Skip to main content

Shakespeare Sacrificed: Or the Offering to Avarice
Investors of America and abroad, here's a simple hypothetical question for you regarding your investment. Let's say you own or are considering owning shares in a company with several pay-rates of employees. Let's simplify it: 500 laborers making 20k each, 100 managers making 200k each, and one CEO making 20 million dollars. If a penny saved is a penny earned, where's the low-hanging fruit? If, for some reason, we had to save millions a year to stay in the black and see a return on our investment, what's the quickest, safest way to do it?

You're not going to find laborers willing or able to do the same job for a grand a year. Likewise, you might be able to find a decent manager trainee or two straight out of college willing to start at 10k or 20k a year, but not anyone with experience and they won't hang around long at that pay rate. Without labor there is no product, no sales, no revenues. A similar albeit weaker argument could be made for managers. So unless demand for the product has dropped quite a bit, mass layoffs don't make a lot of sense.

But I'll bet the line of qualified applicants for CEO willing to work for a half a million a year will stretch around the building. Bingo, there's your savings, immediate savings, megabucks a year straight to your bottom line overnight. There's a stock that can suddenly pay much larger dividends, or at least continue paying a dividend at all. That's a stock that commands my attention.

So what's that CEO doing that would possibly persuade us to keep them on the payroll? What's the downside of replacing them for a lot less or just eliminating their entire job? As a former investment manager, I've asked this question often of clients and colleagues. Below the fold are the most common answers I get and some fictional, possible responses to consider.

The CEO founded the company and therefore owns it.

First of all, if it's public then by definition they've sold it to shareholders and the CEO no more owns that company than Toyota owns your Prius or Home Depot owns the shingles on your roof. Second, for the vast majority of familiar firms, the CEO had nothing to do with starting the company. Unless that CEO owns more than 50 percent of the outstanding stock, he's serving solely at the pleasure of the actual owners, the stockholders. If we as owners make it a practice to pay our employee[s] twenty or thirty or a hundred times more than we need to, we might be admirable, generous people, but probably not the sharpest, most successful investors.

Ten million or twenty million dollars sounds like a lot, but it's just a drop in the bucket.

It's only a drop in the bucket when we're talking about one employee, i.e., the CEO. When it's the exact same ten million that goes to 500 people in labor or 50 in management, suddenly it's excessive spending that cannot be justified to shareholders and everyone, especially those who make the least, has to pitch in and sacrifice. It's also often bullshit: ten million dollars plus or minus can indeed affect a quarterly or yearly earnings report enough to have an exponential effect on both the stock price and any dividends paid.

The CEO works really, really hard and therefore earns it.

Wow! The CEO works a hundred times harder than any other employee we have or can find? Good grief, the man must be a world-class athlete. Or maybe he has a time machine in his office that allows him to put in hundreds of hours a day?

The CEO is critical to the company, without him it fails and he is the only one willing and/or able to perform as required.

Umm ... are we sure about that? If the CEO-employee happens to be one of a tiny few people who can make the last minute jumpshot or TD, if the CEO happens to be the golden voice that sells a million albums, or if the CEO is the one personally making the majority of every sale and no one else can do it, maybe, just maybe. So the obvious question would be ... is he?

Hey, I'm making money so I'm OK with his guy.

At least that beats the other lame excuses but there's still two big problems. Assuming we don't want to make way more money and our employee is delivering, by all means let's keep him on our payroll. But if there's a single losing quarter or a bad year, wouldn't that render this rationale false, especially if we can turn things around overnight by simply letting one multimillionaire go? And if that's true for the CEO making ten million, it's true for labor, too.

OK, you got me, the CEO got a fat contract from the existing stockholders before I came along and he's sucking them dry.

Bummer, sucks to be one of those stockholders then. But tell me, outside of a rare, near certain sure thing or a huge potential payoff for a small risk, why would we want to be one of them?

Now the real answer to my hypothetical is most folks shrug their shoulders, say that's the way it's generally been done and what is the alternative? As a pragmatic, steely eyed investment advisor, I don't have a great answer either. So maybe it's time to challenge that convention.

Obviously the numbers above are made up to keep things simple. In many cases the CEO's pay really is a drop in the bucket compared to labor. But if we add in the pay for other big wigs that usually changes the equation quite a bit. I can think of several examples right off the top of my head where a single CEO or a tiny group of senior execs made enough money to substantially change the earnings report, during a period when the stock went sideways or down, and in which the lowest paid employees suffered layoffs and all kinds of erosions in wages and benefits.

If a company justifies layoffs and other cuts to the lowest paid employees for economic reasons, while awarding enormous bonuses and other perks to the CEO saying they somehow earned it, it's pretty clear what's going on: the CEO isn't just fucking over the employees, he's fucking over the owners of the company. Why an owner would put up with that remains a mystery.
 

Tags

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Highest (164+ / 0-)
    Recommended by:
    annieli, Betty Pinson, mollyd, kpardue, gizmo59, Railfan, CwV, poliwrangler, belinda ridgewood, jsmagid, Mary Mike, Lilyvt, Black Max, tampaedski, writeofwinter, LamontCranston, HoosierDeb, VeggiElaine, radarlady, Simul Iustus et Peccator, TheOpinionGuy, on the cusp, eztempo, slowbutsure, firemage, Buckeye54, GAS, tle, Brian B, Nattiq, Eyesbright, rbird, gfv6800, Egalitare, Wreck Smurfy, SteelerGrrl, donnamarie, Alumbrados, The grouch, citizen dan, wilderness voice, jbsoul, Catte Nappe, millwood, SoCalJayhawk, glitterscale, Rogneid, thanatokephaloides, dotdash2u, eeff, wasatch, science nerd, Nisi Prius, kevinpdx, sillycarrot, sydneyluv, TheDuckManCometh, Navy Vet Terp, slathe, Azazello, jacey, FriendlyNeighbor, corvaire, jcrit, LOrion, unclebucky, dksbook, arlene, HedwigKos, pcl07, Orinoco, GreyHawk, Capt Crunch, BYw, corncam, pickandshovel, kaliope, skybluewater, mettle fatigue, SaraBeth, dRefractor, BlueMississippi, kyril, dougymi, NCJan, Eric Nelson, myrmecia gulosa, RadGal70, Wood Gas, dandy lion, Rick B, NoMoreLies, leeleedee, OldDragon, ichibon, musicsleuth, Witgren, Debs2, tofumagoo, ewmorr, PipeUp, Emmet, statsone, cocinero, p gorden lippy, pixxer, revsue, wxorknot, susakinovember, gundyj, third Party please, Skennet Boch, OrdinaryIowan, old possum, NM Ray, golem, The Hindsight Times, mommyof3, Kevskos, annan, dradams, HarpboyAK, TracieLynn, RUNDOWN, Unitary Moonbat, jck, RiveroftheWest, WhizKid331, YellerDog, Odysseus, xaxnar, yoduuuh do or do not, rjnerd, MA Liberal, renbear, llywrch, Zack from the SFV, kurt, JimWilson, richardvjohnson, 417els, furrfu, OHdog, Blue Bell Bookworm, hlsmlane, catwho, jhop7, terrybuck, liberaldregs, tb mare, Arahahex, RunawayRose, zinger99, lissablack, Bill Roberts, Turbonerd, RANDREWF, KansasNancy, codairem, YucatanMan, radical simplicity, Luma, JerryNA, DWG

    paid CEOs in 2013, some look like they can justify it, others are not so clear.

    •  It's VERY hypothetical (4+ / 0-)

      Of course those numbers are not what is happening in the real world, but, your point is still made.

    •  No, none of them can justify it (32+ / 0-)

      The point is not whether or not the company is successful, the point is whether, successful or not, the CEO job could be done equally well for far less money.  As the writer notes, if an equally good CEO could be found for half a million a year, then a twenty million per year CEO is a waste.  Fifteen million less for dividends, capital investments, or employee retention.

      We get used to the right wing implying that they are defenders of "markets" and "capitalism", but kleptocracy and plutocracy are not actually "free market" features, nor is total lack of regulation beneficial to a market economy.  Almost all of the countries that have strong human rights, environmental regulations, quality of life, and social safety net are actually capitalist, including in Scandinavia.  Just decently regulated capitalist economies.  Americans tend to use "socialism" as a shorthand for "any system with a better social safety net than we have", but that creates confusion.  We're actually a mixed economy, with free markets but also regulations and a social safety net for the common good, and that's what has worked best so far; technically, even here, it's working better than more autocratic or chaotic systems do.

      •  Well said.... (6+ / 0-)

        .. although while this used to be the case in America, it does seem that everyday we get closer to being a fascist Plutocracy and farther away from being a civil society... which is what happens when the bottom line ONLY capitalists are allowed to buy governments at the expense of everyone else.

        Finché c'è vita, c'è speranza

        by gininitaly on Sun Jan 19, 2014 at 08:59:26 PM PST

        [ Parent ]

      •  It is quite plausible that CEOs are really worth (1+ / 0-)
        Recommended by:
        furrfu

        their salaries.

        It's pretty hard for many people to believe that a guy who sits in a corner office and makes decisions is really worth thousands or even tens of thousands of times as much as someone who physically makes products.

        However, lets take a look at another much simpler field of endeavor where there are similar discrepancies in pay - the NBA.

        Now, I think we can all agree that even the worst player in the NBA is still an incredibly good basketball player - far better than anyone reading this ever had a chance of being.  These people are all already the top .01% or less of US basketball players.

        And, unlike CEOs vs. production line workers, they are all doing pretty much the same job.

        Therefore, logically, we would expect the highest paid NBA players to make only a bit more than the lowest paid.  2 or 3 times more - sure.  Ten times more, maybe.  100 times more?  Not on your life.

        In actual fact, Kobe Bryant is making $30MM this season while Mario West is making only $20,000.  That's a 1,500 times difference.  Moreover, this differential is almost certainly compressed by the NBA's salary cap.  

        This is  obviously not because team owners want to give huge amounts of their money to the hired help.  It is presumably because the NBA is a competitive labor market and, given the value of a winning team, the difference in value between the best basketball player in the country and the 500th or so best is really 1500 times.

        It is obviously much harder to measure CEO value than NBA player value (how do you compare the CEO of an oil company with the CEO of a software company) but it does not seem unreasonable that there are similar issues in business.  For example, there were easily a dozen database companies started in the 70s and 80s, as well as the in house efforts of companies like IBM.  Today, of those companies, Oracle has a market cap of $171 billion and the rest are nowhere.  People who have worked for Larry Ellison (and I am one of them) pretty universally agree that he is the person who drove that value.  He was the Kobe Bryant of database company CEOs while the other guys were somewhere further down that list.  Larry Ellison was obviously worth quite a few billions of dollars to Oracle investors (including myself) and I won't say I am happy that he insisted on getting those billions, but I consider it an acceptable price to pay for his talents.

        •  I'll grant you your one example, but... (5+ / 0-)

          how many hundreds of other companies are out there who hire someone who's in someone's network (not because of their abilities)?  How many companies stagnate or have their value drop, or close down entirely, and that CEO gets a golden parachute and shows up six months later at another company thanks to network connections?  How many other smart, tough, intuitive people are out there who could do just as well if they were put in the job, but weren't blessed with an orally-implanted silver spoon, a diploma from the right university and a membership certificate in the old boys' club?  I'm guessing the answer is "a lot".  

