• kelly said on Nov 19, 2007....

  Of course they don't earn it.  What I find bizarre is that CEO compensation more closely reflects the S&P than it does company profits.  Perhaps it's a reflection that CEO have less and less to do with producing real product than they do with bolstering the company image and therefore stock price.
  
  
  What's also weird is that accoring to all the reports I've been hearing worker productivity has gone UP in the past few years.
  
  
  It's actually quite disgusting.  Capitalism at its finest, however.

• silverwhisper said on Nov 19, 2007....

  actually, i was thinking that the vast majority of officer compensation is tied to share prices and ROI for shareholders. look at steve jobs's compensation pkg: 100% is stock options, IIRC. and we all know how that's working out for him, right?
  
  not to put too fine a point on it, but the role of the CEO is to ensure ROI, AFAICT. how a CEO goes about accomplishing that end is the real devil in the details.
  
  no, a CEO's worth is not 4.x * more productive than the average employee. but the CEO is the only one whose job is recognized as being about corporate performance overall.
  
  the simple truth is that each employee ideally should be compensated in recognition of overall corporate performance, if you ask me.
  
  ed

• muckpar said on Nov 19, 2007....

  Why do you all think the wealthy own our legislators and presidents? 

• bloc said on Nov 19, 2007....

  "actually, i was thinking that the vast majority of officer compensation is tied to share prices and ROI for shareholder"
  
  Unfortunately this isn't the case. These CEO's are getting fat packages even when they ruin a company.
  
  
  "The handing over of $161.5 million to Merrill Lynch's CEO Stan O'Neal, in retirement and other benefits after he was kicked out for mishandling the asset-backed business, is enough to make you become a Marxist-Leninist.
  
  But he's not the only bigshot that is pulling down obscene salariesand retirement or severance payments equal to the GNP of small African nations." source
  
  
  
  

• bloc said on Nov 19, 2007....

  more from warren buffet.
  
  

  "Billionaire Warren Buffett testified before the Senate Finance Committee on Wednesday in defense of the federal estate tax, the nation's only tax on inherited wealth.

  Buffett invoked the historical roots of the estate tax, established in 1916 during the Gilded Age to put a brake on anti-democratic concentrations of wealth and power. "Dynastic wealth, the enemy of meritocracy, is on the rise," Buffett told the panel. "Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy."

  ...

  Buffett pointed out that tax cuts of the last decade have enabled the superrich, including himself, to get richer. "Tax-law changes have benefited this superrich group, including me, in a huge way. During that time the average American went exactly nowhere on the economic scale: He's been on a treadmill while the superrich have been on a spaceship.""

  The whole article is a must read.

• TinSoldier said on Nov 19, 2007....

  Umm, I actually agree with you regarding CEO compensation bloc. So you won't find any arguments from me. You will not convince me that CEOs have deserved a 300% to 400% increase in pay while individual workers have not.
  
  I do understand that CEO compensation usually consists of stock options. I can tell you -- stock options that I've received have almost universally been useless. Does the chart include actual salary, or salary + stock options?
  
  Here we go -- this looks like the same place you got your chart from? Or at least it includes the same chart:
  http://www.faireconomy.org/research/CEO_Pay_charts.html
  
  I don't so much mind the fact that CEOs got a 400% pay raise -- it's the cumulative effect that I don't like. I don't like the fact that CEOs make about 411 times as much as the average worker. I do not believe them to be 400x more productive nor are they adding 400x more value to a company.
  
  Although I'm not a big fan of unions, the AFL-CIO has a good page about CEO compensation trends as well. Their basic point -- with which I agree -- is that there is an incestuous relationship between CEOs and board members. Once again, it's the old-boy network, just like in politics. Some of the worst excesses in politics have been curbed, and that needs to be done in corporate boardrooms as well.
  
  
  kelly wrote:
  Capitalism at its finest, however.
  Bullshit. This isn't "capitalism" at all. It's cronyism or feudalism or whatever you want to call it.
  
  CEOs deserve to be well-compensated. They're like generals. But after a certain point it becomes ridiculous.
  
  

• muckpar said on Nov 19, 2007....

  Full public funding of national elections is the only way to get politicans to represent the people instead of the plutocrats who currently buy them.  I duly acknowledge this if enacted would not end the wealthy's influence on the political process, but it would be a heckuva start.

