The myth of the comptetent high paid executive

whiteonion · 04-04-2011 12:21PM #1

I find no evidence whatsoever that says a company with a high paid ceo performs better than companies with lower paid ceo's and other executives. For example Irish executives in the banking system were very high paid yet it went down the ****ter due to their incompetence.

Victor Muller, the CEO of Spyker, got a bonus of €500 000 even though the company itself is bleeding.
http://www.dutchnews.nl/news/archives/2011/04/shareholders_lobby_group_quest.php

When I follow blue chip companies I see no correlation between the pay of the CEO and how profitable they are. Why do people keep on repeating the mantra that you need ridiculous salaries to get good CEO:s? Excessive pay seem to attract the worst of the worst to be honest.

I must further add that Irish politicians are among the highest paid in the world, yet Ireland is not doing that grand now is it?

FatherLen · 04-04-2011 12:22PM

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Trigger13222 · 04-04-2011 12:28PM

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BizzyC · 04-04-2011 12:29PM

wow, your post is so fresh and original, I wish to subscribe to your newsletter!

orourkeda · 04-04-2011 12:31PM

whiteonion wrote: »

I find no evidence whatsoever that says a company with a high paid ceo performs better than companies with lower paid ceo's and other executives. For example Irish executives in the banking system were very high paid yet it went down the ****ter due to their incompetence.

Victor Muller, the CEO of Spyker, got a bonus of €500 000 even though the company itself is bleeding.
http://www.dutchnews.nl/news/archives/2011/04/shareholders_lobby_group_quest.php

When I follow blue chip companies I see no correlation between the pay of the CEO and how profitable they are. Why do people keep on repeating the mantra that you need ridiculous salaries to get good CEO:s? Excessive pay seem to attract the worst of the worst to be honest.

I must further add that Irish politicians are among the highest paid in the world, yet Ireland is not doing that grand now is it?

Because you do.

this is arse · 04-04-2011 12:39PM

i passed out CEO's office earlier and he has a wireless mouse that cost €75

ScumLord · 04-04-2011 01:21PM

These people seem to be good at playing the big corporate machine. They do **** all but regurgitate what they've been told while having little to no idea what any of it actually means.

Saadyst · 04-04-2011 01:35PM

If anyone could do it, why don't you?

*prepares for excuse*

Akrasia · 04-04-2011 01:49PM

this is arse wrote: »

i passed out CEO's office earlier and he has a wireless mouse that cost €75

was he also wearing a fur coat and a crown with the price tag still on?

syklops · 04-04-2011 01:51PM

CEO salaries are a bit like premiership footballer salaries. Do they really deserve that much money? Maybe not, but the fact is, the companies/clubs have the money to pay them. They could offer a much smaller amount, but at the end of the year/season, and the company/team is not at the top of the table, would you like to be the one to say to the board: "Well we could have paid the CEO/Striker more, but we didn't feel they deserved it".

Blisterman · 04-04-2011 01:51PM

Big companies finances are in the Billions. So if a highly paid CEO increases the profits by just 1%, that could be hundreds of millions. Hence why they're paid so much.

If these companies could save money by hiring someone less expensive, you don't think they'd have already done it?

stovelid · 04-04-2011 01:53PM

this is arse wrote: »

i passed out CEO's office earlier and he has a wireless mouse that cost €75

Get back to your desk and do some work and maybe you'll have one in a few years.

mikemac · 04-04-2011 01:55PM

A corporations only loyalty is to its shareholders.

Not to employees or community or anyone else.

If the CEO can increase the share price even by a small percentage and deliver tens or even hundreds of millions in equity, then they deserve the 500,000 or so salary
With the big money comes pressure. Much like a football manager, if you don't deliver you're sacked and reputation ruined as the media and everyone knows you failed to deliver

Not everyone can handle that.
And some people are quite content on 25k and photocopying files in an office. Good for them

PeakOutput · 04-04-2011 01:58PM

ScumLord wrote: »

These people seem to be good at playing the big corporate machine. They do **** all but regurgitate what they've been told while having little to no idea what any of it actually means.

and out of curiosity what experience are you speaking from exactly?

