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Are Bankers Paid Too Much? Are Technology CEOs? 712

Posted by timothy
from the can't-even-count-that-high dept.
DavidHumus writes with this excerpt from a New York Times article: "Big paydays on Wall Street often come under laserlike scrutiny, while Silicon Valley gets a pass on its own compensation excesses. Why the double standard? The typical director at a Standard & Poor's 500 company was paid $251,000 in 2012, according to Bloomberg News. Mr. Schmidt [Google's CEO] is above that range by over $100 million. ...The latest was the criticism of Jamie Dimon's pay for 2013, given the many regulatory travails of his bank, JPMorgan Chase. The bank's board awarded Mr. Dimon $20 million in pay for 2013, $18.5 million of which was in restricted stock that vests over three years. ...For one, the outsize pay for Mr. Schmidt doesn't square with Google's performance. Putting aside the fact that he is not even the chief executive, Google had net income of $12.9 billion last year. JPMorgan was higher at $17.9 billion...." DavidHumus notes "Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"
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Are Bankers Paid Too Much? Are Technology CEOs?

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  • by cfulton (543949) on Thursday February 20, 2014 @01:27PM (#46295905)
    But, the kitty that they are paid from is soooo large that from the corporate perspective they are not all that expensive. And free enterprise etc. So, paid too much yes. Anything we can really do about it no.
  • Gee.. (Score:4, Insightful)

    by 3.5 stripes (578410) on Thursday February 20, 2014 @01:28PM (#46295915)

    I'm guessing people are focusing on the bankers because google didn't fuck the world's economy.

    I still think it's bullshit.

  • Because (Score:5, Insightful)

    by boristdog (133725) on Thursday February 20, 2014 @01:30PM (#46295931)

    Because the tech sector hasn't crashed the world economy...yet?

  • by SQLGuru (980662) on Thursday February 20, 2014 @01:33PM (#46295963) Journal

    At the top tier (VP, Pres, CxO), pay should be capped as some (documented) multiplier of the lowest level salary. Bonuses should be tied to company performance. That's it. If the CIO wants to get paid more, he either needs to raise the rates of those below him or improve the performance of the company in some meaningful way. When a company making billions pays its executives $50M but lays off thousands making $40K, it feels really crappy. Sure, I understand that sometimes those layoffs boost performance and what not, but there really is a point where having MORE money doesn't really do much for you.......whereas losing your job is VERY disruptive.

  • by fahrbot-bot (874524) on Thursday February 20, 2014 @01:34PM (#46295993)

    ... how much money does someone really need? I'm not against Capitalism, but seriously, does one person really need $100 million, or even $20 million as an (semi?) annual salary or bonus? Does a CEO need 500 times (recent figures) the average salary of his/her own employees - you know, the people doing the actual work?

  • by mi (197448) <slashdot-2012@virtual-estates.net> on Thursday February 20, 2014 @01:35PM (#46296007) Homepage

    "Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

    The even bigger question is, why is this any of our business? As long as it is not the taxpayers footing the bill, count your own money...

  • Perhaps... (Score:4, Insightful)

    by Anonymous Coward on Thursday February 20, 2014 @01:36PM (#46296025)

    Perhaps if Google and Apple had done the same damage to the economy as bankers did a few years ago and had to be rescued with 700 billion dollars (from a government that argues that a few billion in homeless shelters is wasteful expending) people would be pissed at them too.

  • by Max Threshold (540114) on Thursday February 20, 2014 @01:37PM (#46296027)
    Some jobs are harder than others, and deserve to be rewarded more than others. But absolutely nobody "earns" more than a small multiple of minimum wage, and this should be enforced with a progressive tax structure based on an algorithm in which the only variable is the minimum wage. At today's minimum wage, astronauts, brain surgeons, and the President of the United States should be making about $60K a year, and it should only go down from there.
  • by brunes69 (86786) <`slashdot' `at' `keirstead.org'> on Thursday February 20, 2014 @01:40PM (#46296083) Homepage

    CEO pay in general is too high I agree.