• silverwhisper said on Nov 19, 2007....

  bloc: your response does not actually refute my point. financial services companies offer pensions, employee stock ownership plans, base salary as well as shares for officers. your first link does not include segmentation of the total compensation, nor does it track the merrill-lynch share price leading up to the announcement of neal's departure (which likely paradoxically increased his payout).
  
  had he done better, would he not be richer, as reflected by increased value of his shares?
  
  ed

• TinSoldier said on Nov 19, 2007....

  ed: I hate to out-liberal you, but there have been a lot of high-profile cases where a CEO has practiced slash-and-burn tactics at a company and decreasing revenues and profits, and yet still somehow walking away with a golden parachute.
  
  Usually when said company is put up for sale (which will drive up a stock price regardless of performance).
  

• silverwhisper said on Nov 19, 2007....

  on the contrary, it pleases me deeply to be out-liberaled by a conservative.
  
  feel the power of the dark side! :D
  
  
  
  ahem.
  
  yes, but these are news b/c they are not the norm, TS. bernie goetz made vigilante justice popular in the 1980s. he did not make it common.
  
  ed

• TinSoldier said on Nov 19, 2007....

  Heh. You remember Bernie Goetz. Another rep for you!
  
  Ahem.
  
  I understand that these high-profile cases are not the norm, and that most CEOs don't even fit the profile shown by the graphs in this blog, but are they a majority? Or even a significant enough percentage to be notable?
  
  I would certainly feel a whole lot better about it if they were anomalies.
  

• bloc said on Nov 19, 2007....

  @sw
  "had he done better, would he not be richer, as reflected by increased value of his shares?"
  
  yes, but they get paid handsomely even when they fail miserably. Golden parachutes have gotten way out of hand.

• silverwhisper said on Nov 20, 2007....

  TS: now if only we had rep here... :D
  
  more seriously though: i'd like to see a survey of such things. i'm sure this information must be available: CEO compensation such as we're discussing here should be reported in a publicly-held company's annual report or SEC filings, i should think. i am however unaware of any such resource and lack the time to google for it just now.
  
  bloc: yes, they have, but the fact remains that CEO compensation is, as i stated at the beginning, a function of their shares. i agree the golden parachute is ridiculous but without knowing how the reported compensation is calculated, we don't know just how over the top it really is, do we?
  
  ed

• bloc said on Nov 20, 2007....

  "but the fact remains that CEO compensation is, as i stated at the beginning, a function of their shares"
  
  
  I no you didn't mean it this way, but this reads in such a way that it implies that compensation is solely or primarily based on their shares. This isn't the case.
  
  
  These CEO scandals have gotten a lot of press. You can find a lot of info and some of it explains their compensation contracts.

• kelly said on Nov 23, 2007....

  "Bullshit. This isn't "capitalism" at all. It's cronyism or feudalism or whatever you want to call it."
  
  
  The real capitalism, not the ideal.  Liberals aren't the only ones who have pie-in-the-sky ideals.

• bloc said on Nov 23, 2007....

  i concur with kelly

• TinSoldier said on Nov 23, 2007....

  The real capitalism, not the ideal.  Liberals aren't the only ones who have pie-in-the-sky ideals.
  
  Heh. I never said that they were.
  
  And that's why we have things like anti-trust laws and consumer protection laws and securities laws and stuff like that.
  

• silverwhisper said on Nov 23, 2007....

  why TS, do you mean to suggest that unfettered capitalism such as advocated by libertarians is somehow not ideal? :D
  
  ed

• TinSoldier said on Nov 23, 2007....

  I've discovered that I'm not particularly fond of anarchy under most circumstances, ed, except in song.
  
  :-)
  

• TinSoldier said on Nov 23, 2007....

  I'm reading something else almost wholly unrelated, but another thought came to me:
  
  If mankind were a perfectly moral animal, then a system of governance would not be necessary. However, in the real world, neither assertion is true.
  

• bloc said on Nov 23, 2007....

  It's the classic leviathan point of view that college students learn in poli sci 101

• TinSoldier said on Nov 23, 2007....

  Heh, I've already got ten tabs open of stuff I gotta read!
  
  Plus I've already learned more than my "one new thing a day" and my brain might explode :D ...
  
  But even though I am vaguely familiar with Hobbes, I will read it, even if I martyr myself in the process...
  

• Cussane said on Nov 24, 2007....

