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The myth of the comptetent high paid executive

whiteonion

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?

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pow wow

OP you have no proof the other way, that paying CEOs less would mean you'd get ones who are better at it. If you want someone who is perceived as being 'good' at their job in the market (usually encompassing doing their job well and being seen to do it well) then you'll pay for them. Catastrophic corporate failure isn't always solely in the hands of the CEO.

Incidentally on the political point, Ireland is a young democracy with relatively closed political ranks and as a democracy the responsibility for who is in charge lies with the electorate. Maybe an ounce of accountability would do you good.

whiteonion

PeakOutput wrote: »

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?

Which companies are you referring to as the most profitable? What are their CEO:s salaries?

whiteonion

pow wow wrote: »

OP you have no proof the other way, that paying CEOs less would mean you'd get ones who are better at it. If you want someone who is perceived as being 'good' at their job in the market (usually encompassing doing their job well and being seen to do it well) then you'll pay for them. Catastrophic corporate failure isn't always solely in the hands of the CEO.

Incidentally on the political point, Ireland is a young democracy with relatively closed political ranks and as a democracy the responsibility for who is in charge lies with the electorate. Maybe an ounce of accountability would do you good.

If you can't always blame bad performance on the CEO then maybe the CEO is not such a big factor in a company's success either...

PeakOutput

whiteonion wrote: »

Which companies are you referring to as the most profitable? What are their CEO:s salaries?

http://money.cnn.com/magazines/fortune/global500/2010/full_list/

the top 5 most profitable companies in the world

walmart - ceo = Michael T. Duke total compensation (2010) =$19,234,268.00
royal dutch shell - ceo = Peter Voser total compensation (2010) = 5,361,000.00

Exxon Mobile - ceo = Rex W. Tillerson total compensation (2010) = $27,168,317.00

Bp - ceo = Anthony B. Hayward total compensation = BP was paying Hayward an annual salary of £1,045,000; his 2008 bonus was £1,496,000 and in 2009 his bonus was £2,090,000.

Toyota Motor - Ceo = Akio Toyoda total compensation (2010) = cant find exact info on this guy but 'Toyoda, the grandson of Toyota’s founder, owns 4.564 million shares in the carmaker, valued at about $162 million, according to data compiled by Bloomberg.'

edit; sorry they are ranked by being the best companies in the world not the most profitable my bad, the top 5 most profitable are acutally gazprom, exxon mobile, industrial and commercial bank of china, bp and china construction bank. i think all the ones i listed besides toyota are in the top 20 most profitable

whiteonion

PeakOutput wrote: »

http://money.cnn.com/magazines/fortune/global500/2010/full_list/

the top 5 most profitable companies in the world

walmart - ceo = Michael T. Duke total compensation (2010) =$19,234,268.00
royal dutch shell - ceo = Peter Voser total compensation (2010) = 5,361,000.00

Exxon Mobile - ceo = Rex W. Tillerson total compensation (2010) = $27,168,317.00

Bp - ceo = Anthony B. Hayward total compensation = BP was paying Hayward an annual salary of £1,045,000; his 2008 bonus was £1,496,000 and in 2009 his bonus was £2,090,000.

Toyota Motor - Ceo = Akio Toyoda total compensation (2010) = cant find exact info on this guy but 'Toyoda, the grandson of Toyota’s founder, owns 4.564 million shares in the carmaker, valued at about $162 million, according to data compiled by Bloomberg.'

edit; sorry they are ranked by being the best companies in the world not the most profitable my bad, the top 5 most profitable are acutally gazprom, exxon mobile, industrial and commercial bank of china, bp and china construction bank. i think all the ones i listed besides toyota are in the top 20 most profitable

So the CEO of Exxon Mobile is 5 times better than the CEO of Royal Dutch Shell?

sock puppet

whiteonion wrote: »

So the CEO of Exxon Mobile is 5 times better than the CEO of Royal Dutch Shell?

First year mistake there. Back of the class.