    But I find it easier to stomach Silicon Valley CEO pay for a reason - they are producing an actual product whereas investment banks do not - they actually harm the economy, they don't help it.

    http://en.wikipedia.org/wiki/F... [wikipedia.org]
    http://www.huffingtonpost.com/... [huffingtonpost.com]

    Furthermore, most Silicon Valley CEOs are either founders of the companies or were involved from an early phase. They put a lot of blood and sweat into these companies over the years. They are not just MBAs flown in for a couple of years to later on bail with golden parachutes when things get rough.

    http://en.wikipedia.org/wiki/F... [wikipedia.org]

  • by Billly Gates (198444) on Thursday February 20, 2014 @01:40PM (#46296091) Journal

    *devils advocate*

    Why should they be capped?

    It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

    Doing so would make great talent do something else or not try as hard and everyone looses out.

    If someone is paid too much the market takes care of that with something called a firing. Losing your job does suck and is very disruptive but the shareholders need a return and who is the shareholder? Your elderly mom, YOU, etc. If you have a savings plan you own shares. Also investment money is needed to expand or go into more markets. They only way to do that is to have great accounting books.

    Yes it does suck to be laid off at a human level, but ask yourself what are you providing? The reason you are let go is because you fix some computers. The CEO on the otherhand changes the lives of milllions of people.

    You want that cash and job security then you ought to be a better worker and provide greater value. The sky is the limit and the CEO didn't start out like this overnight. It was not luck. Even company founders are poor. It took Zuckerberg 10 years before he became very wealthy.

    The free market takes care of everything if you just bud out and not interfere.

  • by mrchaotica (681592) * on Thursday February 20, 2014 @01:44PM (#46296127)

    At the top tier (VP, Pres, CxO), pay should be capped as some (documented) multiplier of the lowest level salary. Bonuses should be tied to company performance. That's it. If the CIO wants to get paid more, he either needs to raise the rates of those below him or improve the performance of the company in some meaningful way. When a company making billions pays its executives $50M but lays off thousands making $40K, it feels really crappy.

    The fact that executive pay being so disproportionate to employee pay "feels really crappy" is not a problem. The fact that executive pay being so disproportionate to employee pay destabilizes society by destroying the middle class is a problem!

  • Re:ELOP (Score:5, Insightful)

    by mbone (558574) on Thursday February 20, 2014 @01:45PM (#46296149)

    Another word JOBS.

    Even if you hate Apple look what happened to Apple since 1997 when Steve Jobs came back who is considered one of the best CEOs? CEO's get paid a lot because they have a HUGE impact on stock price and company performance.

    Steve Jobs had a salary of $ 1 per year. He shared in the success of the company because he owned a good chunk of it.

    That, I have no problem with.

  • by Anonymous Coward on Thursday February 20, 2014 @01:48PM (#46296209)

    Too bad that free markets are a theoretical ideal that doesn't really happen in real life. Sure, market forces shape outcomes. But market failure is a real thing that happens. You can't rely on the market to correct it's own failure.

  • by CastrTroy (595695) on Thursday February 20, 2014 @01:49PM (#46296225) Homepage
    I've heard about this idea, but I think there are some major flaws. Basing the CEOs pay on the pay of their lowest paid employees doesn't work out. Microsoft probably has very few low paid employees by virtue of business sector they are in. They design software, so the majority of their employees are going to be paid quite well. Starbucks on the other hand sells coffee. Even though they pay pretty well, I would have to say that the average Starbucks employee makes nowhere close to the same amount as the average Microsoft employee, and they shouldn't because that job simply doesn't require the same expertise. Should the Apple CEO get a large salary because their employees are well paid, or should he get a small salary because Apple's devices are made by low paid workers in China. Sure they are directly employees of Apple, but if it wasn't for the low paid factory workers, Apple wouldn't have so much money to spread around to their official employees.
  • by mrchaotica (681592) * on Thursday February 20, 2014 @01:50PM (#46296227)

    As long as the stock goes up, the stockholders will look the other way too. "It is all the cost of doing business," they will say.

    The other problem is that the stockholders mostly aren't people. Instead, they're large mutual funds managed by a single person who is in the CEO/director good ol' boys club too.