  My god, did someone let the socailists and communists out of there well deserved footnote in history. I am not a CEO, yet I am a corp. director, everyday i go to work i make decisions that effect the employment of 1500 people, my job is to keep them employed, manage a 300 million dollar a year company and at the same time provide a reasonable return to our investors, many of which are pension plans that will provide for you when you retire.  So yes, i make a whack of money, but i work 70 hours a week, and every day before i put my name on a memo i have to consider the effect it has on my employees, so before you all get on your soapboxes, try sitting in my office for a day
   
  Cussane

• bloc said on Nov 24, 2007....

  i wouldn't expect someone in your elitist position, which presumes an elite mind, would be so quick to reduce complex situations down to black and white nonsense (i.e. communism or capitalism). I'm glad I'm not one of your employees ;)

• TinSoldier said on Nov 25, 2007....

  ...And yet, corporate officers were responsible for making the same kinds of decisions in the 50s and the 60s and the 70s and the 80s and the 90s and yet they still didn't take home 400X the average worker's pay.
  
  Can you explain that? Can you explain how somehow corporate officers' productivity (and therefore their wages) has increased at a so much higher rate than the average worker's?
  
  Are you so much smarter or harder working than I am? Now, the CEO of our company posted in our company forum some of the typical stuff that he does, especially as we approach the end of a quarter or the end of a fiscal year. What about you, Cussane, as a corporate director? Most of the corporate directors that I know are semi-retired executives who only have to work three days a week or so.
  
  So I am truly interested in knowing what kinds of things go on on Mt. Olympus. Can you explain them so a blue-collar conservative like me can understand? Use small words if you must.
  
  I am also interested in better understanding what kinds of factors go into your decision to either propose or vote on CEO pay for whatever corporations for whom you are a director.
  

• Cussane said on Nov 25, 2007....

  Bloc, your presumtion is as usual crap and i am also glad you are not one of my employees. Tin, quite simply it is driven by the market, if I want to hire a good CEO then I pay what the market demands, I have never in my post anywhere (or in any of my other posts) stated I was smarter or worked harder than anyone else (I expect those assumtions from Bloc, i expected more than that from you tin). as for why my wages are higher, quite simple, every job has an inherent worth, i know how much my customers will pay for product, how much raw materials cost and what my fixed costs are, I also know that my investors expect a certian amount of return on thier investment, a good ceo is worth thier weight in gold and it is generally thier decisions that keep you employed. And no I work an average of 65-70 hours a week, and i am no where near semi-retired. Cussane

• bloc said on Nov 25, 2007....

  not just pay, but golden parachutes. 

• TinSoldier said on Nov 25, 2007....

  as for why my wages are higher, quite simple, every job has an inherent worth, i know how much my customers will pay for product, how much raw materials cost and what my fixed costs are, I also know that my investors expect a certian amount of return on thier investment, a good ceo is worth thier weight in gold and it is generally thier decisions that keep you employed.
  
  
  I understand all of this, Cussane, really. But I don't understand how CEO compensation has grown so much more quickly than average workers' pay. That's what I am taking issue with.
  
  I understand that CEOs are important, and that most of them actually work hard, and that the best ones have to juggle the needs of their company and their investors and their employees and their customers. I have no problems with CEOs making much more money than I do.
  
  For me, though, it's just a matter of scale.
  
  
  And no I work an average of 65-70 hours a week, and i am no where near semi-retired. Cussane
  
  
  I didn't mean to imply otherwise. I tried to give the example of my company's CEO who I am sure works very hard relatively speaking, versus someone in my family who used to be a major executive but who is now semi-retired and serves on the board of directors of a couple of companies.
  
  I mean, if you are on the board of a healthy company then what are you doing for those 65-70 hours a week? If you are helping new companies get started or trying to fix broken companies then I understand. I'm genuinely curious, by the way.
  
  I had asked above, and I believe that ed did too, how this study measured stock compensation compared to actual salary. Because I'm sure there are ways of twisting that to make it look especially bad -- give a corporate officer a large option at a very low price and he's gonna make money no matter what. Whereas I've been at my company for eight years now and I want desperately for them to succeed, I've been granted stock options that are basically useless as our stock continues to nosedive.
  
  *shrug*
  
  I actually have a pretty high opinion of business and business leaders. But when I see such huge disparities it can be enough to jaundice even the most optimistic eye.
  

• Cussane said on Nov 25, 2007....