          Business is something one has a talent for, like gardening or cooking or writing.  Unfortunately, there are lots and lots of people who have zero business talent who nonetheless get to play executive because of their greed (there's $ in business, not so much in gardening) and their connections (tell me former President Shrub got to play with an oil company because of his brilliant business acumen).  I think the diarist is right- if upper management positions were based on talent and value, we'd see a lot of discarded deadwood and a lot of half-million dollar salaries.  A lot of companies could do as well, or better, with cheaper CEOs.  But they won't, of course, because the CEO position isn't as much about business talent as it is about creating cushy landing pads for spoiled upper-class brats whose purpose in life is to suck money from others- from their "lesser" workers and, of course, from the taxpayers in the form of corporate welfare.

          Odds and ends about life in Japan: 1971wolfie.wordpress.com

          by Hatrax on Mon Jan 20, 2014 at 02:58:08 AM PST

          [ Parent ]

        •  That depends on a belief that there are skills (4+ / 0-)

          and talents involved in management, as there are in sports or music or acting.  There are not, it's a myth propagated by 'business schools'  (another racket).  Successful CEOs are mostly rather dull bullies who could be replaced by committees or even by orangutans with no difference to the bottom line.

          Armed! I feel like a savage! Barbarella

          by richardvjohnson on Mon Jan 20, 2014 at 03:37:51 AM PST

          [ Parent ]

        •  Your NBA numbers are crucially flawed (3+ / 0-)

          The minimum salary in the NBA, set by their collective bargaining agreement (CBA), is $490,180/year.   Kobe's salary is 60 times that much.  And Kobe's an anomaly because his contract pre-dates the current CBA, which limits future salaries to around $20 million a year.  

          I suspect you simply went to ESPN.com's list of salaries and saw Mario West's name at the bottom, next to $25,000.  However, Mr West hasn't played in the NBA since 2011, when he played 6 games, and currently plays in the Philippines.  His $25,000 is this year is deferred payment for those six games.  (Players often defer payments to help the team fit the salary cap that year).

          When Mr West had been a regular roster member for the Hawks before that, he was making near the league minimum (a paltry $446,750).  

          Nobody deserves poverty.

          by nominalize on Mon Jan 20, 2014 at 10:06:31 AM PST

          [ Parent ]

      •  Never Fix It - Not in This Lifetime (4+ / 0-)

        Why?

        It's a closed club.  The stockholders have little or nothing to do with the structure, selection, and compensation of management.  Who does?  The Board of Directors.  And who is in a closed club?  The Board of Directors and CEO.

        They all run together.  One guy is CEO of Company X, and he or his wife or kid or brother is on the Board of Directors of Company Y.  Same, same - the CEO of Company Y has kids, or wife, or family on the board of Z, and it goes on and on.

        Only the large institutional investors could stop it, and they are in the club, too.  Can you see Mitt Romney voting to remove a Board of Directors for compensation issues.

        The scandal of business in America is the inflated compensation of CEOs, and that came about because of the explosion of MBA-producing schools.  

        It's Morning in America (and the GOP has a hangover).

        by stlawrence on Mon Jan 20, 2014 at 03:33:55 AM PST

        [ Parent ]

        •  Sounds a lot like Congress and Senate (0+ / 0-)

          N/T

        •  The funny thing is that you aren't joking (0+ / 0-)
          Only the large institutional investors could stop it, and they are in the club, too.  Can you see Mitt Romney voting to remove a Board of Directors for compensation issues.
          Mitt Romney made his money running a PE firm that did buyout funds.  When a buyout fund buys a company they almost always fire the board and usually fire the CEO unless they are funding an MBO.  They don't need to fire a board over compensation issues - they control the board and negotiate compensation directly with the CEO.

          Given that track record, why do you think they would be shy about firing a board if they still had enough shares after their investee re-IPOs?  In actual fact, of course, they never need to do that.  Boards don't buck investors with enough votes to remove them.

        •  I was about to say (0+ / 0-)

          The answer to this:

          Why an owner would put up with that remains a mystery.
          Is actually well known: they sit on each other's boards, and thus vote on each other's compensation. The big $$ investors aren't investing in the company, they're investing in compensation package quid pro quo.

          The modern day twist on "you scratch my back, I'll scratch yours" is "you bloat my comp, I'll bloat yours."

    •  of that list, (0+ / 0-)

      only Murdoch and Lauren, I believe, fall into the category of company founders -- and Murdoch inherited at least some of his. The others are all hired hands.

      Great Questions of Western Philosophy: How much wood would a woodchuck chuck if a woodchuck could chuck wood?

      by Mnemosyne on Sun Jan 19, 2014 at 05:11:33 PM PST

      [ Parent ]

    •  I see only four women's names (5+ / 0-)

      in this list of 100.  I think this may be related to why these people are so overpaid.

    •  Some thoughts about this list (5+ / 0-)

      Number one on this list is Larry Ellison of Oracle. Due to his ownership of Oracle stock he's one of the 5 richest people in the US. He doesn't need a salary of this size -- he gives it too himself entirely out of egotism. (And yeah, Larry is known to be a bit hung up on himself.)

      I'm surprised Musk made this list -- my God, Tesla is a start-up! Every dollar he takes from the company is a dollar that the company needs to nurture growth over the long run -- & he knows that. He is rich enough he could be CEO for a token $1 a year. And maybe have a Tesla to drive around for advertising purposes.

      Going down the list, I see lots of examples where the CEO could be fired & replaced by some suit at half the salary & no one would notice the difference, in terms of corporate profits. Is Moonves that important to CBS? James Q. Crowe to Level 3 -- which was created out of mergers of mergers? Or Tillerson to Exxon -- which sells petroleum products for practically the same price as every other oil company? Anyone of them could be replaced with someone at half or a third the cost overnight, & the corporation would save that much money. (And maybe see further savings as this kind of adjustment repeated down the ranks of senior management. Cut the salaries of 10 corporate VPs from, let's say, $10 million to $5, & you double what you saved from getting a CEO with a more realistic salary.)

      The reason they aren't replaced with less expensive talent is -- as pointed out elsewhere -- that they have too many friends who make that kind of money, & were an investor to start pushing for that kind of right-sizing, said investor would starting finding the going hard.  No one wants to rock the boat.

  •  wage-mastery and wage-slavery, still slavery /nt (20+ / 0-)

    Warning - some snark may be above‽ (-9.50; -7.03)‽ eState4Column5©2013 "I’m not the strapping young Muslim socialist that I used to be" - Barack Obama 04/27/2013

    by annieli on Sun Jan 19, 2014 at 02:46:48 PM PST

  •  Most CEO's today (58+ / 0-)

    are glorified accounting managers.  Most of them aren't even that, they have underlings who develop detailed executive summaries every day, written at the level of a high school senior.

    There are plenty of people who can handle the job of CEO, there's nothing magic or highly skilled about it - just good friends and connections.

    Money is property, not speech. Overturn Citizens United.

    by Betty Pinson on Sun Jan 19, 2014 at 02:50:39 PM PST

    •  a lot of them are likely rainmakers (6+ / 0-)

      It used to be that the good old white boys were the only ones who could make it rain, or so they thought. But these days, it's getting easier and easier for all kinds of folks, and these fellows are a bit nervous about holding on, I think.

      Great Questions of Western Philosophy: How much wood would a woodchuck chuck if a woodchuck could chuck wood?

      by Mnemosyne on Sun Jan 19, 2014 at 05:08:52 PM PST

      [ Parent ]

    •  "Just good friends and connections" (21+ / 0-)

      Bingo!

      I heard one of those laissez faire Ayn Randians talk about how CEOs "deserved" their pay because their companies just paid them according to their "true worth" based on some vague and indiscernible but nevertheless totally accurate "market."

      These days when the CEO is rarely either the founder or even an expert in what the company produces, works only on short term plans and jumps around from company to company like a bee sucking pollen in spring, I think the good ol'boy (and rarely girl) network, along with corruption among those who set salaries, has more to do with setting the pay rate than some "invisible hand."

      "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

      by NCJan on Sun Jan 19, 2014 at 05:12:53 PM PST

      [ Parent ]

    •  How do you explain someone like Louis (2+ / 0-)
      Recommended by:
      J Orygun, saucer1234

      Gerstner who moved from doing an excellent job running RJR Nabisco to IBM where he engineered a dramatic turnaround?

      Obviously John Akers had not been doing such a good job and Louis Gerstner demonstrated the ability to do an excellent job running two companies in totally different industries.

      •  those are rare (2+ / 0-)
        Recommended by:
        Celtic Legacy, Rebecca

        inflated CEO salaries are common.
        In your example up there, you point to Kobe Bryant. How many Kobe Bryants are there? One. For this single one, an exorbitant salary may be "worth the price". For a legion of others, not.

        the chance that any random company's CEO is one of the Bryant/Ellison league of actually exceptional people tends to nil. These exceptional people can be counted on a hands fingers - thats why they are famous, why you / I / everyone knows them. Even among those who are famous, the actually gifted are a minimal fraction. Tony Hayward of BP for example - famous, well what was his worth? Look into the professional career of the current (soon to be former) PSA boss. What's his worth?

        The fact that there are exceedingly small numbers of people truly worth their wight in gold is not a counterargument against the suggestion that the general CEO salaries are wildly inflated and not in any way supported by an actual benefit they bring to the companies.

        Conversely, I hope that people don't forget that there are people enough in the middle and lower ranks of companies who are in fact as gifted and talented as the Ellison class CEOs but never made it out of obscurity due to circumstances.

        Inflated salaries for the top slots actually help to suppress the possibilities for true management talent to get through to the top.

         

        •  How do you determine that inflated CEO (0+ / 0-)

          salaries are more common than salaries that are as appropriate as possible given the obviously imperfect information that board compensation committees work with?

          In your example up there, you point to Kobe Bryant. How many Kobe Bryants are there? One. For this single one, an exorbitant salary may be "worth the price". For a legion of others, not.
          95 out of the 565 NBA players (http://espn.go.com/...) make more in a day than Mario West, the lowest paid player, makes in a year.  
          The fact that there are exceedingly small numbers of people truly worth their wight in gold is not a counterargument against the suggestion that the general CEO salaries are wildly inflated and not in any way supported by an actual benefit they bring to the companies.
          If we assume the average NBA player weighs 200 pounds, then with gold at $1,254 / oz, 166 out of the 565 NBA players get salaries worth their weight in gold each year.  Do you also believe that the majority of these players are overpaid?  Why?  And what is the motivation of the team owners to overpay them?

          If you accept that in the NBA there really are so many people worth their weight in gold, why do you find it hard to believe that the same is not true in business, where the financial stakes are much higher, even if performance is much harder to measure?