  • by Anonymous Coward on Thursday February 20, 2014 @01:57PM (#46296301)

    Too bad that free markets are a theoretical ideal that doesn't really happen in real life. Sure, market forces shape outcomes. But market failure is a real thing that happens. You can't rely on the market to correct it's own failure.

    Too bad that fairness is a theoretical ideal that doesn't really happen in real life. Sure, government force shape outcomes. But government failure is a real thing that happens. You can't rely on the government to correct it's own failure.

  • Re:tl;dr (Score:4, Insightful)

    by slapout (93640) on Thursday February 20, 2014 @02:00PM (#46296347)

    I find having a bank account very handy for handling my money. Banks do contribute to society.

  • Re:Because (Score:4, Insightful)

    by swillden (191260) <shawn-ds@willden.org> on Thursday February 20, 2014 @02:02PM (#46296379) Homepage Journal

    Because the tech sector hasn't crashed the world economy...yet?

    In addition to that, I think there's a perception that bankers make their money by exploiting the people, by charging them more for mortgages, paying them less in interest, etc. Basically, by sucking money out of these common transactions that everyone has to make. The money paid to bankers could, the argument goes, have been left in the pockets of the average person.

    In contrast, doing business with tech companies is more voluntary. No one has to buy an iPhone or an iPad, while buying a house or condo is more mandatory (even renters get hit, since their landlords have mortgages and pass the costs along). Using Google is perhaps harder to avoid, but the average person's perspective is that they don't pay Google anything, so the money paid to Eric Schmidt doesn't come out of their pocket. In fact, the advertisers who pay Google get their income from the people, so the average person actually does contribute to Schmidt's income, very indirectly (though there's a good argument that the advertisers would have needed to advertise regardless and since Google has made advertising more efficient the net effect of Google's work has been to reduce the amount consumers pay).

    Anyway, without getting into the degree to which these perceptions are accurate (not very), banks are seen as parasites, while tech companies are seen as adding value, and that has a strong impact on whether people feel the companies have the right to pay their people exorbitant amounts of money.

  • Re:Because (Score:2, Insightful)

    by Anonymous Coward on Thursday February 20, 2014 @02:05PM (#46296415)

    1999-2000 Tech bubble?...

  • by sjbe (173966) on Thursday February 20, 2014 @02:07PM (#46296455)

    Bankers earn a profit by moving other peoples' money around and taking some off the top.

    True, and the reason they can make money at this is because it is a VERY valuable activity to society. Far more valuable than the bit they keep for themselves most of the time. If you need evidence of how valuable it is, merely look at our recent financial crisis when the flow of money froze up.

    There are plenty of jobs that don't involve making things but nevertheless are very valuable. Don't confuse the value of the activity with the behavior of the parties involved.

    One of those jobs is necessary for us to progress.

    Think so? Try building a company without access to banking or financial services. You won't get very far. Anyone who thinks banking and financial services aren't necessary for progress doesn't understand finance. It's like saying your car doesn't need oil. Technically true for a little while but it won't work very well or for very long.

  • by AchilleTalon (540925) on Thursday February 20, 2014 @02:10PM (#46296505) Homepage

    You are right since the devil is right as well.

    There is absolutely no reason to cap the CEO or anyone else salary based on whatever equation anyone can come with thinking he is clever than the next door guy.

    CEO salary is determined by investors, those who are taking risks in the company and hired him to take care of their investment in that company.

    If the investors believe this guy to earn that salary, it is up to them to reduce the salary and compensations or to fire him to hire someone else capable to take care of the investors' money.

    It is not a matter of how much money someone needs to be comfortable, it is a matter of how much money this guy will bring to the investors and shareholders.

    No investor wants the CEO to spend more money than needed in employees wage and salary. No investor wants the CEO to not spend enough money that the company will be put at risk or go to bankrupcy lacking the talented people it needs to make money. You can disagree with what the investors think and their strategy for the company, that's fair. However, it is not to someone which have no money in the company and who risks nothing in the enterprise to decide.

  • Re:tl;dr (Score:3, Insightful)

    by Dishevel (1105119) on Thursday February 20, 2014 @02:10PM (#46296519)
    Just because you hate bankers (Most people do for good reason) is no reason to abandon reasoned thought.