  Bloc, sorry, dont have a golden parachute, Tin, I dont know where you work, but in my industry over the last 10 years or so the average employee has seen their salary increase @ 110-120%, but as for the disparity quite simply there are thousands of people who can perform manual labour or semi-skilled positions and they get paid what the market dictates, however as we have seen with Nortel, Enron etc, good CEO's are few and far between and as such can demand a higher salary. I work that many hours because i have 19 plants spread out over 2 countries, 6 states and 4 provinces and we have just completed a levereraged buyout so a couple of wrong decisions could cost the company millions. and as for stocks/bonus most CEO & directors (at least in my employment history) is paid out on the performance of the company, and in my case this is confirmed by outside auditors selected by our parent company to make sure the books are not fudged.

• bloc said on Nov 25, 2007....

  "Bloc, sorry, dont have a golden parachute, Tin, I dont know where you work, but in my industry over the last 10 years or so the average employee has seen their salary increase "
  
  Surely you aren't suggesting that this anecdote is indicative of the economy in general, yet I can see no other reason for you to have said it.
  
  "however as we have seen with Nortel, Enron etc, good CEO's are few and far between and as such can demand a higher salary."
  
  I don't think this is the case. It's very easy to structure a pay package to be based on performance. What we've seen lately is a rash of underperforming CEO's getting enormous payouts. Please look at my graph and explain why CEO pay began sky rocketing around 96. There is no good explanation for it. It isn't because they are "worth it".
  
  I am finding it hard to believe that someone in your position would base beliefs on narrow anecdotes. I find it even harder to believe that someone in your position isn't aware of the scandals of late regarding CEO's and their compensation. Frankly, the idea that suddenly, around 1996, CEO's became many times more productive is silly. Many of us are highly skilled and work many hours. I'm a programmer and I can assure you that myself and all of my friends fall into this category. We aren't paid poorly, many of use make 6 figures, and there is a shortage of good programers. It's absolutely absurd to assert that CEO pay is related to hard work, talent, or productivity in the economy as a whole.

• TinSoldier said on Nov 25, 2007....

  bloc -- if you are are making more than $50K then I need to seriously figure out how to get into the programming biz. Something that I've wanted to do for a long time.
  
  Cussane -- I work in the electronics industry as a repair technician. It's a catch-22 situation for me. On  the one hand, I love what I do. On the other, companies that I've worked for have always seemed to be struggling.
  

• Cussane said on Nov 25, 2007....

  Bloc, I would suggest you read the prior posts before ranting and raving, the comment regarding salary increases was in answer to a statement from Tin, not on the general ecomony. As for the 96 and forward theory, I dont have an answer as I wasn't in this position then, but i am sure that the answer is more than just a graph, as Abe Lincoln said there are lies, damm lies and then there are statistics, as for CEO payouts, again i did refer to past scandals, and while aware of the current ones I dont have the information I need to make a informed decision on them (novel idea that isn't it). As for CEO's not being worth it, i would offer to you that on whole there are thousands of CEO's doing an excellent job and simply because of a few bad apples does not fairly reflect on the whole, and as for those payouts sometimes it is cheaper to pay a bad employee (CEO or otherwise) to go away instaed of long costly legal battles in a lawsuit happy society Cussane

• silverwhisper said on Nov 25, 2007....

  cussane, i don't understand your point re: long, costly legal battles WRT employee compensation. ?
  
  ed

• bloc said on Nov 25, 2007....

  "I dont have the information I need to make a informed decision on them (novel idea that isn't it)."
  
  Yet you seem to have made a decision and have clearly tried to argue that CEO's should get paid over 400 times that of a regular employee.
  
  "but i am sure that the answer is more than just a graph"
  
  At least my graph has some substance, more so than a meaningless sound bite.

• kelly said on Dec 02, 2007....

  "As for CEO's not being worth it, i would offer to you that on whole there are thousands of CEO's doing an excellent job and simply because of a few bad apples does not fairly reflect on the whole..."
  
  
  Uh, huh.  More likely what is going on is that a few bad apples have been caught. This in no way implies that the rest are a solid bunch of crunchy Honeycrisps.  Usually when problems start being addressed like this it is just the tip of the iceberg, to use a different metaphor.
  
  
  Check out www.theyrule.net to see how interrelated the CEOs and board members of different companies are.  It starts to look like a good-old-boy network where they can all vote themselves nice raises.  You know, you scratch me back I'll vote you a hundred million dollars.  It's nice work if you can get it.

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