PeakOutput

whiteonion wrote: »

So the CEO of Exxon Mobile is 5 times better than the CEO of Royal Dutch Shell?

the shareholders of exxon mobile apparently think he is however, nobody is claiming it is a linear relationship accept you

edit; if you look at their profits he is around 50% better which is the same as around 6billion dollars, again that only matters if you are trying to argue it should be a linear scale, which i am not

AskMyChocolate

PeakOutput wrote: »

http://money.cnn.com/magazines/fortune/global500/2010/full_list/

the top 5 most profitable companies in the world

walmart - ceo = Michael T. Duke total compensation (2010) =$19,234,268.00
royal dutch shell - ceo = Peter Voser total compensation (2010) = 5,361,000.00

Exxon Mobile - ceo = Rex W. Tillerson total compensation (2010) = $27,168,317.00

Bp - ceo = Anthony B. Hayward total compensation = BP was paying Hayward an annual salary of £1,045,000; his 2008 bonus was £1,496,000 and in 2009 his bonus was £2,090,000.

Toyota Motor - Ceo = Akio Toyoda total compensation (2010) = cant find exact info on this guy but 'Toyoda, the grandson of Toyota’s founder, owns 4.564 million shares in the carmaker, valued at about $162 million, according to data compiled by Bloomberg.'

edit; sorry they are ranked by being the best companies in the world not the most profitable my bad, the top 5 most profitable are acutally gazprom, exxon mobile, industrial and commercial bank of china, bp and china construction bank. i think all the ones i listed besides toyota are in the top 20 most profitable

Given how much he cost the company, and shareholders what do you you think would have been a suitable performance related remuneration package for him? I would assume that the director in charge of safety would also have been a hichly paid executive, what do you think would have been a suitable remuneration package for that man/woman?
No doubt by not assessing safety standards they managed to scrimp and increase short-term profits, at the expense of the long-term welfare of the company, but sure what do they care? They made their money at the expense of the shareholders. Also, given the fact, that most CEO's of large companies are elected by proxy, by an inner circle who appoint each other to their boards, how do you reckon it's done on merit? What do you think would be a suitable bonus for Mike Aynsley or Gillian Bowler?

With regard to Steve Jobs, he was a founder of Apple and built the company from nothing. When he left an assortment of highly paid executives, who didn't think he was up to the job of running a large corporation eased him out. They then drove the company to the brink of bankruptcy while personally rewarding themselves for their "superior abilities" in the process. Jobs was brought back and rebuilt Apple into the company it is today, along with John Ives, another technical genius like Steve Wosniak was, although I've no doubt you'd like to give the credit to the lads with the MBAs in order to justify your ridiculous pay packets.
Your reasoning has been specious at best, moronic at worst, throughout this thread, and your inability to form anything but Strawman arguments in defence of your case is indicative of the level of rationality of the majority of executives in large corporations today. Btw, the most successful and profitable Corporation of all time is The Catholic Church, having grown itself prudently and steadily for 2000 years. Any CEO of Exxon Mobile or the other oil companies that were spawned by Standard Oil, that thinks the profitability of those companies is down to anyone other than John Rockefeller is either deluded, an idiot or a liar. The same could be said for any other CEO of a third generation company you have mentioned that didn't build the company themselves.

whiteonion

There are studies done in this field and it seems that very high salaries for CEO's is likely to have a negative effect for the company's performance in regards to profitability and return on investment for shareholders.
http://www.project-syndicate.org/commentary/bebchuk9/English

For example if an oil companies profit doubles because the price of oil doubles you can't say that the CEO is a genius for doubling the company's profits. In this case the increase in profit has nothing to do with the CEO's performance.

goose2005

syklops wrote: »

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".

The difference is that footballers don't run clubs and so can't set their own salary.

whiteonion

When presented with evidence the crowd saying high-payed CEO's perform better seem to be very quiet now...

PeakOutput

AskMyChocolate wrote: »

Given how much he cost the company, and shareholders what do you you think would have been a suitable performance related remuneration package for him? I would assume that the director in charge of safety would also have been a hichly paid executive, what do you think would have been a suitable remuneration package for that man/woman?
No doubt by not assessing safety standards they managed to scrimp and increase short-term profits, at the expense of the long-term welfare of the company, but sure what do they care?

iirc the rig that had the problem that caused the bp oil spill was run by a subcontractor not bp itself. I am not saying they arent to blame I am just saying its not black and white.