          Even among those who are famous, the actually gifted are a minimal fraction. Tony Hayward of BP for example - famous, well what was his worth?
          From May 1, 2007 until April 19, 2010 (from when Hayward started until the day before the Deepwater Horizon spill) BP share value dropped 11.65%.  Pretty crappy... except it is virtually identical to the performance of Exxon and Royal Dutch Shell.  So for what BP paid Hayward they got someone who apparently was just about as good as his competition - no better, no worse.

          As for whether or not he had any value without the BP platform, well, in the past three years he has created a new company, Vallares, which is now a $4.5 billion dollar company drilling for oil in Iraqi Kurdistan.  His ability to put that together so fast indicates that he does have some value.

          •  Give any number of reasonably intelligent people (1+ / 0-)
            Recommended by:
            Celtic Legacy

            the kind of resources and start-up cash that Hayward got, and they could build an oil company, too.  

            If he'd built a 4.5 billion dollar company based on a completely novel concept, I'd be a lot more impressed.  

            Odds and ends about life in Japan: 1971wolfie.wordpress.com

            by Hatrax on Mon Jan 20, 2014 at 03:10:11 AM PST

            [ Parent ]

    •  You should also then explain why private (0+ / 0-)

      companies also pay large amounts of money to their CEOs.

      For example, I am now doing some work with private equity.

      Private equity buyout firms control the companies they buy.  Their managers' compensation depends purely on the performance of their investments and they derive no benefits at all from high executive salaries.

      For a company like Bain Capital, every dollar that goes to a CEO costs them, depending on the exact performance of the fund that bought that company and the exact terms of the partnership agreement, as much as $1.00 but more frequently $.20 if the fund is doing well and they are getting carry.

      Despite this, LBO PE firms give huge packages to successful CEOs.  In fact, many CEOs aspire to work with PE firms and serially manage their acquisitions.

      HCA (#10 on the AFLCIO list) is a good example of this.  They are still 30% owned by Hercules Holdings LLC, the PE vehicle that was used for the acquisition and KKR and Bain together own another 22%.  They control the company and can set the CEO's salary.  So why would they give Bracken $46MM unless he was worth it?  Class solidarity?  Why should that matter?  If they found a good CEO for $1MM then he just would not be in their class, so no solidarity concerns.

      •  2 reasons why private companies overpay: (0+ / 0-)

        1. "Market rate" for CEO pay over the last 20 years has risen by 200%, and over the last 40 years by 700%.
        2. People like you have bought into the baseless myth that CEOs "deserve" high pay.

        I say baseless because CEOs overseas make on the order of 12x to 50x of lowest worker pay, while in the US they make 350x to 400x of average worker pay (higher when compared to lowest pay). I don't see those international companies floundering- they're doing pretty well. Many overseas companies are doing the jobs that used to be done in the USA... before our CEOs outsourced those good jobs in exchange for personal gain, Mafia scale pay, stock options and bonuses.

  •  CEO pay is way overblown (23+ / 0-)

    But unlike the example in the article, CEOs making the big bucks are in companies with far more than 500 employees, therefore a cut in their pay doesn't reduce the companies expenses by such a big percentage.

    That said, they're way overpaid than what you would need to pay by, for instance, promoting a good candidate from within.

    Some people fight fire with fire. Professionals use water.

    by Happy Days on Sun Jan 19, 2014 at 02:55:18 PM PST

  •  There ought to be a way (22+ / 0-)

    to rate companies according to their overall profits and CEO-to-average employee pay ratio.  Such a rating would be a source of information I would pay attention to if I invested in individual company stocks.  I would hope that there are enough small investors out there who would be interested in this sort of information.

    -5.13,-5.64; GOP thinking: A 13 year path to citizenship is too easy, and a 5 minute background check is too burdensome. -- 1audreyrenee

    by gizmo59 on Sun Jan 19, 2014 at 02:57:05 PM PST

  •  Well as we all know (34+ / 0-)

    The CEO simply is NOT worth all that money. But they have the key to the petty cash drawer and are allowed to steal, plain and simple. And that is modern capitalism in a nutshell: "I can take as much as I like because I can." And as long as I look the other way for the tiny handful of people who can stop me and allow THEM to steal as much as I do, it's all good.

    My right to swing my arm DOES NOT end where your nose begins. My right to swing my arm is absolute unless you are strong enough to stop me.

    America isn't a capitalist economy, it's a thuggish kleptocracy.

    The Mafia writ large.

    •  Moral economy (1+ / 0-)
      Recommended by:
      kurt

      Unfortunately the right wing thuggish kleptocracy has us measuring their worth on their own terms.

      Instead of just talking about what these guys are actually worth and whether or not their pay can be helpfully spread around the lower rungs of their own corporations, we should also be talking about what the bulk of that pay would be worth if it were pooled--by an equitable tax system--for sharing towards the common good-- not only a social safety net, but a good, universal healthcare system, better schools and universal access to higher education, child care, neighborhood and housing reform, mental health and homelessness alleviation, research (for climate change and a number of other pressing needs) etc.

      We don't actually even have to fight for a ceiling to their pay, as long as we have a decent "floor" for the pay of all others.

      "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

      by NCJan on Sun Jan 19, 2014 at 05:23:58 PM PST

      [ Parent ]

    •  The usual measure for CEO compensation (4+ / 0-)
      Recommended by:
      riesling, ohiolibrarian, kurt, RunawayRose

      seems to be "let's give the new guy whatever the last guy got, plus 25% or so, plus options." The median compensation thus is continually rising at a significant multiple of the rate of inflation, but nobody wants to be one of the guys sitting there below the median so it continues to spiral up, absent any evidence of increased value of job performance. I have read reviews of studies that argue coherently that CEO value is often in fact inversely proportional to compensation. At best, the two parameters seem only loosely linked.

      Your black cards can make you money, so you hide them when you're able; in the land of milk and honey, you must put them on the table - Steely Dan

      by OrdinaryIowan on Sun Jan 19, 2014 at 06:30:21 PM PST

      [ Parent ]

  •  Most anti-capitalist statement ever: (13+ / 0-)
    Hey, I'm making money so I'm OK with his guy.
    Um, unless I've really forgotten my finance lessons from college, it's always the case that the market demands that we maximize profits.  So why the sudden lack of concern about being "the best possible capitalist" when it comes to the CEO's salary?

    "Ridicule is the only weapon which can be used against unintelligible propositions." - Thomas Jefferson

    by rfall on Sun Jan 19, 2014 at 03:00:41 PM PST

  •  Ya know what.... (30+ / 0-)

    While I realize some CEOs are hardworking excellent heads of companies, many are not, and despite all their hard work NO ONE is worth millions upon millions in salaries, dividends, pay-outs and bonuses.  Especially when the employees who make it possible for these companies to exist, and who are probably working far harder than the CEO, are just scraping by.

    I think, therefore I am........................... Plus ca change, plus c'est la meme chose....AKA Engine Nighthawk - don't even ask!

    by Lilyvt on Sun Jan 19, 2014 at 03:07:14 PM PST

    •  And that's what bothers me (10+ / 0-)

      I've heard the argument that CEO's and upper management are the cream of the crop, that losing them would tank the company.  It drives me nuts.

      How many people are there out there that could do the same job just as well, or nearly so as to not make a big difference (or perhaps even do it better), that are stuck in middle management jobs, or that caught in the last layoff and are drawing unemployment?

      I would bet the numbers would be in the tens of thousands or more.  The CEO just happened to be in the right place at the right time, knew the right people, and scratched the right backs (and stuck the knife in the right others).

      •  Yup.... (7+ / 0-)
        The CEO just happened to be in the right place at the right time, knew the right people, and scratched the right backs (and stuck the knife in the right others).
        Or kissed the right ass, or went to school with the right person, or married the bosses daughter/son, etc..
        We are where we are because of the incestuous inbred nature of corporate-hood.
        I worked in a business once which was totally mis-managed by CEOs who knew nothing about the business, yet they were in charge.  The business went belly up, not a surprise to any of us, and the CEO (and other toadies) got huge payouts and then, through their privileged network, went on to 'lead' other businesses (which they probably knew nothing about)....down the road to oblivion.
        They got their money and we, the workers, got the shaft.

        I think, therefore I am........................... Plus ca change, plus c'est la meme chose....AKA Engine Nighthawk - don't even ask!

        by Lilyvt on Sun Jan 19, 2014 at 06:10:04 PM PST

        [ Parent ]

        •  A classic example of the "Chicago School".. (4+ / 0-)

          which held as a fundamental tenet the idea that a manager needed only to know how to manage, and actual knowledge of the product or production processes was thereby superfluous. This works pretty well for the manager most of the time, as they tend to fail UP; for the business entities "blessed" with their acumen, however, it's not so rosy.

          Your black cards can make you money, so you hide them when you're able; in the land of milk and honey, you must put them on the table - Steely Dan

          by OrdinaryIowan on Sun Jan 19, 2014 at 06:39:04 PM PST

          [ Parent ]

          •  Like Louis Gerstner who failed so spectacularly (0+ / 0-)

            at IBM, right?  After all, coming from Nabisco he knew nothing about the IT industry.

            •  Gerstner is the exception, not the rule. (1+ / 0-)
              Recommended by:
              OrdinaryIowan

              Lots of research has been done on actively managed stock funds. The higher active management cost subtracts from the investors' gain, but adds practically nil. The same has been done comparing highest paid CEOs versus performance of the companies- high pay is to the detriment of the company (stock) owners. http://www.kansascity.com/...
              BBB, you've spent a lot of your short time here on Daily Kos defending poor downtrodden companies and CEOs. Let me give you two clues: (a) this is a progressive community, not a right wing pro-bidness site; and (b) it's a fact-based community, where reality trumps talking points, especially business marketing and agitprop.

    •  Does that apply to everyone? (0+ / 0-)
      NO ONE is worth millions upon millions in salaries, dividends, pay-outs and bonuses
      Does that apply to actors and sports stars?

      Actors are not running the major move studios, so why do the studios pay actors so much if the actors are not worth it?

      •  Why is it, do you suppose, (1+ / 0-)
        Recommended by:
        Lilyvt

        that CEOs in other countries don't make nearly as much as CEOs in the U.S., on average?  Are American CEOs that much better and more awesome?  

        Odds and ends about life in Japan: 1971wolfie.wordpress.com

        by Hatrax on Mon Jan 20, 2014 at 03:26:51 AM PST

        [ Parent ]

        •  That's a very good question (0+ / 0-)

          There are a few superstar CEOs who do.  For example, Carlos Ghosn who is CEO of Renault and Nissan.

          There are many potential reasons:

          1. In many countries the CEO is not as important.  For example, the Japanese economic model with its strong protection of existing incumbents may make the difference between a great CEO and an OK CEO less important.

          2. CEOs in other countries just are not as good.  Apotheker was a superstar in Germany, but when he tried to compete in the US he flopped miserably.  (On the other hand, SAP competes globally, so this is a tough argument to make.)

          3. CEOs in many countries are not globally portable - most Japanese CEOs only speak Japanese so they cannot threaten to quit and take jobs outside Japan for more money.

          I agree that there is a real question here, but I don't think this is proof that US CEOs are overpaid.

  •  Makers and takers! (5+ / 0-)

    The makers (who often shift wealth from taxpayers, like pharmaceutical companies with Medicare) create wealth and jobs, while the takers (hardworking employees who work back-breaking jobs at $8/hour) just want to mooch off others!

