High CEO pay
- added May 17, 2008
- 6 responses
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- CarolynGillis
- added this
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- Posted by Michael Arjona
- melichael@hotmail.com
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In recent years, there has been a lot of criticism concerning the salaries of Fortune 500 CEOs. The graph below from The Economist shows how much CEO compensation has grown relative to the average wage in the United States.
As you can see, the compensation for executives in major US corporations was around 30-40 times the wages of the average worker up until the late 1980s. Now, executives make over 100 times the average wage. You could also look at the largest compensation packages for US CEOs on this Forbes site, noting that the highest paid CEOs make a couple hundred million dollars for the year (this of course includes bonuses and stock compensation).
Some are particularly aghast at what CEOs make when their performance is poor. For example -
The Corporate Library, an American corporate-governance consultancy, last year identified 11 large and well known but poorly governed companies, including AT&T, Merck and Time Warner, where the chief executive had been paid at least $15m a year for two successive years even as the company's shares had underperformed. Robert Nardelli received a $210m pay-off when he lost his job earlier this month even though the shares of his company, Home Depot, fell slightly during his six years in charge. Carly Fiorina, ejected from Hewlett-Packard almost $180m better off—including a severance payment of $21.6m—after a lacklustre tenure as chief executive.
What do you think about the increase in executive pay? Is it an outrage or is it fair? Should there be restrictions on how much a CEO can be paid? You may want to remember our discussion of labor markets and how marginal revenue product was the basis for how much someone should be paid.
Posted by Michael Arjona
As you can see, the compensation for executives in major US corporations was around 30-40 times the wages of the average worker up until the late 1980s. Now, executives make over 100 times the average wage. You could also look at the largest compensation packages for US CEOs on this Forbes site, noting that the highest paid CEOs make a couple hundred million dollars for the year (this of course includes bonuses and stock compensation).
Some are particularly aghast at what CEOs make when their performance is poor. For example -
The Corporate Library, an American corporate-governance consultancy, last year identified 11 large and well known but poorly governed companies, including AT&T, Merck and Time Warner, where the chief executive had been paid at least $15m a year for two successive years even as the company's shares had underperformed. Robert Nardelli received a $210m pay-off when he lost his job earlier this month even though the shares of his company, Home Depot, fell slightly during his six years in charge. Carly Fiorina, ejected from Hewlett-Packard almost $180m better off—including a severance payment of $21.6m—after a lacklustre tenure as chief executive.
What do you think about the increase in executive pay? Is it an outrage or is it fair? Should there be restrictions on how much a CEO can be paid? You may want to remember our discussion of labor markets and how marginal revenue product was the basis for how much someone should be paid.
Posted by Michael Arjona
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- CarolynGillis
- 2 months ago
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1) As a stockholder, I try not to so I can sleep.
2) Outrage.
3) Yes.-
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- kramericus
- 2 months ago
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there will be a revolt... there MUST be a revolt.
they're not worth the money, and the ROI on their salaries and perqs has been getting worse and worse for a LONG time.
but not until investment firms start voting their shares against lousy management or more companies convert to only electing BODs with MAJORITY votes will any of this change.
and i worked for HP "under" Carly. if you know what i mean... the "one on the bottom is the one getting screwed," as the old joke goes.... see http://www.plusaf.com/bluntconsulting/gfbcarly.htm for more of my Carly-commentary.. all true, too!
if there ever IS a judgment day, those guys are going to be left holding the warm end of the stick... -
using the very famous al gore analogy of the shapes of the african and american continents , would those lines on the ceo MONEY graph perhaps match the social bullshit meter of those points in time?
how can we measure "mental, speech, relationship to one another" bullshitting? whichever way, i feel the graphs would match. -
At some point all these bastards look in the mirror and realize they are the scum of the Earth.
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- StuntBunny
- 2 months ago
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