    If I own a company and I hire someone I can pay them as much as I want. If I pay them too much my company suffers. That is my problem. In the case of bankers, their salary comes from the profits of the banks and therefore is paid for by the people on the board. It is their choice. If you do not like the fact that taxpayers are bailing them out then take that up with your idiot, beholden senators and representatives. Tell those bastards you do not want to pay to bail out financial institutions. That you think automatic federal deposit insurance entourages people to not care where their money is.

    But people are stupid so ... Fuck those bankers. They make too much money!

  • by SeaFox (739806) on Thursday February 20, 2014 @02:12PM (#46296547)

    "Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

    The even bigger question is, why is this any of our business? As long as it is not the taxpayers footing the bill, count your own money...

    Taxpayers are footing the bill. Or did you miss the recent media attention about all the people who work at Wal-Mart, McDonald's etc and have to get food stamps and other government assistance to make ends meet. This isn't the rhetorical lazy bum leeching off welfare or unemployment benefits, there are people being good citizens and actually working.

  • by AchilleTalon (540925) on Thursday February 20, 2014 @02:13PM (#46296571) Homepage
    BTW, bankers are an exception due to what happened with the financial crisis which ended with governement pumping tons of dollars to keep them afloat no matter how bad they did. At then end, everyone did pay for the risk, not just the shareholders and investors. That's what was unacceptable. The rules were bent in that case at the advantage of bankers.
  • Re:tl;dr (Score:5, Insightful)

    by geoskd (321194) on Thursday February 20, 2014 @02:20PM (#46296671)

    The Banker? Because without him, those technology CEO's wouldn't have any money to make things and contribute to society.

    Horse crap. When the technology company critically needed money, the investment bankers are nowhere to be found. The only people that will put money in that direction are the angel investors. The bankers only become involved when all of the real risk has been removed. Without investment bankers, companies would still be formed and grow, it would just be a much slower, more natural, growth. Investment bankers are, as stated, parasites.

  • Re:tl;dr (Score:5, Insightful)

    by interkin3tic (1469267) on Thursday February 20, 2014 @02:22PM (#46296683)
    Straw man argument. No one said that banks are useless, just that "bankers" (in the wall street sense) contribute less to society (in the "where most people live" sense) than one would expect, given how much they are paid.

    It's not like repealing glass-steagall gave us the internet, smart phones, and a cure for cancer. All that I can see it did was continue a feedback loop whereby the super-rich get richer, get more power, and change the laws to make themselves richer at our expense.

    Credit unions serve the purpose you mention, yet they don't at the moment leech off society like chase does. We could do away with the too-big-to-fail entities, and it wouldn't hurt you or me too much. Well, in theory, anyway, I'm sure the extraction process in reality would leave something worse, be it through reform in the current political climate or violent revolution.
  • by Billly Gates (198444) on Thursday February 20, 2014 @02:22PM (#46296685) Journal

    Jobs was worth every penny after what he brought to Apple.

    Apple didn't magically invent the iphone, imac, ipod, appstore, and Steve led the way. It brought value to hundreds of millions of people.

    Yes if you are skilled doing programming/network design/chip design/ you can get wealthy. The key is to not work for someone elses dream.

    Think of a product or server you and your fellow coworkers can provide? Start a company with your partners and make something. Or move to a place with startups in Silicon Valley where you make less starting out but have options in owning shares of the company. Many will fail but you will have many clients on your resume fast until one sticks and you strike gold.

    You are more valuable than you think. Just because your current company doesn't value what you do as part of the bottom line, doesn't mean your skillset wont benefit someone else more greatly. ... of course if you have a baby and a wife there is also risk. Are you willing to take that? If not then being paid a lot less is worth the price in terms of job security and benefits.

  • Re:tl;dr (Score:3, Insightful)

    by amicusNYCL (1538833) on Thursday February 20, 2014 @02:37PM (#46296889)

    Bankers should not be in the business of buying and selling companies. A banker's job is to store your money until you need it again. What they actually do is move your money around and take points off the top, and enrich themselves. And yes, without Glass-Steagall they most certainly do buy companies, but that should not be the job of a banker.

