Current Events > High CEO salaries are seriously overrated

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The highest CEO salary I could find was Tom Rutledge for Charter Communications - his salary is $98 million a year. Charter has 91.000 employees, so if Rutledge made $0 and his salary was distributed to every employee in the company, then each employee would get $1076.92 a year

Other examples include:

Disney - Bob Iger's salary is $41 million - Disney has 195,000 employees - Distributing his salary would give each employee $210.26 a year

Gamestop - J. Paul Raines' salary is $7.8 million - Gamestop has 20,000 employees - Distributing his salary would give each employee $390 a year

Walmart - Doug McMillon's salary is $21.8 million - Walmart has 2.3 million employees - Distributing his salary would give each employee $9.48 a year

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It's true that companies have other executives who make millions, but distributing their salaries would give the other employees a relatively low amount. And of course the executives would have to make something so this is unrealistic.

Companies' success (which a lot of is directly caused by the CEOs and other executives) allows the companies to give them those big salaries.
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That's their publicly claimed salary, but I doubt that's the full picture.

If they are actually proven to be that useful, the pay is fine
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Hexenherz posted...

That's their publicly claimed salary, but I doubt that's the full picture.

the full picture is they often already have significant ownership of the company, so their stock asset appreciation is worth far more than any salary
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Distributing one person's salary is a fallacy. However, the fact that each employee would get an extra $1076.92 a year is actually huge, considering almost all of them would spend it all, thus stimulating the economy more so than any one clown could.

Think of it like this: instead of paying one guy $98 million a year, you could have an additional 1960 employees earning $50,000 a year. Are you telling me this one bozo has the productivity of 1960 employees?
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Darkman124 posted...

Hexenherz posted...

That's their publicly claimed salary, but I doubt that's the full picture.

the full picture is they often already have significant ownership of the company, so their stock asset appreciation is worth far more than any salary

Most CEOs of public companies do not have significant ownership. But those equity awards are usually a majority of their compensation compared to salary.
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Mandasnake posted...

If they are actually proven to be that useful, the pay is fine

Yup, here's a new study supporting this

http://www.marketwatch.com/story/the-bigger-the-ceo-to-worker-pay-gap-the-better-the-performance-study-finds-2017-07-24
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Public salaries often exclude benifits, bonuses, etc.
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I think rather than distributing it people wanna know what exactly they do to earn that amount. Like is "coming up with the course" of the company as CEO worth getting paid that much when you're not the one probably doing the labor?
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lilJoe457 posted...

I think rather than distributing it people wanna know what exactly they do to earn that amount. Like is "coming up with the course" of the company as CEO worth getting paid that much when you're not the one probably doing the labor?

the labor isn't the valuable work, is the issue. a construction worker does a lot more labor than a doctor, but we don't pay them more for that

https://www.inc.com/will-yakowicz/study-luck-looking-the-part-relative-intelligence-makes-the-ceo.html

John_Galt posted...

Mandasnake posted...

If they are actually proven to be that useful, the pay is fine

Yup, here's a new study supporting this

http://www.marketwatch.com/story/the-bigger-the-ceo-to-worker-pay-gap-the-better-the-performance-study-finds-2017-07-24

A new bullshit study. Anyone can come out with a study "supporting" any idea.
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The problem is when CEOs start whining that they need corporate bailouts or that they're being forced to fire people and shut down projects when in reality they could just pay themselves less money. It's all nonsense.

TheBiggerWiggle posted...

Public salaries often exclude benifits, bonuses, etc.

Total compensation including those and other types of compensation are filed in the Form 10-KT.

1337toothbrush posted...

A new bullshit study. Anyone can come out with a study "supporting" any idea.

Not sure what makes this study "bullshit" when they explain the information they use but ok. Is the other study great because it supports your view that CEOs are basically worthless?

Izec posted...

The problem is when CEOs start whining that they need corporate bailouts or that they're being forced to fire people and shut down projects when in reality they could just pay themselves less money. It's all nonsense.