When I follow blue chip companies I see no correlation between the pay of the CEO and how profitable they are. Why do people keep on repeating the mantra that you need ridiculous salaries to get good CEO:s?

really? I look forward to you providing examples of large succesfull companies with low paid ceos

the fact is that things go wrong once in a while there will always be examples of companies with well paid ceos failing or doing badly but that dosnt mean that the majority of ceos are overpaid, for every one company you show me that has failed I will show you a very successfull one.

paying a high salary does not get you to the top of the leader board it just gets you in the league, you still have to pick the right candidate for the right job

biko · 04-04-2011 02:21PM

http://www.psychologytoday.com/blog/wired-success/201008/are-ceo-salaries-out-control

Jay Lorsch, of the Harvard Business School, says that rising income inequality is political dynamite and damages the reputation of American business. Charlie Munger, Warren Buffett's partner at Berkshire Hathaway says that top executives are paid too much.
Even conservative Florida Governor Jeb Bush is on record as saying that out-of-control executive compensation is a treat to capitalism.

Jesse Fried, a law professor at Harvard University and co-author of the book Pay Without Performance: The Unfulfilled Promise of Executive Compensation, argues that much of CEO pay is not based on performance.
Henry Mintzberg, widely renowned management guru at McGill University, argues that executive compensation bonuses are a bad idea and that compensation needs to be restructured.

Fremen · 04-04-2011 02:56PM

biko wrote: »

. Charlie Munger, Warren Buffett's partner at Berkshire Hathaway says that top executives are paid too much.

Heh. Munger.

whiteonion · 04-04-2011 03:02PM

feelingstressed wrote: »

A corporations only loyalty is to its shareholders.

Not to employees or community or anyone else.

If the CEO can increase the share price even by a small percentage and deliver tens or even hundreds of millions in equity, then they deserve the 500,000 or so salary
With the big money comes pressure. Much like a football manager, if you don't deliver you're sacked and reputation ruined as the media and everyone knows you failed to deliver

Not everyone can handle that.
And some people are quite content on 25k and photocopying files in an office. Good for them

The highly paid CEO:s running Irish banks did quite well now didn't they?
The highly paid CEO:s in American banks who needed to be bailed out did well not didn't?

The highly paid CEO:s for American car companies that got bailed out did well didn't they?

Do I need to go on?

pow wow · 04-04-2011 03:04PM

Because if you're really good you can name your price, and to compete a company has to be willing to pay it.

whiteonion · 04-04-2011 03:14PM

pow wow wrote: »

Because if you're really good you can name your price, and to compete a company has to be willing to pay it.

Can you prove to me that there is any relation between how much a CEO is paid and the return on investment for shareholders? Or are you just speculating that higher paid CEO:s do a better job than lower paid ones?

Steve Jobs salary is $1 per year. Is he a bad CEO? :rolleyes:

Logical Fallacy · 04-04-2011 03:18PM

BizzyC wrote: »

wow, your post is so fresh and original, I wish to subscribe to your newsletter!

Nice reply, i've never seen THAT before.

(vicious cycle ensues)

kirving · 04-04-2011 03:24PM

whiteonion wrote: »

Can you prove to me that there is any relation between how much a CEO is paid and the return on investment for shareholders? Or are you just speculating that higher paid CEO:s do a better job than lower paid ones?