  •  The CEO is either raising the ROI or s/he goes... (1+ / 0-)
    Recommended by:
    DarkSyde

    ...which is why most chief positions last less than 20 months. The low hanging fruit I see in your question is around 90 managers I'd let go and save $18million annually. A good CEO can do more with fewer managers.

  •  I like the way you think. (9+ / 0-)

    Keep spreading this idea, I'd sure like to see some overpaid accountants out on the street selling pencils.

    "Time flies like an arrow. Fruit flies like a banana." --Townes Van Zandt

    by Bisbonian on Sun Jan 19, 2014 at 03:08:24 PM PST

  •  Good analysis. (10+ / 0-)

    It's one thing if a CEO earns a couple million per year, but once it becomes $20-30m, it's clear there's something wrong there...

    •  Put it in perspective, banana... (0+ / 0-)

      "a couple of million" is much more than most people in the very wealthiest countries on the planet can manage to scrimp and save in a lifetime, and we're talking about it being reasonable for someone to 'just' make that in one year versus some who make that much in a month. There is something really screwed up in our country where we accept that as somehow reasonable.

  •  You are misinterpreting what a CEO (17+ / 0-)

    Does in today's market. Used to be they were innovators, had direction for a company, a vision. That is no longer true. In today's corporate world, they are the salespeople of the bilking more company profit on behalf of the shareholders and selling this great package to the employees. They are literally nothing more more than what our politicians are: charming snake oil salespeople who sugar coat the stockholders interest, which is always more money.

    It is every person's obligation to put back into the world at least the equivalent of what they takes out of it. - Albert Einstein (edited for modern times to include everyone by me!)

    by LeftieIndie on Sun Jan 19, 2014 at 03:11:17 PM PST

    •  Then why do private owners (ie. PE firms) (0+ / 0-)

      also pay CEOs huge amount?

      •  That CEO is usually the true creator (1+ / 0-)
        Recommended by:
        Celtic Legacy

        of the company. If they haven't gone into IPO then they are usually the true owner. As such, as long as their company remains in the black, they make the big money. Which is actually pretty understandable. In our business I wear most of the CEO hat as far as the business administration day to day. Although I have worn all the hats in the company, I have a business partner who runs the other half of the company. Taking a company from nothing to something is a pretty big deal if you don't use any investors, and that CEO can legitimately take a bigger piece of the pie. I would never begrudge a CEO who is the owner of the company taking a bigger piece of something they built up.

        However, that all said, they do not get the huge payouts that are being discussed here. There is no board for them to report to, there is no set of investors who can boot them out, they can retire or sell the company. Either way, it's their baby if you will. The worst of the excesses are the companies that have stockholders.

        It is every person's obligation to put back into the world at least the equivalent of what they takes out of it. - Albert Einstein (edited for modern times to include everyone by me!)

        by LeftieIndie on Mon Jan 20, 2014 at 04:24:29 AM PST

        [ Parent ]

        •  Um.... do you know what a PE firm is? (0+ / 0-)

          When a PE firm owns a company (ie. after an LBO) the CEO is rarely the founder.  (Dell, with Michael Dell, is a rare counterexample).  Most CEOs in such situations are hired hands and the PE firm can replace them at will.

          •  Private Equity Firm, yeah I'm quite well (0+ / 0-)

            aware of it. So what do Private Equity firms do? They raise funds for companies... how do they do that? Through venture capital, through leveraged buyouts, growth capital and IPO's. Therefore, there is a board because IPO is all about buying shares in a company, which then means there is a board that sits over the CEO. Anytime outside money is put into a company to grow it, that takes the control of the company away from the original founding CEO/Owner. This is a hard decision for any company to make: take outside funds to grow the company faster and risk losing control of it (possibly completely as in Steve Jobs and Apple), or refuse outside funds and grow it organically. This is a decision we had to make in regards to our business.

            And let me point out, Michael Dell as in your example above, does in fact answer to a board. He has a rather unique position doesn't he? He's the founder/CEO of the company and still is, while he answers to a board. On a different note, Dell is not doing as well as in previous years, might want to check on how that came to be, which you can usually put to the share holders and how much money they want. This going from Month to Month, quarterly reports, for the maximum amount of money does one very bad thing for companies: creates a bubble that eventually has to burst. Dell is now in that position and has been for quite some time.

            It is every person's obligation to put back into the world at least the equivalent of what they takes out of it. - Albert Einstein (edited for modern times to include everyone by me!)

            by LeftieIndie on Mon Jan 20, 2014 at 09:33:12 AM PST

            [ Parent ]

            •  You may be aware of it but you don't understand it (0+ / 0-)
              So what do Private Equity firms do? They raise funds for companies...
              No.  Private equity firms invest in equity that is not publicly traded.  They can do so with private firms or by buying a public company and taking it private.
              how do they do that? Through venture capital, through leveraged buyouts, growth capital and IPO's
              VC, LBOs, and growth capital are PE, but they don't raise money for the company - they raise it for themselves and then invest it in the company.  LBO is a bit complicated - some money is borrowed by the company - but it is to fund the PE firm's purchase of the company.

              IPOs are the opposite of PE - you are taking a company public.  An IPO is often the exit for a PE firm.

              The rest of your comment seems totally incoherent.  Once a company IPOs it is no longer owned by the PE firm.

              Dell, as I pointed out, is a highly atypical example.  The board at Dell is now controlled by Michael Dell and Silver Lake partners.  I do not know in what proportion or even if that information is public, since Dell is now a private company.

              •  No actually I get it quite well, (1+ / 0-)
                Recommended by:
                JerryNA

                however you seem intent on using just one company as a specific, which has a very unique case of going from public to private to hold your argument with me. Originally you asked about private firms, when they are private and the CEO. I answered that. If you have a grudge against Dell and what Michael makes, take it up with him. But that is not a basis for using it to bludgeon every private company and note, I did not use PE in my first statement. I was very clear about private ownership and CEO's making money.

                It is every person's obligation to put back into the world at least the equivalent of what they takes out of it. - Albert Einstein (edited for modern times to include everyone by me!)

                by LeftieIndie on Tue Jan 21, 2014 at 04:40:17 AM PST

                [ Parent ]

  •  The CEO is paid by the shareholders, (38+ / 0-)

    and his/her job is to maximize shareholder return. There is nothing in this equation that refers to the worker. If the CEO could hire a million workers every year at $8/hour, and all of them lived in poverty, that CEO would be a hero to the shareholders. If another CEO came along that could reduce the wage to $7.50, that CEO would be an even bigger hero, because s/he would put another $1 billion on the bottom line. (2000 hrs x $.50 x 1,000,000 workers) It's referred to as the race to the bottom.

    This is why we need government. If government hired all excess workers at a living wage -- say, $15 / hr. This would very quickly dry up the supply of $7.50 workers. What would these workers do? There is more than enough jobs in infrastructure, education, law enforcement, and basic research to employ everybody.

    How to pay these workers? Increase taxes on the rich. At some equilibrium level of taxation and wages, we would produce the maximum well-being for Americans. Right now, we're not even trying.

    Republicans proved in October that they are UNFIT TO GOVERN. Don't let the voter forget it. (-7.25, -6.21)

    by Tim DeLaney on Sun Jan 19, 2014 at 03:15:26 PM PST

    •  I logged in just to rec this ^^^. n/t (7+ / 0-)
    •  But the CEO is a worker (9+ / 0-)

      The fundamental point that the writer is making is that CEO's are paid more than replacement cost.

      I completely agree with you; we need minimum wage and other social safety net features to prevent owners from exploiting labor (I like investing and am a former entrepreneur by the way), but that isn't the point here.

      It isn't "We paid the CEO 20M a year but the company made money so it's great".  That is exactly like saying "I paid $20 for a box of raisins, even though the same raisins could equally easily be had for fifty cents, but I was smart because the raisins tasted good."  They may have tasted good but you still overpaid for them.

      You raise valid broader issues but the point here is that we could pay CEO's much less and still have equally good CEO's.  In fact, they'd be better, because the savings would add to ROI.  German CEO's make a fraction of what American CEO's do, and seem to be doing an equally good job.  

      Something other than true free market principles is causing American executive pay to be irrationally excessive, and that's an important issue.

      •  You say: (4+ / 0-)
        You raise valid broader issues but the point here is that we could pay CEO's much less and still have equally good CEO's.  In fact, they'd be better, because the savings would add to ROI.  German CEO's make a fraction of what American CEO's do, and seem to be doing an equally good job.
        From the shareholders' point of view, if a CEO happens to be a sociopath bastard who is very talented at screwing the worker, he is a great CEO because he conveys profits to them. Perhaps the German system is better than ours; I don't know enough about Germany to say one way or the other.

        If the shareholders can gain $1 billion by hiring a CEO at a mere $10M premium, they have gained $990M. The American system rewards CEOs who are skilled at squeezing the worker. Labor is generally a corporation's biggest expense.

        We need to realign the incentive of corporations. Today, they are rewarded for screwing the worker. That's what we need to change.

        Republicans proved in October that they are UNFIT TO GOVERN. Don't let the voter forget it. (-7.25, -6.21)

        by Tim DeLaney on Sun Jan 19, 2014 at 05:45:04 PM PST

        [ Parent ]

        •  German CEOs work for the corporation... (3+ / 0-)

          ...AND for the people because most Germans share common values. Here's an example: when American CEOs were closing companies and outsourcing manufacturing to Asia, in Germany, they were looking for solutions that would be good for the country as a whole. So Germany turned toward quality products that took more person hours and kept people employed - and sold for much higher prices. That's a simplification, of course, but at the root of the problem with the US (and British, btw) is the absence of shared values.
              The 1% are playing a game to see who can win. They are working for themselves. There are the people directly under them, who are also working for the benefit of the 1%.  Then, there's everyone else - running around, trying to survive, with an every person for him/herself sort of attitude.  While all this is going on, almost everybody hates the government because it isn't working for the people, as it should. It's working for the 1%.
              Lack of solidarity benefits the 1%. It makes it much easier to exploit people. That's why they oppose unions and also oppose movements that arise on behalf of the people.    
              I see the core problem with the US economy as a moral problem that will only be solved by solidarity - people working together with shared values of patriotism and concern for one another. In addition, there is a dire need for political strategies that work. This will be challenging to achieve, but it's possible.

    •  Sounds like discount retail (3+ / 0-)
      Recommended by:
      kurt, Celtic Legacy, codairem

      Where as even store "managers" can make even less than minimum wage per hour due to long hours and missing benchmarks of bonus requirements.

      On drying up the supply of low wage workers - see any "Free Trade" agreement recently.

      “Those who can make you believe absurdities, can make you commit atrocities.” ... Voltaire

      by RUNDOWN on Sun Jan 19, 2014 at 08:15:17 PM PST

      [ Parent ]

  •  The problem stems from the fact that... (32+ / 0-)

    the CEO's compensation is voted on by the Board of Directors.  Who is on the BOD?  The CEO's of other corporations.  They have a vested interest in the inflation of top salaries.