They made their money at the expense of the shareholders. Also, given the fact, that most CEO's of large companies are elected by proxy, by an inner circle who appoint each other to their boards, how do you reckon it's done on merit? What do you think would be a suitable bonus for Mike Aynsley or Gillian Bowler?

No idea who they are neither do I care really you are misunderstanding the point of my posts, which I will explain in just a second

With regard to Steve Jobs, he was a founder of Apple and built the company from nothing. When he left an assortment of highly paid executives, who didn't think he was up to the job of running a large corporation eased him out. They then drove the company to the brink of bankruptcy while personally rewarding themselves for their "superior abilities" in the process. Jobs was brought back and rebuilt Apple into the company it is today, along with John Ives, another technical genius like Steve Wosniak was, although I've no doubt you'd like to give the credit to the lads with the MBAs in order to justify your ridiculous pay packets.

Not at all I think steve jobs is an absolute genius at what he does and deserves all the credit for saving apples ass as well as creating a few other very very successfull companies that most people have heard of but most don't know he was involved in.

Your reasoning has been specious at best, moronic at worst, throughout this thread, and your inability to form anything but Strawman arguments in defence of your case is indicative of the level of rationality of the majority of executives in large corporations today.

please point out any strawman arguments I have made. you can throw accusations around all you want but try to back them up at least please, what have I said that is not directly related to the issue being discussed?

Btw, the most successful and profitable Corporation of all time is The Catholic Church, having grown itself prudently and steadily for 2000 years.

and that has what exactly to do with anything? do you think they didnt spend any money in the process? Do you think, if they were starting from scratch in todays world, following todays rules they would get to the same position?

Clearly some have missed the point of my posts, personally I believe that if you want the best you have to pay for the best. that dosnt mean that the highest paid ceo is the best ceo it just means that a high salary is a necessary part of the package you need to offer if you want to attract the top guys for no other reason then if your not offering it someone else will and you wont get your man / woman.

however, my point in this thread is that when it boils down to it I have no idea weather these people are worth the money or not BUT neither does the op and using a few examples of failed companies that have required government bailouts isn't good enough.

Goldman Sachs for example required a large bailout and came under a lot of scrutiny for still paying their execs so much during that time but the fact that they were one of the first companies to pay their government back for the bailout got little to no press.

When presented with evidence the crowd saying high-payed CEO's perform better seem to be very quiet now...

sorry I havn't been around to immediately answer your ridicolous claims I was at the gym and finishing a thesis. You have not presented a shred of evidence.

I am still waiting for your list of successful companies with low paid ceos, even an attempt at googling would find you a list of ten companies which pay their ceos $1 but the fact that you havn't even done that shows me that your only interested in spouting out an opinion that has no grounding in fact. I could make a better anti-highpay argument in ten minutes then you have all day.

Solnskaya

biko wrote: »

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.

here's my shallow and simple post, but thats ^ freudian, and soo perfect. Big bucks really is a treat to capitalism.

kincsem

This is the plan.

The shareholders don't know how much the chief executive should be paid.
The board (which includes executives) appoint a committee to review top pay.
They get an outside consultant to advise, so they it is fair.
The consultant knows (1) they expect increases not decreases (2) he will get a nice fee every year for his annual review.

Benchmarking upwards only, a bit like we had in other areas.

whiteonion

PeakOutPut, I gave you a link to a study that disproves what you said. Did you bother reading it?
Well, looks like he runs away again when presented with evidence.

Well here's another study you can take a look at, but I guess you won't bother reading that either.
Don't let facts get in you way now!
http://online.wsj.com/public/resources/documents/CEOperformance122509.pdf

"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. For example, firms
that pay their CEOs in the top ten percent of pay earn negative abnormal returns over the next
five years of approximately -13%. The effect is stronger for CEOs who receive higher incentive
pay relative to their peers. Our results are consistent with high-pay induced CEO overconfidence
and investor overreaction towards firms with high paid CEOs."

Here's another one...
"Overall, our results show a strong
negative relation between pay and future returns."

AskMyChocolate

PeakOutput wrote: »

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?