  • Re:tl;dr (Score:4, Insightful)

    by geoskd (321194) on Thursday February 20, 2014 @02:38PM (#46296905)

    If you do not like the fact that taxpayers are bailing them out then take that up with your idiot, beholden senators and representatives.

    Bailing out the banks was not optional. Congress failing to act when the crash happened would have resulted in deaths. Even a 50% colapse of our global economy would cause millions of people to starve to death or die fighting for food. A 90% collapse would kill half the population in the US in the first winter alone. We have built a system where the banks are in the position where they are too big to fail. If we let them fail, the economy colapses.

    It all goes back to the way companies pay their employees. Back in the 19th century and before, companies kept huge cash reserves so that when they issued payroll checks, the checks didn't bounce. for a company like GM or UPS, that payroll reserve would be on the order of billions of dollars. With the advent of the modern banking sector, a brilliant banker thought up the idea of payroll lines of credit. This allows a company to spend its entire payroll reserve, and if there isn't enough in the coffers, they temporarily run a line of credit until the funds come in. In practice, this allows the company to average pretty close to zero in their payroll accounts. It means that companies can re-invest that money into growth.

    The down side to that, is what happens when a bank is insolvent. That bank can not loan any money (they dont have any to lend), so they close their customers payroll accounts. Now, the bank can't honor withdrawls because they have no cash, and the companies have not paid their employees because they have no payroll credit account anymore, and they dont keep cash reservces anymore. Now, the employees cant buy anything because they have no cash, cant get cash, and the ATM/debit cards arent working anymore. So they stop buying *anything*. Now they cycle gets viscous. Companies no longer have any income because people have no money, so they cant even honor their outstanding payroll, nevermind next weeks paychecks.

    If one bank does it, the economy can absorb the hit. If 25% of the banking sector does it, the shock waves will eventually (a few months out) colapse the entire banking sector, and with it everything else. Everything stops. This happened with the great depression, but at that time the credit economy was only 30% of the whole economy. Today, the credit economy accounts for 98% of the worlds economy. You take that away, and its like taking away 98% of the air under an airplane. It simply cant function, and the result is gonna be messy.

  • by Billly Gates (198444) on Thursday February 20, 2014 @02:39PM (#46296917) Journal

    The middle class is being destroyed in western nations due to not being as valuable as they once were due to globalization and an over supply of college educated folks

    Not because the rich can force us all to work for less. The middle class is growing in Asia and in India at an exponential rate. It will return back again as the price of dollar declines and inflation goes up in these countries. Some companies are manufacturing back in the US as the cost savings have dwindled.

    The market determines your salary and it goes up and down for each individual/company. My example in another post was you can get rich programming. ... at a .com or inventing a new app rather than POS code at pizza hut, where food production is valued higher.

    You can't pay an engineer minimum wage. He will find a job elsewhere where he is valued more.

    Some is true with the middle class here. Many jobs were lost because India can do them for a fraction of the price and Americans are lazy (seriously not flamebait) and do not work as many hours as foreign counterparts.

  • by amicusNYCL (1538833) on Thursday February 20, 2014 @02:42PM (#46296963)

    I'm sorry, but I don't see a reason why I should necessarily need the services of a banker to run my company.

    If we're talking reality, then in this reality the bankers have paid the lawyers and the lawmakers to make sure that all of them are needed for everything. But just because that's the way it is, doesn't mean that's the way it has to be. The American financial system is not necessary in and of itself (proof: the world got along fine before there was an American financial system), all of the necessity in the system has been created by the people in the system. We need to bring back Glass-Steagall and take a step back from the cliff.

  • by pitchpipe (708843) on Thursday February 20, 2014 @03:02PM (#46297207)
    So we socialized the risk. Let us also socialize the profits.
  • The real issue (Score:4, Insightful)

    by Trailer Trash (60756) on Thursday February 20, 2014 @03:04PM (#46297229) Homepage

    The real issue is the disconnect between company performance and executive pay. We're seeing a lot now of people who run a company into the ground and end up with a golden parachute, anyway. It's doubly insulting when people who make literally 1/1000th the CEO's pay end up with nothing.

    My belief is that the real problem is that we're disconnected from the companies that we own. I own stock in a bunch of companies. Through mutual funds. In my Roth IRA. I can't show up at their annual meeting and vote because I don't directly own them.