    When you couple this with the inability of shareholders to sue the BOD or CEO (by recent case law).  They are bullet proof.  They can do exactly what they want with impunity.  Shareholder proxy votes are a joke.  When was the last time shareholders did not give their proxy to the BOD?

    As the Brits say, "it's a mugs game".  Only a fool thinks it can be peacefully changed.  The plutocrats have us by the short and curlies and they know it.  

    You will note that the Bill of Rights is now apparently a Bill of Concerns. Charles Pierce, Esquire Magazine Feb 2014

    by spritegeezer on Sun Jan 19, 2014 at 03:21:11 PM PST

    •  Just want to put this in... (12+ / 0-)

      There is nothing "peaceful" about nonviolent resistance.

      Nonviolence in its dynamic condition means conscious suffering. It does not means meek submission to the will of the evil-doer, but it means the putting of one's whole soul against the will of the tyrant.
      - Gandhi
      I'm of two minds about this.  MLK and Gandhi feature large in my thinking on this matter, but I occasionally ask myself certain troubling questions. Would MLK without Malcolm have succeeded?  Would Gandhi without Bhagat Singh have succeeded?

      Does the potential threat of violence against the powers that be enable nonviolent protest? Can this effect, if it exists, be approximated with violent action only against property, by monkey wrenching and economic sabotage? Must people die?

      I haven't come up with an answer.

      Join Essa in a revolt against the gods. Continue the fight, Causality.

      by rbird on Sun Jan 19, 2014 at 03:39:32 PM PST

      [ Parent ]

      •  Great questions, rbird. (5+ / 0-)

        I don't know the answers either.

      •  No and No. (3+ / 0-)
        Recommended by:
        BYw, kyril, codairem

        "Malcolm have succeeded?  Would Gandhi without Bhagat Singh have succeeded?

        Does the potential threat of violence against the powers that be enable nonviolent protest?"

        The key point is that if violence breaks out too soon or is too successful, that gives the PTB cover to bring out the machine guns.
        -----------------------------------------
        “I know”, Nimzowitsch replied, “but he threatens to smoke, and you know as well as I that in chess the threat is often stronger than the execution”.

        "Our problem is not that the glass is half empty or half full, but that the 1% claims that it is their glass." ---Stolen from a post on Daily Kos

        by jestbill on Sun Jan 19, 2014 at 04:12:00 PM PST

        [ Parent ]

        •  They need no excuse to bring out the guns... (3+ / 0-)
          The Jallianwala Bagh massacre, also known as the Amritsar massacre, was a seminal event in the British rule of India. On 13 April 1919, a crowd of non-violent protesters, along with Baishakhi pilgrims, had gathered in the Jallianwala Bagh garden in Amritsar, Punjab to protest the arrest of two leaders despite a curfew which had been recently declared.[1] On the orders of Brigadier-General Reginald Dyer, the army fired on the crowd for ten minutes, directing their bullets largely towards the few open gates through which people were trying to run out. The dead numbered between 370 and 1,000, or possibly more.
          http://en.wikipedia.org/...
          Thanks for contributing, but this is a question I asked myself, and history came up with an answer.  Not just here, but nonviolent protests against the Vietnam War were met with violence, nonviolent movements just about everywhere have faced incredibly violent opposition.

          Join Essa in a revolt against the gods. Continue the fight, Causality.

          by rbird on Sun Jan 19, 2014 at 04:37:10 PM PST

          [ Parent ]

          •  The US has an armed populace... (0+ / 0-)

            ...which the PTB would have to take into consideration. Now, I'm an old woman, but I've seen a lot in my life, and I know a little bit about politics and government. I'm about to write something that many of you will disagree with.
                 There is no hope that gun control will come at any time in the near future. That's a fact. Given that, I think that all progressives and other peaceable individuals should arm themselves and learn how to use these arms. It's only sensible. The country with the highest per capita gun ownership is not the US. It's Switzerland. By law, every Swiss head of household must have a gun, and training in how to use it.They are all members of a citizen militia. Now, that's not the case in the US, but I think it's important that people be on a more equal basis. And that people be able to defend themselves if called upon to do this. It's my opinion that remaining unarmed in a country where so many people are armed to the teeth is a big mistake.

          •  and then? (0+ / 0-)

            What happened after the massacre?

            Change comes slowly. Change comes slowly. Change comes slowly. Change comes slowly. Change comes slowly.

            What happened after Kent State?
            What happened after TV covered the Freedom Riders?

            Yeah, not much.  The protests did not end the Vietnam War.
            The massacre(s) in India did not result in independence for quite awhile.
            Etc.

            But public opinion changed--eventually.  It changed because the movement was made front page news.  The violence would not have happened if the PTB were sure that protesters would remain passive. It was their fear that caused it.

            A nonviolent movement is useless unless there is some credible threat.  A violent movement (SLA?) will be destroyed.  The middle ground is the only place to be.

            "Our problem is not that the glass is half empty or half full, but that the 1% claims that it is their glass." ---Stolen from a post on Daily Kos

            by jestbill on Mon Jan 20, 2014 at 10:13:12 PM PST

            [ Parent ]

      •  sounds like a distinction without a difference (1+ / 0-)
        Recommended by:
        OrdinaryIowan
        Nonviolence in its dynamic condition means conscious suffering. It does not means meek submission to the will of the evil-doer, but it means the putting of one's whole soul against the will of the tyrant.
        - Gandhi
        Either way you suffer, so what's the advantage?  The difference seems to be optics: i.e. "Let's sit quietly in white sheets while they beat and shoot us.  People will think we're spiritual or something."

        While Machiavelli said that given the choice, it's better to be feared than loved (fear can be earned through your own actions but love can only be given - and taken back just as easily - and it's most important for a ruler to keep the ball in his court), it's important not to be hated, since those who hate you will willingly suffer to tear you down.  Suffering and dying to tear down oppression versus suffering and dying under that oppression in the hope that a higher power will intervene (be it a god or just someone with more guns and something to gain: reputation, favors, etc.).

        I suppose if you truly believe in such a higher power and it's willingness both to help you and to judge you in your turn, then it might be more important to stay righteous no matter the cost.  Though it begs the question how people like that can justify a revolution in the name of anything as selfish and worldly as a higher standard of living?

        Domestic politics is the continuation of civil war by other means.

        by Visceral on Sun Jan 19, 2014 at 04:29:01 PM PST

        [ Parent ]

        •  So you are an adherent of violent revolution? (1+ / 0-)
          Recommended by:
          NCJan

          The difference between violence and nonviolence is mere "optics"?

          I think you've confused nonviolence with "passive resistance."

          There's nothing fucking passive about nonviolent protest, which rejects violence against humans, but does embrace economic warfare and violence against property.

          MLK led boycotts, Gandhi led campaigns that took away profits from English businesses in India.  Monkey wrench gangs sabotaged machinery in factories.  Nonviolent action was even undertaken in Nazi work camps during World War II, when weapons were intentionally broken by slave laborers during assembly.

          But my question remains, is this enough?  Does there need to be a component of violence, or the threat of violence, for nonviolent protest to work, a "deal with us or deal with them" situation?  Does MLK's success depend upon the existence of Malcolm X?

          Join Essa in a revolt against the gods. Continue the fight, Causality.

          by rbird on Sun Jan 19, 2014 at 05:23:04 PM PST

          [ Parent ]

          •  Excellent question (1+ / 0-)
            Recommended by:
            rbird

            The problem is that if you act like those you oppose, you become them.  Both Gandhi and MLK knew this.

            Even as we see non-violent movements spout violent elements before/as their aims are achieved, these very aims are undermined.

            We've just all got to put our thinking caps on and think harder about how to make non-violent resistance prevail and succeed.

            "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

            by NCJan on Sun Jan 19, 2014 at 05:31:57 PM PST

            [ Parent ]

        •  The biggest problem with violent revolution is (0+ / 0-)

          what comes after it succeeds. Violence often becomes the norm, the legitimate means of changing government. There is a reason why some African coworkers told me about a saying: "One man, one vote, one time." A violent revolution usually ends with a strong leader in charge, becoming a dictator, who then has to be removed from power by another revolution after years or decades of brutal rule. If you want a reason against violence, there it is: it does not create a peaceful society afterwards, but a brutal one. Think many countries in Africa, in Latin America, think Russia/USSR.

      •  I don't know the answers either but... (4+ / 0-)

        Non-violent persuasion has a far better track record.

        Countries that originated in violent revolution don't tend to be very good on human rights or quality of life.  The main exceptions are the US and France, but of course, the US had slavery and segregation long after our revolution.  France was a dictatorship several times after theirs.  And neither the US nor France is particularly strong on human rights in the current milieu.

        India is a socially conservative nation with severely ingrained social problems (they have strong anti-homosexuality laws on the books, for example, and millions of people without access to basic public health etc), but it has a stable democratic government, which is quite remarkable for such a large, diverse, and poor nation.  

        In almost all the countries with the best record on things like human rights, the environment, and quality of life, a traditional monarchy was non-violently subsumed into a democratic system, as a symbolic constitutional monarchy.

        There is no controlled experiment, but the circumstantial evidence seems very much to favor non-violent persuasion over use of violence.

    •  Exactly (5+ / 0-)

      They all sit on each others boards and vote each other pay raises.

      It's like a big corporate circle-jerk.

      If the pilot's good, see, I mean if he's reeeally sharp, he can barrel that baby in so low... oh you oughta see it sometime. It's a sight. A big plane like a '52... varrrooom! Its jet exhaust... frying chickens in the barnyard!

      by Major Kong on Sun Jan 19, 2014 at 05:17:28 PM PST

      [ Parent ]

    •  And the majority shareholders (0+ / 0-)

      The ones who hold multi-millions of "voting" shares or more.

      “Those who can make you believe absurdities, can make you commit atrocities.” ... Voltaire

      by RUNDOWN on Sun Jan 19, 2014 at 08:17:22 PM PST

      [ Parent ]

    •  So take control of the board. (0+ / 0-)
      The problem stems from the fact that...
      the CEO's compensation is voted on by the Board of Directors.  Who is on the BOD?  The CEO's of other corporations.  They have a vested interest in the inflation of top salaries.
      Granted, it's hard to find the 430B to buy out Exxon, but there are much smaller companies which are also failing to properly perform CEO searches.

      Buy them out and run them better.

      -7.75 -4.67

      "Freedom's just another word for nothing left to lose."

      There are no Christians in foxholes.

      by Odysseus on Sun Jan 19, 2014 at 09:26:33 PM PST

      [ Parent ]

    •  Plenty of companies that pay huge amounts (0+ / 0-)

      to their CEOs have a small number of large shareholders who can replace the board any time they wish.

      For example, HCA is still effectively controlled by the PE consortium that took them private last time together with the Frist family.

      Those guys are not charities and they can replace the board pretty much at will.

      How do you explain why they pay the CEO so much?

    •  So CEOs are Union Thugs. nt (0+ / 0-)

      Bello ne credite, Americani; quidquid id est, timeo Republicanos et securitatem ferentes.

      by Sura 109 on Mon Jan 20, 2014 at 12:54:14 AM PST

      [ Parent ]

  •  most CEO compensation tied to stock somehow (6+ / 0-)

    Therefore the CEO's interests are perfectly aligned with those of the other stockholders ... or they would be if those other stockholders had any balls, then they'd be totally on-board with looting and running.