Strawman argument and ridiculously specious reasoning. There is no reason to believe that the profitability of a company is the result of a CEO's remuneration package, or that the profitability of a company is a measure of how well it is being run. The fact that it is evidence enough for you speaks volumes about your ability to reason. I'll reduce the cost of running your BMW by putting low-grade petrol into it and no oil. Had you cited increased market share rather than profitability you may have had a leg to stand on. You have been given plenty of evidence, to refute your ridiculous theory, you have simply chosen to ignore it. Irish Bankers and Banking Executives in general in the Western Hemisphere have been amongst the highest paid executives in the world, they produced massive short-term profits and received huge bonuses. They have destroyed in the space of twenty years, thriving solid companies that it took 200 years to build.

PeakOutput wrote: »

iirc the rig that had the problem that caused the bp oil spill was run by a subcontractor not bp itself. I am not saying they arent to blame I am just saying its not black and white.

Is it not the CEO's job to ensure that he is employing high quality staff and getting value for money from his subcontractor in relation to what he is paying that subcontractor? Oh no, I forgot, the fact that BP were paying top dollar meant that they were automatically getting the best rig operators. That is your reasoning isn't it? And the fact that the CEO of the subcontractor produced massive profits by providing substandard equipment and service proves how good a CEO he is, despite the fact that he has ruined the Company's name and destroyed their chances of securing these contracts into the future. Right, gotcha now.

No idea who they are neither do I care really you are misunderstanding the point of my posts, which I will explain in just a second

They are the CEO and Chairwoman of Anglo Irish Bank and Permanent TSB respectively, although given the country's current situation, you could hardly be expected to know this. Your posts have no points, just opinions; I would do well to either understand or misunderstand them. I look forward to your explanations I couldn't find any in this post.

Not at all I think steve jobs is an absolute genius at what he does and deserves all the credit for saving apples ass as well as creating a few other very very successfull companies that most people have heard of but most don't know he was involved in.

By this logic, does it not automatically follow that the Executives (mis)running the company in his absence were both incompetent and overpaid, and provide yet more evidence that there is no direct correlation between what you pay someone and their ability to do the job they are being paid for?

please point out any strawman arguments I have made. you can throw accusations around all you want but try to back them up at least please, what have I said that is not directly related to the issue being discussed?

You challenged WhiteOnion to come up with ten large companies that pay their CEOs €1. He never said that CEOs should be badly paid, he made the point that paying massive (self-awarded) salaries was no guarantee of competence in Senior Executives.

and that has what exactly to do with anything? do you think they didnt spend any money in the process? Do you think, if they were starting from scratch in todays world, following todays rules they would get to the same position?

Longevity and sustained prudent growth are the hallmarks of a well run company.This is achieved by re-investing in the core constituencies of your company, not trying to wring every last cent out of it.

Clearly some have missed the point of my posts, personally I believe that if you want the best you have to pay for the best. that dosnt mean that the highest paid ceo is the best ceo it just means that a high salary is a necessary part of the package you need to offer if you want to attract the top guys for no other reason then if your not offering it someone else will and you wont get your man / woman.

I'm not sure if this is an oxymoron or a paradox, but I'm pretty sure it's one or the other. Your personal beliefs are not germane to the argument anyway. Provide some logic, reasoning or evidence to support your contradictory theories.

however, my point in this thread is that when it boils down to it I have no idea weather these people are worth the money or not BUT neither does the op and using a few examples of failed companies that have required government bailouts isn't good enough.

It's better than anything you've provided.

Goldman Sachs for example required a large bailout and came under a lot of scrutiny for still paying their execs so much during that time but the fact that they were one of the first companies to pay their government back for the bailout got little to no press.

If you believe in the principles of capitalism or free enterprise then Goldman Sachs should have been put into liquidation rendering the stock worthless. Further proof if any were needed, that their executives' personal greed and remuneration structure rendered the company worthless. Berkshire Hathaway did not require a bailout. Also, Goldman Sachs were given hundreds of billions of dollars at 1% by the U.S. government which they then loaned back to the government at 3.5%.
A five year old child could make hundreds of millions of dollars playing by these rules. It doesn't require any financial acumen. It is not a measure of competence, it is a measure of contacts and organised white collar crime.

sorry I havn't been around to immediately answer your ridicolous claims I was at the gym and finishing a thesis. You have not presented a shred of evidence.