    In the old days, the board really represented the shareholders and shareholders often had bought the shares. As such, they had a closer stake in the company and the outcomes. The idea of a CEO ruining the company and then being compensated for it would have caused the board to be changed at the next annual meeting.

    I'm not sure what the solution is but I believe this disconnect is a big part of the problem.

  • by mrchaotica (681592) * on Thursday February 20, 2014 @03:06PM (#46297243)

    Nothing in your post explains why executive pay has risen from 50x average pay (in the 60s) to 500x average pay now.

  • by swb (14022) on Thursday February 20, 2014 @03:11PM (#46297303)

    "Say on pay" wouldn't be such a hot topic in corporate governance (it even has its own wikipedia page) if investors actually had that much influence over executive compensation.

    Most top executive compensation is detrmined by compensation committees made up of board members, many of whom are also top executives elsewhere. I don't want to risk you limiting my compensation if it exposes me to a risk you might limit mine. There's a moral hazard for these people.

    The consultancies who get involved in executive compensation face the same risks -- those that come out and say that compensation should be decreased will likely find themselves losing business. Another moral hazard where self-interest keeps them from advocating for anything but the status quo.

    The end result is that rank and file investors have little to no control over this and many barriers are erected to prevent shareholders from voting in more than an advisory way on this, let alone an up/down vote or even less likely, dictating compensation strategies.

    Even in situations where CEOs have the concentrated authority to make big decisions unilaterally, I find it hard to believe that they are *individually* performing all the work required to make them. They are instead relying on legions of experts and other labor to make a decision, something which I don't think is magical enough to warrant the sheer scale of pay they recieve because they individually aren't doing the work but are demanding the scale of pay as if they were.

    Even then, when they make terrible decisions that cost billions of dollars or oversee others who lose this and they lose their jobs, they still walk away with so much money its difficult to see any accountability they face. Maybe if you face the prospect of earning $20 million dollars you should also face the risk of losing $20 million dollars personally. But the current system is just win-win for them outside of bragging rights at the club.

  • by epine (68316) on Thursday February 20, 2014 @03:11PM (#46297317)

    If you need evidence of how valuable it is, merely look at our recent financial crisis when the flow of money froze up.

    That's just about the dumbest thing I've ever heard.

    I guess you don't recall the August 1981 strike air-traffic controllers strike [wikipedia.org]. Most of those wealthy bankers could be replaced by people being paid 10% as much, and after a few years we'd hardly notice the difference, except perhaps that the new lot wouldn't be nearly so adept at screwing the system over.

    I guess if you were running NASA you'd pay a billion dollars per o-ring, because--gosh--look at what happens if it won't deform, and the size of the bill if we need to replace the dumb thing. Ten thousand parts at a billion dollars each sure adds up. When you think about it, with each o-ring protecting the safety of a ten-trillion dollar shuttle, a mere billion dollars per ring is a screaming deal, wouldn't you say?

    Finance wasn't rocket science until the inmates figured out that astrobucks are a good living. It doesn't need to be rocket science any more than an o-ring needs to cost a billion dollars.

    The controllers had Washington by the balls. Big mistake. The bankers have Washington by the carotid artery. We can therefore infer from this that bankers do more important, more productive, more difficult work. Or we can infer that bankers are better at pouring over Grey's Anatomy if it serves their personal interests.

  • Re:tl;dr (Score:5, Insightful)

    by master_kaos (1027308) on Thursday February 20, 2014 @03:23PM (#46297493)
    Are you sure? I find it hilarious how huge companies have to lay off thousands of employees, yet the CEOs are still making their 10s of millions in salary. How about first eliminating bonuses, as well as dropping salary before eliminating employees. For example ,Blackberry CEO getting a compensation package of 88 mil literally days before laying off a bunch of employees. How about offering him 50 mil instead and keeping on 700 workers,
    And he gets a private jet to travel between his home and Waterloo headquarters at an approx value of 50k per round trip (almost someones full yearly salary) because he is too fucking lazy to move to waterloo to do his job even though he is getting a shitton of money.
    And yes I am a bit better because I do live near (and work in)waterloo and know a few people affected by the layoffs.
  • by DudeTheMath (522264) on Thursday February 20, 2014 @03:24PM (#46297517) Homepage

    Note that the CEO is trying to get the most out of his (almost always "his") employer, too. Who's his employer? Why, the board, usually full of banking CEOs who love to negotiate their high salaries, bonuses, etc., from their boards. It's largely a big circle jerk.