    The moral of the story of the golden goose really is lost on these guys.  "Of course you kill the goose, sell its parts to the highest bidder, use that money to buy something bigger, kill that and sell its parts to the highest bidder, and so on and so on.  A goose is just potential earnings until you do something with it.  Why waste your time fussing over the goose while it trickles out money?  Milking is for stupid people and/or cowards.  The only correct course of action is the one with the greatest possible payoff - anything less is selling yourself short - and your job (or rather the job of the people under you) is to do whatever it takes to guarantee that payoff.  If you can't make the play this quarter, you won't get a chance next quarter, because a brand new CEO can boost stock prices just by showing up ... then you sell anyway and wait for things to settle back down then buy back in."

    Domestic politics is the continuation of civil war by other means.

    by Visceral on Sun Jan 19, 2014 at 03:27:49 PM PST

    •  As a stockholder (2+ / 0-)
      Recommended by:
      kkkkate, Odysseus

      As a stockholder nearing retirement, I want to know that the stocks I hold have solid companies with long-term plans and committed CEOs at the helm. (Yes, that used to be called blue chip.  I don't think it exists anymore.)

      It is not worth it to me to see short-term profit turned to bankruptcy in the course of a few years.

      So it is not really in my interest to see CEOs coming in for a few months or years and falsely boosting profits at the cost of the long term health of the company.

      I don't want to be a day trader.  I want to be an investor.

      "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

      by NCJan on Sun Jan 19, 2014 at 05:36:18 PM PST

      [ Parent ]

  •  jobs for the boys and girls (6+ / 0-)

    A few years ago a friend dated this pothead.  This guy managed barely to get his MBA, and his father set him up at a friends of the family company on CEO track. In a world where jobs like this were competitive, he would have never had a chance.

    Which is to say that asking a major investor to cut executive pay is essentially telling them that their kids are not going live the luxurious lifestyle of their parents.  Sure, every once in while someone gets in who is not from money, but those kids with wealthy parents are taken care of.

    Look at Warren Buffett.  He has set up 1 billion dollar charitable trust for each of his kids.  That is an essentially tax free transfer of wealth for which his kids will get a guaranteed very large salary.  Now, if we started talking seriously about limiting executive pay, how could he tansfer wealth without paying large taxes?

  •  privately held companies outperform (6+ / 0-)

    publically held ones.

    the difference is the owners are the managers
    and can operate to longer term.

    publically held companies live and die by the quarter.

  •  the great hazard of High CEO Pay is it destroys (13+ / 0-)

    Morale.

    When your boss makes 2-4 times what you make
    it's one thing, when the boss makes 400 times?

    who gives a darn about a good job, now suddenly
    it's just working to increase their bonus

    •  Not only does it destroy morale (5+ / 0-)

      It also means that the boss doesn't live in your community much less your neighborhood.  Their kids don't go to the same schools as your kids, they don't eat at the same restaurants, they don't go on the same vacations, they don't drive the same cars.

      In short it means that bosses have no clue as to how the 99% live because they are totally removed from having to experience it--even vicariously.

      "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

      by NCJan on Sun Jan 19, 2014 at 05:39:27 PM PST

      [ Parent ]

      •  the bosses never lived with the workforce (2+ / 0-)
        Recommended by:
        NCJan, codairem

        but, it was a lot closer coupled.

        I grew up in Chicago,

        The Working stiffs lived on the south side or south suburbs
        but the executives all lived up in Winnetka or lake forest.

        Later some of the wealthy were out in Oak Brook, Hinsdale,
        Oak Park or River Forest.  

        Some big money types lived in Hyde Park or on the Miracle Mile if they didn't have kids or their kids went to private schools.

        But trust me, the kids of the 1% didn't go to the same schools ad the bottom 80% even then.

        The Gap was 4:1 in 1964 and they had a lot of perks, paid gardeners, paid housekeepers, paid drivers but a CEO made in a career what Babe Ruth made in a season.

        •  I grew up in a small factory town (1+ / 0-)
          Recommended by:
          codairem

          I think big cities might be different from small town America, until recently a place where a lot of factory production took place.

          Of course when I grew up rich didn't mean mega--it meant what today would be called upper middle class, because income inequality wasn't as stark.

          While it was true that there were two sides of the tracks in my small home town, the children of upper level factory managers and doctors and lawyers and dentists did go to school with the children of workers.  

          While they were, of course, tracked differently, a smart child of a factory worker (or a small business owner) could get into AP tracking with the "rich kids" by dint of hard work and brains and involved parents.

          While the tracks were different, everyone played on the same sports teams and graduated together and had parades together and managers often found it in their interest to sometimes show up at the diner where the working folks had breakfast.

          Think Peyton Place.

          "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

          by NCJan on Mon Jan 20, 2014 at 08:35:20 AM PST

          [ Parent ]

          •  yeah in smaller towns (1+ / 0-)
            Recommended by:
            NCJan

            it's going to be more closely coupled.

            •  Or it was more closely coupled (1+ / 0-)
              Recommended by:
              patbahn

              Now most factories and mills etc. in small formerly working class towns have closed down or moved abroad and even if the rich (or upper middle class) live nearby in suburbs or in town, they would never send their kids to the same public schools as the rest of the town.

              This has huge implications in terms of how much of a tax base small, mostly working class towns are able to command to invest in schools.

              So income inequality is not only bad for mixing the classes, but for upward mobility as well.

              "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

              by NCJan on Mon Jan 20, 2014 at 11:01:36 AM PST

              [ Parent ]

    •  While freezing and cutting wages for the hourly. (0+ / 0-)

      “Those who can make you believe absurdities, can make you commit atrocities.” ... Voltaire

      by RUNDOWN on Sun Jan 19, 2014 at 08:22:54 PM PST

      [ Parent ]

  •  Well If We Restored Proper Progressive Taxation (14+ / 0-)

    and also on stock compensation, after around 3 million, the next dollars would be taxed at 70-90% and so for all of top management, today's extreme compensation wouldn't be offered or sought.

    It's the only answer to this problem that has ever worked. And without it, we've always had this gap.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Jan 19, 2014 at 03:40:04 PM PST

    •  this plus (7+ / 0-)
      after around 3 million, the next dollars would be taxed at 70-90% and so for all of top management,
      including all stock and stock option gains, with an exception for restricted stock that cannot be sold for 7-10 years.  So many of these CEO moochers make out big time after only a few years by gaming the numbers and the system, leaving the stockholders holding the bag.
    •  it used to be 90% on income above $200,000 (3+ / 0-)
      Recommended by:
      Odysseus, RunawayRose, codairem

      95% during WWII.

      $3 million a year - not net worth: PER YEAR - is an awful lot of money, especially considering the average income in the US is somewhere around $50,000 (one-sixtieth), and I remember seeing a graph of income versus population that suggested the greatest number of wage earners make somewhere around $20,000: i.e. minimum wage or slightly over.

      Compare that to Scandinavia, where tax rates start where ours stop - somewhere around 1/3rd - and average CEO salary isn't much more than 10-15 times that of the lowest paid worker.

      Domestic politics is the continuation of civil war by other means.

      by Visceral on Sun Jan 19, 2014 at 04:38:14 PM PST

      [ Parent ]

    •  Amen n/t (0+ / 0-)

      "If you are cast on a desert island with only a screwdriver, a hatchet, and a chisel to make a boat...go make the best one you can. It would be better if you had a saw, but you haven't." T.Roosevelt on politics.

      by NCJan on Sun Jan 19, 2014 at 05:39:46 PM PST

      [ Parent ]

  •  In addition ....... (5+ / 0-)
    Ten million or twenty million dollars sounds like a lot, but it's just a drop in the bucket.
    Add to that the rest of the CEO's senior management minions ..... and it's often more than 10% of total revenue (sometimes a lot more).

    "We should pay attention to that man behind the curtain."

    by Ed Tracey on Sun Jan 19, 2014 at 03:41:37 PM PST

  •  been there... (6+ / 0-)

    One company where I worked saw layoffs of perhaps 10% of (mostly low- or mid-level) employees in several stages over a one-year period.  This followed a year in which "all" wages had been frozen, due to the stalled economy.  

    The year following the dismissals, the CEO's salary was increased from $7 million to $14 million plus various perks.  Apparently the stockholders, or more likely his peers on the board of directors, thought he had saved the company a lot of money.  

    A few years later, after a few more large-scale layoffs, the CEO was getting $28 million as well as perks.

  •  Restructure (3+ / 0-)
    Recommended by:
    dksbook, NoMoreLies, cherrymapin

    We can see from the trade agreements that the US and US workers have been given the shaft since NAFTA.  Multi-national corporations use and abuse the US by buying Congress, destroying regulations, using military power overseas to support their extractions.   CEO's are global citizens like Romney stripping US companies for profit and exploiting their assets for sale and use offshore where they park their money tax-free.  No reason US citizens benefit from any of their actions.  Their shareholders are powerless other than not to invest in them.  The myth that the purpose of the corporation is to make as much money as possible regardless of their actions was started by them.
    Stop the give-away trade agreements.  Stop corporate power and control of our government.  Start new business models that have quality, reasonable sharing of income and enhance the US as it was 40 years ago before the take-over and ruin of the US worker.  If other countries admired the US multi-national corporations so much, there would be no need for trade agreements that give away the US to enhance foreign countries who block our products with tariffs and quotas.  The balance-of-trade tells the story.  We have been sold out.

  •  Wasn't there an episode with Ben & Jerry's where (0+ / 0-)

    there tried a to hire a sensibly lower paid CEO and it didn't work out?

    I recall a story like that on TV some years ago.

  •  CEOs don't get paid for their smarts (4+ / 0-)

    They get paid for the thickness of their "roll-a-dex."

    Once you get to the top position you're not the person who fixes the photo-copier, drives the truck, answers the phone, or files the corporate tax return. You pay others to do that.

    However, position is for the person who can pick up the phone and get in touch with someone who can help that company when the chips are down.

    Whether it is a customer, a vendor, a banker, old college roommate, or government official that provides the help, the true value to the company is that the CEO has sufficient personal contacts to make things happen, which otherwise can not be achieved.

    At the CEO level, success in business is all about who you know, not what you know.

    "There are many truths of which the full meaning cannot be realized until personal experience has brought it home." John Stuart Mill

    by kuvasz on Sun Jan 19, 2014 at 03:51:51 PM PST

  •  Hiding profits (1+ / 0-)
    Recommended by:
    Major Kong

    Without a doubt, balance sheets are next to impossible for shareholders to decipher.  On top of that stock analysts can't always tell legitimate expenses from phony ones - it all depends on how much time there is to commit to studying it.

    That said, if a publically traded company reports say, $0.20/share in net earnings in Q1 and in Q2 he needs to show $0.21 to look like a hero.  In reality If gross earnings are $0.26, it's easy to make that that nickel disappear -through bonuses, offshore vendor accounts that trace back to the parent company, you name it - there are many ways to hide earnings so that you can not only hide earnings but you can FIND earnings if you need to make the quarterlies balance.

