CEO pay out of control

Discussion in 'Politics, Religion, Social Issues' started by Rodimus Prime, Mar 12, 2010.

  1. Rodimus Prime macrumors G4

    Rodimus Prime

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    #1
    As it has come up in multiple threads figure it needs its own.

    I feel CEO pay is out of control. CEO pays raises are going quicker than profits are rising. Take for example this from 2007 http://consumerist.com/2007/04/ceo-pay-up-298-average-workers-43-1995-2005.html

    Corporate profits up little over 100% yet CEO pay is up nearly 300%...... (average work pay went up 4% during the same time)

    In 1980 CEO pay was 20-40 times average worker and today it is over 400 times that.

    No one has explain to me why everything is so top heavy and getting worse. No one has come up with a good reason for why things are so top heavy.
    It is a sad that this top heavy crap is almost to the point that the government needs to step in to protect the economy and the people itself.

    So some one explain why a CEO should make so much more than the people who really earn the money. 40 times yeah I can understand but 400 more than average being the average CEO pay. Come on.
     
  2. leekohler macrumors G5

    leekohler

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    #2
    I agree, it's ridiculous. It can't be helping anyone but the CEO himself either. It certainly does nothing for relations between upper management and everyone else.

    "We're laying you off, but giving this guy a big, fat raise." What are people supposed to think?
     
  3. freeny macrumors 68020

    freeny

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    #3
    I Think its an ethics issue. No problems paying a ceo that brings results and takes care of their workers, but when things go sour the ceo continues to be rewarded, there is something wrong there...
     
  4. rhsgolfer33 macrumors 6502a

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    #4
    I agree with this sentiment.

    Personally, I don't really care what a corporation wants to pay its CEO; thats between the CEO, the board of directors, and the shareholders. However, when **** hits the fan at a company, CEOs should not be taking the same compensation as when the company is raking in the profits.
     
  5. Hmac macrumors 68020

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    #5
    Salaries at corporations you don't work for are none of your business. The free market determines corporate performance. If you don't like the way a given company does business, buy stock and attend their shareholder's meetings.

    Who is going to determine how much a CEO should make if not the shareholders? Are you advocating that the government step in and control how corporations are administered? What do you propose is the basis they'd use to pretend that THAT is constitutional?

    We're either a country that's based on free enterprise, or we're not.
     
  6. leekohler macrumors G5

    leekohler

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    #6
    If that's the case, then why are CEOs being rewarded while they drive a company into the ground? That's free enterprise?
     
  7. 184550 Guest

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    #7
    Again, if the shareholders don't like it, then let them speak up.
     
  8. Rodimus Prime thread starter macrumors G4

    Rodimus Prime

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    #8
    Problem is the biggest shareholder do not really care and CEO pay at another company screws up things at all the others because it pushes everything higher and the cycle goes on. It is out of control and you still failed to address why it is acceptable for CEO to get a fat bonus when the company is suffering and they cut tons of jobs
    or why it is so out of ratio to the average worker? 20 times in 1980 and near 400 times now.

    Or why CEO pay climb near 300% while profits over the same time only climbed 100% and average worker pay only climbed 4%.

    Some how in CEO mind 1+1=300
     
  9. abijnk macrumors 68040

    abijnk

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    #9
    This sums up my opinion as well. I don't give a rodent's hind parts what my company's CEO gets paid as long as my coworkers and I still have jobs and are being paid fairly.
     
  10. Rodimus Prime thread starter macrumors G4

    Rodimus Prime

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    #10
    But here is the catch. Your CEO making an insane amount of money hurts your companies bottom line and when they need to cut cost they will go after you and your friends and then give themselves a raise saying that they save the company by laying off you and your co workers instead of taking a pay cut to save jobs.

    Remember 1 fired CEO = 400 jobs saved now.
     
  11. GfPQqmcRKUvP macrumors 68040

    GfPQqmcRKUvP

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    #11
    That's inaccurate.
     
  12. Rodimus Prime thread starter macrumors G4

    Rodimus Prime

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    #12
    well depending on the sourse and what year you pull it from it been as high as 500 and low point in 310 over the past 10 years.

    319 was 2008. so fire 1 CEO save 318 jobs. Seems like a fair trade to me. http://www.aflcio.org/corporatewatch/paywatch/pay/

    The CEO job is to ruin the company and make it money. if they are having to lay off a lot of workers the CEO screwed up and should be fired.
     
  13. rhsgolfer33 macrumors 6502a

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    #13
    Really? I think it just means wasted money looking for another CEO who will likely take pretty similar compensation as the CEO you just fired. Not only will the company likely be stuck paying a similar salary to the new CEO as to the previous CEO, but a significant amount of money, time, and resources will be wasted on finding that new CEO.

    I also presume roughly 300+ of those employees would be totally fine being paid with restricted stock or stock options that they can't do anything with for a few years and that isn't guaranteed to be worth anything when it vests?

    So a CEO is expected to outperform larger macroeconomic trends such as economic downturns? That's a realistic expectation. :rolleyes:

    A CEO can do everything right and still have to layoff people during large downturn affecting the economy as a whole, like the one we're seeing right now. I do think CEOs pay should decrease during trends like this, but expecting them to outperform something affecting the economy as a whole isn't terribly realistic.
     