Corporate bailouts aren't things that happen outside of an economic crisis. If they want a "bailout" that usually means they are filing for bankruptcy and aren't going to be bailed out by the government. And firing people or ending projects can be due to changes in the economy, their industry, and the outlook of the project. Cutting executives salaries wouldn't help if a project will be unprofitable or if demand for goods declines. If they cannot shift the strategy due to this then they will eventually be fired as returns drop for shareholders due to wasting resources on failed projects and not moving to address shifts in the industry.
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SK8T3R215 posted...

Corporate bailouts aren't things that happen outside of an economic crisis. If they want a "bailout" that usually means they are filing for bankruptcy and aren't going to be bailed out by the government. And firing people or ending projects can be due to changes in the economy, their industry, and the outlook of the project. Cutting executives salaries wouldn't help if a project will be unprofitable or if demand for goods declines.

He's complaining about crony capitalism, which is corruption and not based on rational policy like you are describing. Corruption obviously is a separate problem from highly compensated individuals, though. The most corrupt countries also tend to be very poor, for example.

One thing about the OP is that these numbers include stock-based compensation, which often has restrictions and whatnot associated with it, so really it's not even the same as the cash equivalent in the first place.
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I think the real problem is these people stay rich because of their other income options, which usually take the form of stock options.

Because of this, when the company does well, they get paid pretty big. So the philosophy goes that if by making the business better, the people at the top directly reap the perks of it. Business being better isn't benefiting those who don't have those stock options or company investments, they just get paid their nominal wage and that may be pretty low, even in times of high growth and expansion.
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Solid Sonic posted...

I think the real problem is these people stay rich because of their other income options, which usually take the form of stock options.

Because of this, when the company does well, they get paid pretty big. So the philosophy goes that if by making the business better, the people at the top directly reap the perks of it. Business being better isn't benefiting those who don't have those stock options or company investments, they just get paid their nominal wage and that may be pretty low, even in times of high growth and expansion.

Yes, but this is fundamentally because those workers you are talking about have agreed to sell their labor for a given wage. They were given an offer of compensation in exchange for labor, and they agreed to it. When I hear people criticize this, it's almost as if they think employers should be required to give some kind of stock based compensation for all employment. By the way, if it goes up during good times, it also means it goes down during bad times.
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Theoretically the people at the top are the top are the main reason why the business is doing so well. They have the right philosophy, make the right decisions, hire the right people, etc.

Disney is a great example of this. Before Michael Eisner became CEO, Disney wasn't doing well. Many of his decisions helped make DIsney the company it is today, but by the end of his tenure he made some bad decisions and the company wasn't doing well again.
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Corporate executives barely even make any money compared to hedge fund/private equity managers, but execs are a better target for the media to evoke outrage because if it is publically trading company it is easy to find the compensation numbers...
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Smoke944 posted...

Corporate executives barely even make any money compared to hedge fund/private equity managers, but execs are a better target for the media to evoke outrage because if it is publically trading company it is easy to find the compensation numbers...

Media outrage is often completely devoid of logic and sound factual analysis. Sadly, people these days will go berserk over a sensationalized facebook meme before taking a moment to do a basic google search on the topic.
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Damn_Underscore posted...

Theoretically the people at the top are the top are the main reason why the business is doing so well. They have the right philosophy, make the right decisions, hire the right people, etc.

Disney is a great example of this. Before Michael Eisner became CEO, Disney wasn't doing well. Many of his decisions helped make DIsney the company it is today, but by the end of his tenure he made some bad decisions and the company wasn't doing well again.

I won't deny some execs are actually really good for business. Satya Nadella managed to reverse Microsoft's gameplan after Steve Ballamer led the company astray through the Windows 8 era.

But what is Walmart honestly doing? They aren't evolving or adapting, just taking advantage of their market position as the premiere brick and mortar store. Amazon should be crushing them but they don't change course.

Times like that require a justification for keeping the people on top where they are.
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