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

[Platapus]

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.

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.

[vienna]

^ 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>

[Buddahaid]

Originally Posted by vienna

^ 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.

[vienna]

Originally Posted by Buddahaid

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>

[em2nought]

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.

[Gargamel]

Originally Posted by Platapus

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.

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.

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.