    As an example, Oracle floats 44.5 billion shares.  Even 1 penny per share is huge!

    •  Earnings management is getting less and (0+ / 0-)

      less possible.

      The SEC has cracked down on it and analysts are using statistical tools to identify suspicious companies and then recommending selling them.  (ie. a company that keeps making its numbers by one penny but never misses by one penny.)

  •  No they aren't (1+ / 0-)
    Recommended by:
    happymisanthropy

    nosotros no somos estúpidos

    by a2nite on Sun Jan 19, 2014 at 04:12:50 PM PST

    •  Not Oracle necessarily but as an example. (0+ / 0-)

      Many big homebuilders sold their land holdings at a loss to offshore entities that can now sell land back to the original company at a huge profit.  That offshores the profits and limits the balance sheet earnings of the domestic entity.  It's not necessarily hidden from investors either.  Enron hid it; Halliburton did not, at least not all.  Mostly they used it to skirt anti-trade regs with terrorist countries.

  •  New Fair Play Rule (0+ / 0-)

    The most anybody can be compensated in any corporation is 75 times the compensation of the lowest paid.

    This includes all forms of compensation.

    Simple and fair.

  •  T&R'd, bookmarked for community edu! (1+ / 0-)
    Recommended by:
    RiveroftheWest

    Just the talking points we need to be using about the plutocratic society.

    Poverty is not an accident. Like slavery and apartheid, it is man-made and can be removed by the actions of human beings. —Nelson Mandela

    by kaliope on Sun Jan 19, 2014 at 04:30:46 PM PST

  •  Sadly, most shareholders have no control (6+ / 0-)

    Shareholder rights have been systematically reduced over the years. Most shareholders have no control at all over executive compensation.

  •  An OUTSTANDING analysis (5+ / 0-)

    I've worked in corporate healthcare... upper middle management in a department that only existed because we HAD to...Occupational Safety.

    I have NEVER understood how the value of a CEO or a CFO or any of the higher up muketymuks could be justified... Not in the face of nurses and medical techs working 16 hours for little pay in comparison.

    What is it a CEO actually does? Play golf, hold luncheons, rub elbows with other CEOs and people with money.... how does that really help the bottom line?

    Hell, I'll learn to play golf for 1/4 of what the CEO makes any time in any industry.

    "Growth for the sake of growth is the ideology of the cancer cell." ~ Edward Abbey

    by SaraBeth on Sun Jan 19, 2014 at 04:37:57 PM PST

    •  Not to defend CEOs... (1+ / 0-)
      Recommended by:
      catwho
      Play golf, hold luncheons, rub elbows with other CEOs and people with money.... how does that really help the bottom line?
      ...but you would be surprised.

      A lot of things can happen over lunch or on the golf course or sitting around shooting the shit at a bar. I've done it (not the golf, but certainly having dinner and a drink at a reception). In one case I was involved in, we were stalled in negotiating a contract with a company's lawyers and lower management because they were more concerned about squeezing every advantage out of the contract rather than producing a document both sides were happy with.

      I was at a conference with said company's president also attending and we met during a reception. The discussion came around to the contract and why it was taking so long to be completed, and I explained what the issue was. He called over the executive responsible for the contract (the company was hosting the reception, so many of their management was there) and within 30 minutes we had the outstanding issues sorted out, casually chatting over beer. Next day the messages started flying downhill toward their lawyers and the agreement was concluded within a few days of me getting back in the office.

      Networking really is a critical component of business because it creates the direct, personal, contacts that can help get around blockages in the system. Like everything, it can be used for good or evil, but don't denigrate its importance.

      •  Agreed, but... (0+ / 0-)

        ...in the Fortune 500 environment, a lot of that "networking" is basically the old boys' club.  Real OTJ networking, like everything else, is for the little people.

        By the way, management consultant types have estimated the typical CEO workweek.  It's about 51 hours.  That's above average, but doctors, IT people, lawyers, nurses, and most people in emergency services work more.  There isn't much correlation between length of workweek and productivity for most exempt professional jobs.

    •  Laugh... you've never operated at that level (1+ / 0-)
      Recommended by:
      catwho

      Here are some of the things a CEO does:
      1. Hire all the other senior positions (and fire when necessary) and set compensation plans and priorities for those people
      2. Set major strategy (ie. at HP Apotheker killed WebOS, made the decision to divest the PC division, and pushed through the shambolic Autonomy acquisition)
      3. Define corporate culture (ie. at Oracle, Larry Ellison was once asked to decide what to do about two salespeople who got into a fist fight at a customer.  He asked their manager "Are they on target to make quote",  "Yes", turning to the sales reps, "Don't do it again." - sending the clear and repeated message that the only thing that mattered at Oracle was sales.)

      You just have to compare the records of Ellison at Oracle with Apotheker at HP so see that these things really do matter.

      •  Laugh, indeed. I've done it. (2+ / 0-)
        Recommended by:
        SaraBeth, codairem

        Of course, the businesses I've run have been my own- a translation and relocation assistance company, a small store, and an antique radio restoration business.  Of course, these businesses weren't big at all- three, three, and one (myself) employees.  But I did everything you say the big CEOs do, and more (maintenance, IT, marketing, even janitorial!), and I'm under way more pressure, because if I screw up, my wife and I are living in a cardboard box (plus my business partner, in the case of the store).  The corporate CEO, on the other hand, screws up and sinks the company, shrugs, floats to the ground on his $30 million golden parachute, and is hired six months later by the next company (or retires at 40, or starts his own business with millions in assets and business contacts).

        There are definitely some "superstar CEOs" whose value to their companies justifies their enormous salaries.  For the rest of them, the only difference between them and similarly-able people who will never get a shot is a silver spoon, a legacy admission or a daddy-financed MBA, membership in the correct campus societies, and a sociopath's view of their fellow humans.    

        Odds and ends about life in Japan: 1971wolfie.wordpress.com

        by Hatrax on Mon Jan 20, 2014 at 05:06:09 AM PST

        [ Parent ]

      •  "Define corporate culture" (0+ / 0-)

        Yeah, I've dealt with that crap too...and it can and literally does kill people.

        Like I said... I don't put much value on a CEO. Especially one who has never gotten his or her hands dirty.

        "Growth for the sake of growth is the ideology of the cancer cell." ~ Edward Abbey

        by SaraBeth on Mon Jan 20, 2014 at 05:57:55 AM PST

        [ Parent ]

  •  So, just for yuks... (2+ / 0-)
    Recommended by:
    Odysseus, codairem

    I compared this list to the Fortune 100 for 2013, to see what highly rated companies DON'T have CEOs on the "Top 100" list.  Of the top 20 of the Fortune list, these companies don't appear to have "top 100 CEO pay":

    #5 Berkshire Hathaway (do they even release Buffet's compensation?)
    #6 Apple
    #7 General Motors (makes sense)
    #9 Valero Energy
    #12 Fannie Mae (makes sense)
    #15 Hewlett-Packard
    #16 Verizon Communications
    #17 UnitedHealth Group
    #18 JP Morgan & Chase (that surprised me)
    #19 Cardinal Health
    #20 IBM

    Make of it what you will...

    The word "parent" is supposed to be a VERB, people...

    by wesmorgan1 on Sun Jan 19, 2014 at 04:39:33 PM PST

  •  CEOs making 280 times (5+ / 0-)

    what average workers make? Unless they cure cancer all by their lonesomes, no fuckin way.
    Need to go back to tax rates before Raygun and stop giving people hot money to create chaos in  the markets.

    What do we want? Universal health care! When do we want it? Now!

    by cagernant on Sun Jan 19, 2014 at 04:45:16 PM PST

  •  Here's a thought for the hard to convince (3+ / 0-)
    Recommended by:
    NCJan, Matthew D Jones, catwho

    There are a lot of numbers out there about the relative pay of CEO and 'average workers' over the last 15 years or so but most that I've seen are in the 200-400 range.

    The salary of the 'average federal employee' recently has been around $80,000.

    The president gets $400,000 - ok, he also gets a travel allowance and some other stuff that pushes it up to about $600,000 if you want to include that ( 'fringe' benefits are hard to quantify for the very rich or very powerful).

    But in either case
       $400k / $80k =   5  

       $600  /  $80k  =  7.5

     Not exactly close to 200-400 !  

        $80k * 200  = $16 million
        $80k * 400  = $32 million

    So you can ask someone who thinks that CEOs earn their money if they then think that the president should get paid between  $16-32 million per year !

    •  Is there a competitive market for presidents? (0+ / 0-)

      Could Obama ask us for a raise and if we refused jump ship to Germany and become their Chancellor?

      Do you think that qualified potential presidents are not running because the job pays too little?

      I don't think any of these are concerns, so no need to raise the president's salary.  In fact, we should consider dropping it.

  •  I'm sure this has been posted but.. (6+ / 0-)
    We find evidence that industry and size adjusted CEO pay is negatively related to future shareholder wealth changes for periods up to five years after sorting on pay.
    PDF: http://online.wsj.com/...
    •  Ooh and I particularly like this bit (3+ / 0-)
      Recommended by:
      cherrymapin, OrdinaryIowan, Odysseus
      Our results are consistent with high-pay induced CEO overconfidence and investor overreaction towards firms with high paid CEOs.
    •  This kind of analysis is very hard to do (0+ / 0-)

      right.

      For example, say that CEOs who did very well for shareholders over the past 5 years got the highest pay going forward.

      Now, some of that would be due to luck and some due to skill.  But the luck component presumably would not last.  Therefore, simply due to reversion to the mean, you would expect high CEO pay to be negatively correlated with future changes to shareholder wealth.  But that would not be an argument not to pay CEOs based on past performance.

  •  two other answers (2+ / 0-)
    Recommended by:
    Odysseus, codairem

    not that I like them but:

    1) The board sets the salary. The board hires a consultant. The CEO hires the board. The consultant presents the range of current salaries. The board chooses to pay the CEO a salary in the top 50% or top 33%.

    2) Never explicit, but the CEO's salary functions as a cap on the salary of other employees, so all the top execs have an interest in seeing the CEO get a ridiculously outrageous salary so their own pretty outrageous salaries are not questioned.

    "Your victory has demonstrated that no person anywhere in the world should not dare to dream of wanting to change the world for a better place." -- Mandela

    by agoldnyc on Sun Jan 19, 2014 at 05:36:11 PM PST

  •  1. "The Vision Thing" 2. Who saves money (0+ / 0-)

    The most common actual answer, aside from, "We have to pay $20,000,000 because Bobo Wharehouse pays $18,000,000 to theirs, and we're better," is
    1.The CEO is paid that much for having a VISION for the future that will maximize return for investors
    This is the super secret sauce that the CEO has that allows the creature to not have worked in the field, not have used the company's product or service ever, and yet be the "best person" for the company. The CEO will have a vision whereby, soon, the phone company will no longer have any land lines anywhere in America, will strip all the copper wire out of its grid, and thereby challenge cable carriers who will be left without a pipeline while simultaneously expanding into fifteen brands of cellular service and acquisitions of movie studios so as to ensure that consumers will be purchasing "a la carte" everything with their phones plugged into their television sets. Meanwhile, the CEO will be breaking union contracts and destroying the physical plant of the corporation to lower "costs" and raise "profits."