Steve Jobs salary is $1 per year. Is he a bad CEO? :rolleyes:

On paper that might be his salary, but how much in shares and other benefits does he get?
I don't like him, but that's another story.

whiteonion · 04-04-2011 03:26PM

"Interestingly, his compensation comes as a sharp contrast to many CEOs worldwide, who get huge pay packets -- an issue which was also blamed for the financial meltdown in 2008-09. "Jobs' total compensation consists of a salary of $1 per year. Jobs has not received an equity award since 2003," Apple said in a regulatory filing."
http://articles.economictimes.indiatimes.com/2011-01-10/news/28428732_1_apple-market-value-base-salary

PeakOutput · 04-04-2011 03:32PM

whiteonion wrote: »

Can you prove to me that there is any relation between how much a CEO is paid and the return on investment for shareholders?

can you prove to me that there isnt? naming a few high profile unrepresentative examples is not proof.

as I asked in my previous post I would love you to show the examples you have found of low paid ceos running large successful businesses

Steve Jobs salary is $1 per year. Is he a bad CEO? :rolleyes:

his dividend income alone is around 48million a year. his personal worth is around 1.84 BILLION. he also gets paid for the times he uses his private jet for work(around 248,000 a year)

from very quick search it appears he does it this way(besides the publicity value) because if he was on a standard ceo package his salary would be taxed at 35% but his dividends are only taxed at 15%

also this is just a steve jobs thing not an apple thing (ie apple does not believe that you dont need to pay executives like you are trying to imply they do). when apple coo took over while jobs was on medical leave he was given a 5million dollar bonus plus stock options for 6 months work

pow wow · 04-04-2011 03:34PM

whiteonion wrote: »

Or are you just speculating that higher paid CEO:s do a better job than lower paid ones?

Steve Jobs salary is $1 per year. Is he a bad CEO? :rolleyes:

Rolleyes back atcha. I didn't say higher paid CEOs do a better job than lower paid ones at all.

A CEO is only worth what a company is willing to pay him/her.

whiteonion · 04-04-2011 03:35PM

You said good CEO:s can demand a higher price, by your logic that must surely mean that higher paid CEO:s on average are better than lower paid ones no?

PeakOutput · 04-04-2011 03:40PM

whiteonion wrote: »

You said good CEO:s can demand a higher price, by your logic that must surely mean that higher paid CEO:s on average are better than lower paid ones no?

Even if she won't say that I will

on average the higher paid ceos will be better then the lower paid ones

This isnt just a ceo issue either it is an executive position in general issue.

on a slightly seperate note, I know one particular self employed consultant who commands a quarter of a million a DAY to come into your business and give you advice on how to improve it. If he was not worth it he would not get it. who are you to say he is not worth that much money?

If the job these people are doing is so easy why don't you do it? just work your way up the corporate ladder, maybe get an mba, outperform all of your peers and then tell them when they offer you the head honcho job that youw ould be happy with 70/80/90/100K a year to do it

whiteonion · 04-04-2011 03:45PM

PeakOutput wrote: »

Even if she won't say that I will
on average the higher paid ceos will be better then the lower paid ones

Again, where is the evidence for this?

JuliusCaesar · 04-04-2011 03:48PM

PeakOutput wrote: »

one particular self employed consultant who commands a quarter of a million a DAY to come into your business and give you advice on how to improve it. If he was not worth it he would not get it. who are you to say he is not worth that much money?

Because when you have spent 250,000 on one day's advice, you're not going to say it wasn't worth the money. You'll tell everyone that it was great advice, so nobody will accuse you of mis-spending the funds.

Same goes with CEOs. If you pay your CEO megamillions,
1. it shows off that you can (so your company must be great) and
2. you'll keep telling everyone how great he is, even if he's crop (until it's too late and everyone knows already).

ScumLord · 04-04-2011 03:49PM

PeakOutput wrote: »

and out of curiosity what experience are you speaking from exactly?

That's just how me and the boys roll..

*Puts on sunglasses and speeds away in convertible BMW.

JuliusCaesar · 04-04-2011 03:54PM

PeakOutput wrote: »

on average the higher paid ceos will be better then the lower paid ones

No they are not.

PeakOutput · 04-04-2011 03:55PM

whiteonion wrote: »

Again, where is the evidence for this?

well the fact the most profitable companies in the world have the highest paid ceos is evidence enough for me, were is your evidence to the contrary?

The myth of the comptetent high paid executive

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