  14. Hmac macrumors 68020

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    #14
    As long as no laws are broken, that would seem to be a problem between that company's board of directors, the CEO, and the shareholders. I fail to see how it would be any of YOUR business.
     
  15. Ttownbeast macrumors 65816

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    #15
    So what. A guy heading a company pays them self millions boo hoo it's not a government issue let them keep paying themselves while their company goes in the toilet because it will. I'll cheer the guy on--apparently he did something the rest of us did not do to make that much money. It's simply a business matter what do you want? more laws?
     
  16. Rodimus Prime thread starter macrumors G4

    Rodimus Prime

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    #16
    Well you have problems like to big to fail. If gm went chapter 7 and with out mass goverment help it would of done a huge number on the econo much more than it did now.

    Also the one defending the massive in balance have failed to explain why ceo pay has been going up at a pace the does not follow profits or employee pay. Pay goes up near 300% and profit only increase 100%? Tell me how does that add up

    Part of this melt down is it go way way to top heavy. A pay inbalance of this size is making everything way to top heavy
     
  17. flopticalcube macrumors G4

    flopticalcube

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    #17
    Its a reflection of the bigger role large institutions have as shareholders. They tend to be more passive and don't rock the boat, even as the share price falls. Couple this with the greater roles CEO have on other boards and compensation committees and you have a recipe for spiraling pay. We are now back at the same levels as we were at the turn of the last century for pay gap between top and bottom so its not as if we haven't been here before.
     
  18. rhett7660 macrumors G4

    rhett7660

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    #18
    Why do any of you care what a CEO makes? Really?

    Sorry, this is free enterprise. If the CEO takes the company under then so be it. Another one will step up and take it's place. Jobs are lost. So be it. And please do not tell me "well if your job was lost..." been there done that.

    I sure as hell do not want the government limiting anything that has to do with pay in the private sector.
     
  19. Rodimus Prime thread starter macrumors G4

    Rodimus Prime

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    #19
    Yep and then we had this thing known as the Great Depression. You would think that they would learn from history and top heavy pay means when things fall it falls hard and takes a lot longer to recover.
     
  20. Rodimus Prime thread starter macrumors G4

    Rodimus Prime

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    #20
    I care because of the pay imbalance. Average income is not keeping pace with inflation. Instead the working class american is just getting poorer and the rich are getting richer.
     
  21. flopticalcube macrumors G4

    flopticalcube

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    #21
    At times like this behooves us to reflect on the words of great investors like Warren Buffet.

    http://www.berkshirehathaway.com/letters/2005ltr.pdf

     
  22. rhsgolfer33 macrumors 6502a

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    #22
    Have you looked at stock price? I don't have the data, but I would suggest that stock price matters far more to investors than what a company's profit is (and as such is what compensation is rewarded to many CEOs based on). Even the article you posted recognizes that compensation tends to parallel the S&P 500 index.
     
  23. itcheroni macrumors 6502a

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    #23
    I agree with your sentiments in this thread but have a different point of view. You seem to be angry at the CEO and/or some other aspect of the company for very high compensation. When I hear about CEO compensation, I think about the largest shareholders for many failing companies: the U.S. taxpayer.

    A lot of the people here have already expressed my own belief that government should not dictate private sector pay. The only problem is when the government bails out a company that would have failed and all the executives who would have been out of a job get bonuses "because they won't leave for another company." This problem would not have existed if the company had just failed.

    Also, you mentioned CEO pay increase (a lot) as compared to the average worker increase (4%). Healthcare contributes to the lack of increase for the average worker. Healthcare costs have increased so much that, even though the worker has only had a 4% increase in take home pay, the company is paying 25% more overall to employ that worker. (I heard this on an episode of This American Life where they focus on healthcare).

    You also mention inflation, which is controlled by our monetary policy. They also control the CPI and manipulates it into any number they wish by hedonics. That way they can print as much money as they want and point to the CPI and claim there is no sign of inflation. Our government's plan to get us out of this depression is to inflate the money supply, bail out "too big to fail" corporations, and stimulate the economy with "cash for clunkers" type programs.

    Every always talks about the pain of letting a "too big to fail" company fail. No one ever questions why a company is too big to fail. It is simply great marketing to convince the public that the government is performing a necessary act rather than giving their friends on wall street a hand out. Now all those companies hold an even larger share of the market while still being as weak as ever. Even the companies that paid back TARP only did so because the FASB basically OK'ed accounting fraud. We didn't let a lot of companies go bankrupt and now the economy is in even worse shape than before.

    As for financial regulation, I'm not completely against some but regulation also tends to hurt the smaller players and not the large ones that are giving us trouble. It basically comes down to cost of compliance to new regulations. The big guys can afford to adhere to new regulations easier than a small financial company, thus again giving the larger guys an advantage. And whatever regulations eventually pass, I truly doubt that there will be any good that comes of it. Look at our congress, with people drowning in corporate money, like Dodd. With the new SCOTUS ruling on corporate free speech, there will be no stopping cronyism. You might blame corporations again for this but they only give money because they get something in return. If the government was smaller and didn't have the power to "bail out" corporations, political donations wouldn't be worth the return on investment.
     
  24. rhett7660 macrumors G4

    rhett7660

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    #24
    Is this discussion about Bank CEO's who have taken bailout money or CEO's in general?
     
  25. rhsgolfer33 macrumors 6502a

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    #25
    CEOs in general, at least as far as the OPs original post is concerned.
     

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