved and that he, the new exec exec, got what had long been overdue and to just go on being what he had always been: a good, valued employee who valued the worth of his work...
















<O>

It's not just that. I think that stock holders demanding a quick return on their investments is what mainly drives the disparity.

What I don't understand is how we can have CEO's make massively poor business decisions, bring their company to the brink of ruin and the CEO quits and gets this fantastic "going away" package worth millions.

Hell, I can run a business to the ground all by myself and I would be happy with 1 million dollars. :D

CEO's should have a salary of $1.00 per year and a percentage of the profits. Company does well, CEO gets money, company does poorly, CEO eats Raman like the rest of the employees.

The key is that if the CEOs have golden parachutes, they are not incentivized to help the company as they can always punch out and be taken care of.

^ Agreed. There is also the 'quarterly rewards' system at play: in large corporations, bonuses are awarded on a quarterly basis, making the focus on achieve a short-term gain on the books the goal rather than working towards a long term objective; make the bonus payable as it once was: at the end of the year and based on the degree of gain. I would even like to see the bonus system based on a multi-year term, at least two years, or preferably, five years. If they had to actually work towards a sustained long-term goal rather than just the next 90 days, I think all involved, the corporation, the shareholders, the employees, and even the consumers would benefit...
















<O>

I'm in a quarterly incentive program and I like it, however, our performance gets measured on a monthly basis as we are a service provider, and the more effective we are providing the service, the better the incentive.

I'm not really that concerned about incentives offered to workers or their performance reviews. The big problem is at the executive levels where often over-generous bonus are bestowed on a quarterly basis at a fixed amount/level and the end result is not long term strategies and planning, but, rather, simply get 'good enough' numbers to meet the bare minimum, particularly sine the amount of the bonuses is the same whether the goal is met or the goal is doubled. Platapus' idea of making the bonus pro rata in relation to the extent what is the actual gain(s) seems a better idea than just saying "Increase sales by 5% to get your bonus" because the tendency will be expend what effort is necessary to meet the 5% than go for, say, 10%, 15%, or 20% because the bonus amount is the same for 5% as it would be for 20%...


















<O>

It's definitely distressing to know that people are getting big bucks to run business like Builders Square, Scotty's, Sears & Kmart into the ground. I'm not even sure why the last two bothered having any management for the last ten years anyway. Might as well have placed ideas on a wheel, and let Vanna give it a spin instead. :03:

But it won't work like that in a free market. A CEO who is looking at a two jobs isn't going to take the purely profit sharing one, he's going to take the profit sharing one that also has a nice annual salary. It's only the idealist (Musk and other famous CEO's come to mind) that will willingly take only profit sharing. Those guys are out there to make a statement, the average CEO is only in it for the cash.



It's just like in sports, the players (CEO's) see what a company is capable of paying, and they demand it. They may or may not be worth that amount, but that's what they will be paid.

I agree, while 'the difference will last forever'.

Reminds me of this conversation I saw a while back (about free markets and inequality,) really good talk, its 21 mins but worth it. :)

https://www.youtube.com/watch?v=0DxWBXOZ9PM