    2. Salaries are determined by the board. The CFO will save money on labor.
    The Uberboss realizes that it would be good to save $2,000,000 and makes $4,000,000. He or she sends out an order, "Cut $3,000,000!" The Big bosses get this demand, and they send it down, "Cut $150,000 per division!" The bosses get the command and shout at the supervisors, "Cut $15,000 apiece!" The result is that no one with power thinks to cut him or herself and the company inevitably cuts the people who make or perform the business of the company.

    When the bosses achieve these savings, incidentally, someone will get a big, fat bonus!

    Everyone's innocent of some crime.

    by The Geogre on Sun Jan 19, 2014 at 06:42:58 PM PST

  •  It doesn't matter what people here think. (0+ / 0-)

    If I don't own an interest in the company, I don't get to make the decision of whether the CEO is "worth it" or not.  It's not my decision to make.  

    The decision of whether a CEO is "worth it" belongs to the owners of the company -- the people who are paying his/her compensation.  In a privately-held company, the owners decide what to pay the CEO. In publicly traded company, the shareholders are represented by a Board of Directors, who decides what to pay the CEO.  And the shareholders have the final decision as to what THEY think the CEO is worth -- they can sell their shares if they don't like the CEO's compensation.  If enough shareholders do that, the stock price tanks.  

    And frankly, most  shareholders judge a CEO by one criteria:  Does he/she maximize shareholder value?  That's the CEO's job.  Period.  

    I'm always amused by whether people here think some CEO is "worth it" or not.  It doesn't matter what you think, or what I think.  The only thing that matters is what the owners of that company think.  

    And I suspect people here who think CEO's "do nothing" have no realistic idea what a good CEO does.  For how a CEO can affect the success of a company, see for example Steve Jobs.  Apparently, he was not always a nice man.  But he was a HUGE part of the success of that company -- as demonstrated by the lack of performance when he wasn't there.  

    The federal government can put limits on deducting CEO compensation - and it has.  Under Internal Revenue Code section 162(m), publicly traded companies can only deduct $1 million  in compensation as an employee compensation expense -- anything above that has to be performance based to be deductible.

    Government can -- and does -- set tax policy.  And government can  and should make sure that CEO's pay the taxes they legally owe on their compensation -- right now, CEO compensation over $400,000 is taxed at 39.6% at the federal level, maybe another 9 or 10% at the state level.  Add in the Medicare taxes (and some local income taxes in some places),  and about half of that CEO pay goes to taxes.  That's the role of government -- to set tax policy.   But outside of tax policy, government has no business telling a company that it cannot pay a CEO what that company wants to pay to get the CEO that the owners want.  

    •  I think the point is.. (1+ / 0-)
      Recommended by:
      Odysseus
      And frankly, most  shareholders judge a CEO by one criteria:  Does he/she maximize shareholder value?
      ..that shareholders are actually not good at assessing this, or are doing so according to ideas or logic that does not correspond with the evidence. See my post above:
      We find evidence that industry and size adjusted CEO pay is negatively related to future shareholder wealth changes for periods up to five years after sorting on pay.
      http://online.wsj.com/...

      You're right, opinions of non-shareholders don't matter, but evidence does. There's an almost total lack of actual evidence that higher CEO pay actually results in a better performance. CEOs in Europe (where the worker/CEO ratio is far lower) do not do noticeably worse than CEOs in America, and in fact frequently do better. The stats just don't support the idea that high pay for CEOs is worth it. Instead we get circular logic (High pay because we're worth it: how do we know we're worth it? Well, look at my high pay!).

      •  "We" don't get anything (0+ / 0-)

        circular logic or regular logic.  And "we" don't deserve anything.  People who invest their money in a company do.  They can look at your evidence and decide if they want their money in a company that pays the CEO $x dollars.  "We" don't make that decision for them -- and certainly government doesn't have any role in making that decision for them.  If CEO pay is important to you in investing your money, then it's your obligation to get that information.  If return on investment is what's most important to you in investing your money, then it's up to you to get that information.  

        Here's the question: So, some people here don't think some CEO's are "worth it"?  So what?  I would assume that no one who thinks a particular CEO is not "worth it" would invest any money in a company that overpaid a CEO.  

        I guess the only purpose of diaries like this is to try to convince enough shareholders to take their money out of companies that pay CEO's more than they think the CEO is worth?  Other than that, what is the point?  

        All the focus on CEO pay is really counter productive, in my opinion.  If the concern is that people at the bottom of the economic ladder don't make enough to live on -- a completely legitimate concern -  then focus on fixing that.  Diary after diary about this CEO being overpaid or that CEO being overpaid does nothing to help that.  

        •  I invest my money in companies. I own stock. (0+ / 0-)

          I have no, zero, way to express my opinions. I want the companies I own to be run for the betterment of the long term growth and health of the company, which requires a healthy society and workers. What I have are rules that let me vote "yes" or "abstain" to proposals from a handful of directors. What I get is management by quarters by people who are only looking to their next bonus and stock option grant. The CEO as overpaid rockstar is a big part of the reason why corporations are bleeding workers dry with lower pay, stripping pensions, stealing benefits, and otherwise acting like vultures instead of growing the community.

  •  you would think (1+ / 0-)
    Recommended by:
    Odysseus

    in the 21 century the good ole boy system would be a thing of the past but in their last ditch attempt to save the past it has only gotten worse today.

    the good thing is time is on the side of the people and the corporate thieves time is coming to an end, you can delay the inevitable but you can't stop it.

  •  CEOs are NOT worth it. (0+ / 0-)

    CEOs are normally not inventors of major industries. They are basically hired hands who have politicked their way into corporate power. They are just another worker unless they created the industry. True entrepreneurs deserve to profit from their risk-taking. CEOs who have not been the primary force behind creating an industry do not deserve more that 10 to 15 times what an average worker makes in the corporation. They can be replaced just like any other worker. They have done nothing to make jobs and a better economy. In many cases greedy executives give themselves raises and bonuses when their company is going bankrupt. Witness the greed in Enron for example. GM,...and a host of other corporations have CEOs that are given outlandish salaries despite their corporations losing money.

    Basically, it is greed that comes with power to name one's own salary that causes the Exxon mobil CEO to give himself a 400 million dollar retirement package. Simply put, he is not worth any thing more than a retirement package like government chiefs get. Government executives are allowed 80 percent of their regular salary which is controlled by law so as not to be unduly exorbitant. There is no control over the greed of CEOs in the USA. Some nations have restrictions on how much compensation a CEO can be paid.

    American Heart Association: Diet Soda can cause type 2 Diabetes. "Circulation" July 23, 2007. Read it for yourself.

    by jeffrey789 on Sun Jan 19, 2014 at 09:50:32 PM PST

    •  Worse than that (1+ / 0-)
      Recommended by:
      jeffrey789

      If you ARE an entrepreneur and you create a large, successful company, the first thing that happens is that pundits on CNBC start saying that "it's time for a change", especially the first time you fail to turn in a quarter of 50% growth, even if your company is so big that it's no longer possible.  And it happens even if you own 80% of the stock.

      And the CEO labor pool is so entitled that even if you do decide that you want professional management you find out that it's one big snake pit of cronyism.  Most companies need a good VP of marketing. Most VPs of marketing are imbeciles.

  •  Another consideration (0+ / 0-)

    Most of that CEO pay is "contingent."  The base salaries aren't paltry but they're not usually a big piece of CEO compensation.

    The obvious example is equity compensation.  This creates a huge incentive to emphasize short term returns and hide any long term issues.

  •  Since CEO's big job is competition ... (0+ / 0-)

    their "value" is not real  net utility production, but rather relative advantage over other companies. That is like military spending, it is only "worthwhile" to counter something else. But workers actually "produce  more" and add to net GDP! See the difference?

  •  Most managers don't make $200k (1+ / 0-)
    Recommended by:
    JerryNA

    Until they're at director level at least - more usually half that at best.  But from there up the pay skyrockets.

    Republican threats amount to destroying the present if we don't allow them to destroy the future too. -MinistryOfTruth, 1/1/2013

    by sleipner on Mon Jan 20, 2014 at 03:10:04 PM PST

skybluewater, Mark Sumner, Alumbrados, vicki, Odysseus, glitterscale, eeff, musicsleuth, dpeifer1949, niemann, lucky monkey, bronte17, CanadaGoose, susakinovember, corncam, Bill Roberts, rjnerd, dksbook, revsue, Redfire, annan, Eyesbright, MA Liberal, wdrath, ohiolibrarian, Steven Payne, Sychotic1, lcrp, Major Kong, jcrit, Black Max, eztempo, Gowrie Gal, radarlady, NoMoreLies, tle, ichibon, stlawrence, Erik the Red, 1Nic Ven, YucatanMan, Kevskos, SaraBeth, GreyHawk, kaliope, bunsk, Brian B, Land of Enchantment, xaxnar, third Party please, tommymet, golem, 417els, arlene, The Hindsight Times, jhannon, NCJan, mbdunn, unclebucky, Unitary Moonbat, hlsmlane, Turbonerd, BlueMississippi, kurt, bstotts, out of left field, Debs2, yoduuuh do or do not, LillithMc, Mary Mike, mommyof3, DWG, millwood, Wreck Smurfy, chujb, on the cusp, gizmo59, gundyj, gfv6800, GAS, tofumagoo, pickandshovel, codairem, Uncle Bob, BYw, Issek, HarpboyAK, slathe, HoosierDeb, lissablack, checkerspot, DontTaseMeBro, maryabein, rbird, CamillesDad1, TheOpinionGuy, kevinpdx, stevenwag, Black Kos, Railfan, p gorden lippy, catwho, Luma, LOrion, NM Ray, psychbob, tb mare, pixxer, Jaimas, Betty Pinson, cocinero, slice, Onomastic, annieli, Bluefin, Matthew D Jones, slowbutsure, xarkGirl, vahana, FarWestGirl, Jasonhouse, Coastrange, LSmith, corvaire, myrmecia gulosa, poliwrangler, bakeneko, SteelerGrrl, dradams, Azazello, jacey, KansasNancy, nominalize, OldDragon, molecularlevel, IndieGuy, Eric Nelson, a2nite, belinda ridgewood, radical simplicity, Arahahex, Buckeye54, wxorknot, rat racer, dotdash2u, OooSillyMe, George3, The Geogre, Blue Bell Bookworm, The grouch, Tim DeLaney, Witgren, mettle fatigue, HedwigKos, alice kleeman, sfbaytransplant, RiveroftheWest, JerryNA, riesling, Homer177, Grandson named me Papa, furrfu, peterfallow, ET3117, tampaedski, Mickquinas, TheDuckManCometh, vschultzvidal, RUNDOWN, richardvjohnson, Dodgerdog1, Capt Crunch, jbsoul, old mule, Nattiq, kkkkate, sillycarrot, DrSUSE, Darth Stateworker, SoCalSocialist, writeofwinter

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site