  • Re:ELOP (Score:4, Insightful)

    by wiredlogic (135348) on Thursday February 20, 2014 @03:30PM (#46297599)

    It's a nice little fantasy to think of the $1 CEO as a brave soul who is willing to risk all for their dog food but the reality is that it's a tax avoidance scheme that only wealthy people can indulge in.

  • Re:tl;dr (Score:5, Insightful)

    by PopeRatzo (965947) on Thursday February 20, 2014 @03:34PM (#46297643) Homepage Journal

    The salary of the vice president at McD's isn't taking money meant for the burger flippers pocket....

    He absolutely is.

    In fact, in the specific case you cite, low-end wages are kept below poverty so that not only is the vice-president of McD's taking money away from the burger flippers, but he's taking money from each and every taxpayer by having the government subsidize his employees.

    There are even laws now to codify such arrangements. If a Southeastern state lures a manufacturing plant from say, Washington or Oregon, one of the ways they do it is to agree to allow the company to keep any state income taxes that are withheld from employees wages. The taxes are still taken out of each paycheck, but the money never goes beyond the company's coffers.

    Corporations are seeking out this kind of deal, and states, in a rush to the bottom, are giving in so they can show how they're "bringing jobs" to their area.

    The issue of sports stars or movie stars is a red herring. There are so few of them as to make it irrelevant, and their pay is directly tied to the profits they are expected to generate for the owners.

    CEOs' salaries on the other hand, are entirely a function of a buddy system in corporate boards. Everybody gets a nice income and lifelong security and they scratch each others' backs. You will never hear of the board of directors of a big company or bank asking if maybe they can find a CEO from Pakistan or China who's willing to work for $250,000 instead of $40,000,000, even though there is very little evidence that the CEO has that much impact on a company's bottom line. Despite the fact that it's absolutely the job of the directors to do so. And even if that did ever happen, it wouldn't explain the huge salaries for unproven CEOs for companies getting huge bonuses even when the company is not doing well, which is much more common than most people would imagine. You will often hear, on the other hand, about sports teams deciding not to pay a veteran $40,000,000 if there is $400,000 rookie who can do the job. One of those "minimum wage" players was the quarterback who won the Super Bowl this year, in fact. The guy he replaced was obscenely overpaid and the rookie showed promise and the owners gave him the job.

    And there are plenty of other ways in which income disparities directly hurt most people. Just have a look at the work of Richard Wilkinson and co, who have done a lot of work on this issue. Yes, when people at the top make a lot of money and their incomes increase out of proportion to the rest of society, it takes money away from the people flipping burgers and making cars. And writing code.

    http://www.ted.com/talks/richa... [ted.com]

  • Re:ELOP (Score:5, Insightful)

    by Princeofcups (150855) <john@princeofcups.com> on Thursday February 20, 2014 @03:41PM (#46297737) Homepage

    Steve Jobs had a salary of $ 1 per year. He shared in the success of the company because he owned a good chunk of it.

    That, I have no problem with.

    Until you understand that the $1 a year is one of the most egregious tax dodges today. You pay tax on salary, not on "capital gains." You then borrow against your stocks if you need cash.

  • by Anonymous Coward on Thursday February 20, 2014 @03:59PM (#46297977)

    "say on pay" isn't a hot topic. It is now the law. And guess what? With a few high profile exceptions, almost all executive pay practices have been approved. Shareholders feel that CEOs are earning their pay. It's no one else's business how much CEOs are paid. End of story.

  • Re:tl;dr (Score:4, Insightful)

    by Anonymous Coward on Thursday February 20, 2014 @04:00PM (#46297987)

    Not to mention that both actors and athletes have benefited from being unionized workforces, which is one of the reasons they've been able to negotiate a percentage of profits in the first place.