I don't think this is aimed at me but I hope I have provided you with both cogent arguments and evidence. Btw, I don't know how to say this without sounding snotty, but I would advise you, just on a personal level to get somebody to proof-read your thesis. I'm sure it has no literary basis, but you seem barely literate and spellcheck will not pick up a lot of your mistakes. It will look unprofessional even if it is a financial thesis.

then,than; your,you're; whether,weather; accept,except; affect,effect; etc. If you don't cut these out your thesis will look ridicolous.:)

I am still waiting for your list of successful companies with low paid ceos, even an attempt at googling would find you a list of ten companies which pay their ceos $1 but the fact that you havn't even done that shows me that your only interested in spouting out an opinion that has no grounding in fact. I could make a better anti-highpay argument in ten minutes then you have all day.

^^^ I dealt with this last point earlier.

AMC

Rabble Rabble

Steve Jobs earns a $1 a year.

General General

whiteonion wrote: »

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

Rabble Rabble wrote: »

Steve Jobs earns a $1 a year.

He's in it for the fanboy 'attention' he gets.

Rabble Rabble

The defenders of CEO renumeration here - I guess you are all very successful or aspirational, huh?, or do you realise you are not defending your own class - compare CEO pay to footballers. That is of course, rubbish. If Ronaldo was to not score for a year he would be not played, eventually fired or sold at a reduced cost or for free to a lower team. Were he treated like a CEO, this would happen.

1) Ronaldo doesn't score for a season for his team.
2) Ronaldo instead scores for the opposition every game causing them to be relegated, losing them sh*t loads of money and causing bankruptcy.
3) Ronaldo's pay and bonuses increase.

Obviously this wouldn't happen. For it to happen you would need this.

4) Ronaldo manages the team, and chooses the wages. Fires who he wants.

The reason CEO's are not like other employees is that they set their own renumeration. Sometimes there are fake renumeration studies, but mostly thats a farce. The real owners, the shareholders, dont really care as long as the ship is floating. The CEO can be on his way to destroying the company, and increasing his personal income, and nobody calls foul.

For that reason their salaries need to be, unlike Ronaldo, regulated.

Rabble Rabble

General General wrote: »

He's in it for the fanboy 'attention' he gets.

I 'wonder' about your use of scare quotes.

PeakOutput

AskMyChocolate wrote: »

don't think this is aimed at me but I hope I have provided you with both cogent arguments and evidence. Btw, I don't know how to say this without sounding snotty, but I would advise you, just on a personal level to get somebody to proof-read your thesis. I'm sure it has no literary basis, but you seem barely literate and spellcheck will not pick up a lot of your mistakes. It will look unprofessional even if it is a financial thesis.

then,than; your,you're; whether,weather; accept,except; affect,effect; etc. If you don't cut these out your thesis will look ridicolous.

hahaha

AskMyChocolate

PeakOutput wrote: »

hahaha

Is this your rebuttal to my arguments?

whiteonion

PeakOutPut: Did you read any of my links. Are you still going to say I did not present any evidence that highly paid CEO's don't in general perform better?

PeakOutput

AskMyChocolate wrote: »

Strawman argument and ridiculously specious reasoning.

You clearly do not understand the definition of strawman

Is it not the CEO's job to ensure that he is employing high quality staff and getting value for money from his subcontractor in relation to what he is paying that subcontractor?

ultimately, of course it is and he lost his job as a result

By this logic, does it not automatically follow that the Executives (mis)running the company in his absence were both incompetent and overpaid

yes

, and provide yet more evidence that there is no direct correlation between what you pay someone and their ability to do the job they are being paid for?

no but that is not my argument, I never said there was a direct correlation to pay and performance, Ie the more you pay the better performance you get. I have specifically said more then once in this thread alone that that is not what I am saying but you continue to rattle on implying that that is my position because it suits you.

You challenged WhiteOnion to come up with ten large companies that pay their CEOs €1.

also incorrect, I challenged him to show me the companies he is refering to when he talks about successful companies with lower paid ceos

He never said that CEOs should be badly paid, he made the point that paying massive (self-awarded) salaries was no guarantee of competence in Senior Executives.