  • Re:tl;dr (Score:5, Insightful)

    by ultranova (717540) on Thursday February 20, 2014 @04:12PM (#46298097)

    My thing is, why do we complain at all about who makes how much?

    Because if you indoctrinate people into believing income should be earned, they don't conveniently forget all about that when it comes to your income. CEOs are not perceived as pulling their weight, producing nothing but seemingly endless bankruptcies and layoffs, so all that "welfare queen" rhetoric is now turning against them.

    I mean, it isn't really a zero sum game.

    Of course income is a zero-sum game. Economy produces a certain amount of value per year. If your share of the pie grows, mine must shrink. And if your share is perceived to be unfairly large, then you can expect other people to act against you, driven by both self-interest and a desire to right an apparent wrong.

    Of course it's possible to justify larger share as an incentive to grow the pie a a whole. The problem is, the CEOs haven't done so. The 1% are the modern nobility; the accusations about overcompensation are simply the warning rumbles of a good old peasant revolution every king who fails continuously risks facing.

  • Re:tl;dr (Score:3, Insightful)

    by Quila (201335) on Thursday February 20, 2014 @04:51PM (#46298481)

    I find it hilarious how huge companies have to lay off thousands of employees, yet the CEOs are still making their 10s of millions in salary

    The reasonableness of this is, "it depends." If the company is healthy and making a lot of money, but it found an area that is not profitable and decides to liquidate or downsize it (and has no place else within the company to absorb all of those skillsets), the employees go with that. High CEO pay is perfectly in line with this.

    However, if the company is hurting and they are laying off employees in order to cut costs and stay afloat, then the CEO's pay should be the first to be cut.

    How about offering him 50 mil instead and keeping on 700 workers,

    OTOH, if those 700 workers are making no profit for the company at all, they should be transferred to profitable positions or laid off regardless of CEO pay.

  • Re:tl;dr (Score:4, Insightful)

    by JonnyCalcutta (524825) on Thursday February 20, 2014 @05:10PM (#46298717)

    You don't? That's sad really and I guess explains why they get away with it.

  • Re:tl;dr (Score:5, Insightful)

    by mspohr (589790) on Thursday February 20, 2014 @05:16PM (#46298771)

    Ah yes, the glories of the free market will cure all ills.
    Do you really believe this or are you just trolling?
    "Because if you don't like the job, you can leave, and they can replace you in a couple hours. I fail to see how that is greed when so many people are willing to work for that, and get by on it."
    Are you aware:
    - Most people don't have an option to just leave and get a better job. Have you heard about the unemployment problem?
    - People aren't "getting by" on minimum wage jobs. They need food stamps to eat and Medicaid for health care (if they can get these programs).
    - Average Walmart / fast food worker is not a teenager but is a 30 year old trying to support a family and is not "getting by".
    Do you actually know any minimum wage workers or unemployed people?

  • Re:tl;dr (Score:2, Insightful)

    by Anonymous Coward on Thursday February 20, 2014 @05:37PM (#46299015)

    The best option going forward is this.

    Kill FDIC.

    Hoo, boy! You need to do some reading to find out why FDIC was created in the first place. Hint: it had nothing to do with offering customers free toasters.

  • Re:tl;dr (Score:5, Insightful)

    by flaming error (1041742) on Friday February 21, 2014 @02:49AM (#46302061) Journal

    "Is that hour worth 60 of those newly employed people?"

    No.

    In the first place you have a dimensional analysis problem of non-matching units.

    In the second place, one CEO can't do the work of 60 people. That's why he had to hire them.

    You're right that his job isn't easy. No interesting job is. Lots of people work hard.

    The average CEO makes 340 times his average employee. The CEO does not work 340 times harder than his average employee. He doesn't know 340 times more than his average employee. He doesn't single-handedly bring in 340 times more productivity than his average employee.

    Instead he gets the credit (and sometimes blame) for what every other person in the organization accomplished.

    Good CEOs deserve respect. Not worship. And not money disproportionate to his contribution.

    The reason CEOs get paid so much is not because the free market prices them so high. It's because they are on each others' Board of Directors and they all figured out they could overcharge their companies and share the spoils amongst themselves.

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