It isn't a guarantee of competence but not offering an attractive package is a guarantee of hiring incompetence, imo

I'm not sure if this is an oxymoron or a paradox, but I'm pretty sure it's one or the other.

its a paradox obviously

PeakOutPut: Did you read any of my links. Are you still going to say I did not present any evidence that highly paid CEO's don't in general perform better?

you presented one study that shows correlation but not causation and one article that shows the same.

again for what must be the 5th time, I never said that paying premium guarantees success BUT it is one important part of the package that must be offered to attract the best candidates. It is still up to the company to select the correct candidate in the correct manor and monitor them accordingly.

Is this your rebuttal to my arguments?

No its me laughing in your face for reasons I cant say here without taking a forced holiday

whiteonion

PeakOutPut, did you know that Swedish CEO's are very low paid? I guess that is why we have a bunch of hugely unsuccessful companies like Volvo, Scania, IKEA, Boliden, H&M...

Finnish CEO's are also not extremly well paid. When the share price of Nokia was at its peak the current CEO made less money than the current CEO. The CEO's get pay rices even though the company itself performs badly.

The same can be seen in other companies as well.

The Irish banking system is one example of pure and utter incompetence. These incompetent fools got paid ridiculous money to destroy the economy and yet get paid bonuses after being bailed out.

Paying excessive salaries will attract people who think only of their own paycheck and you can sure as hell expect them to not act in the best interest of the companies they work for in the long run. That is a proven fact if you just bother opening your eyes.

pow wow

whiteonion wrote: »

If you can't always blame bad performance on the CEO then maybe the CEO is not such a big factor in a company's success either...

You're the one who seems so convinced that it is.

PeakOutput

whiteonion wrote: »

PeakOutPut, did you know that Swedish CEO's are very low paid? I guess that is why we have a bunch of hugely unsuccessful companies like Volvo, Scania, IKEA, Boliden, H&M...

what is low paid iyo?

The Irish banking system is one example of pure and utter incompetence. These incompetent fools got paid ridiculous money to destroy the economy and yet get paid bonuses after being bailed out.

the difference between you an me is you blame the fact they were incompetent on their salaries were I say it has nothing to do with their salaries. I say it has more to do with incompetence at every level as far as hiring and regulation and governance goes

Paying excessive salaries will attract people who think only of their own paycheck and you can sure as hell expect them to not act in the best interest of the companies they work for in the long run. That is a proven fact if you just bother opening your eyes.

ok I give in because you have typed that it is a fact in a thread in after hours, I concede, that is reason enough to believe it to be so

you win

congrats

maninasia

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

Right so the CEO is responsible for increasing the income, not the sales manager, R&D head, financial guy, production manager, marketing guru, purchasing manager...all hail the super CEO who does it by himself.

PeakOutput

maninasia wrote: »

Right so the CEO is responsible for increasing the income, not the sales manager, R&D head, financial guy, production manager, marketing guru, purchasing manager...all hail the super CEO who does it by himself.

:rolleyes:

maninasia

whiteonion wrote: »

PeakOutPut, did you know that Swedish CEO's are very low paid? I guess that is why we have a bunch of hugely unsuccessful companies like Volvo, Scania, IKEA, Boliden, H&M...

Finnish CEO's are also not extremly well paid. When the share price of Nokia was at its peak the current CEO made less money than the current CEO. The CEO's get pay rices even though the company itself performs badly.

The same can be seen in other companies as well.

The Irish banking system is one example of pure and utter incompetence. These incompetent fools got paid ridiculous money to destroy the economy and yet get paid bonuses after being bailed out.

Paying excessive salaries will attract people who think only of their own paycheck and you can sure as hell expect them to not act in the best interest of the companies they work for in the long run. That is a proven fact if you just bother opening your eyes.

If you understand how boards operate you will then now that CEOs/chairmen/directors just switch around between different companies and went to the same schools and business schools, it's an incestuous relationship. They FEEL they are worth it and their peers feel it too...otherwise if the CEO is not worth that much maybe we shouldn't be getting paid so much either? (should we call it the 'Dail' effect

).
The fund managers are willing to support, in some cases, huge salaries for CEOs as they want 'their' man in place who will do their bidding. It may not be that they think he is actually worth that money but they want to have some control over the companies strategic decisions and are willing to pay for that.