What should a CEO make?

[seafeye]

We’ve all heard that in the 60’s a typical CEO made about 5 times more than the average employee. Today that number is about 250-350 times.

I can do the math and I know that if I took my CEO’s salary and divided it up equally between each employee, it would only equal $250.

In 40 years is the salary of a typical CEO going to be 500-1000 times that of an average employee? Will that be reasonable? When is enough, enough? Should a CEO make more in one day than an employee does all year?
Should a leaders salary be based on share price? Profits? Revenue?

I only ask because my CEO is making a killing and managers are getting huge bonuses all the while we are losing revenue and market share. All profits are going to stock buybacks, not buying new machinery.

[pwd72s]

In private industry, a CEO's salary should be set by the board of directors. The Govt. has no right to say a damned thing about it.

[RSBob]

In Japan for the longest time a CEO could not make more than 10X the lowest paid worker. If he wanted a big raise everyone got one. The US would be much better off if it implemented something similar into law. Besides who spends more of their paychecks to keep the economy going, the CEO or your average job age earner?

[MBAtarga]

I think recently when I saw the salary of the execs at my company (Fortune 10), the CEO made around $2M/yr salary - and another $18M or so in stock benefits. So at $20M/year - yeah, he's making about 200x the average worker's salary. So every workday, he ONLY makes about 80% of the average employee's yearly salary.

[flatbutt]

A base salary that is 5 - 10 X lowest hourly rate, bonuses to be x% of stock gains.

[seafeye]

Oh I’m not advocating government intervention other than maybe higher taxes. I know the tax wouldn’t make a dent in our deficit but it might be better here than going to his mansion in another country.
After all the sham bankruptcies in 2005-2008. The top always seem to get a golden parachute. While workers lose jobs and retirements. Ship the jobs overseas save $1 on manufacturing and management receive bonuses.

[Sooner or later]

Government should have no say. Board should set salary and bonus package.

As far as base. If the CEO screws up how much will that decision cost the company. If he is correct how much will the company be rewarded by his decision.

Depending on company size I can easily see where the CEO is worth 100x that low on the totem pole employee. Little risk and reward for the bottom of the wage scale with huge risks and reward for the CEO. A quality CEO should be compensated for their ability to minimize those risks while maximizing the reward.

The bonus package should be based on various indicates. They should include, but not limited to, profits, cash flow, cap ex, and sales growth, .

[rattlsnak]

My last CEO made just over $20M a year also.. Thats about $76K a DAY! geez..

[Sooner or later]

How much does an elite basketball player make. Curry is making a half mill a game. 10k per shot when he is really gunning away.

It is not just a CEO making outrageous money.

[john70t]

Originally Posted by seafeye

After all the sham bankruptcies in 2005-2008. The top always seem to get a golden parachute. While workers lose jobs and retirements. Ship the jobs overseas save $1 on manufacturing and management receive bonuses.

It could perhaps be argued that those companies defrauded the government by making it pick up lost pension and comp liabilities, the private investors who were shorted out of a system which is supposed to distribute profits fairly but has a mandate to gain profit, the board was involved with insider trading and self-dealing, and the taxpayers who lost a ton of local jobs which stimulated the economy, and the company was subsidized by government.

But then again it's a 'private' system.

[LWJ]

I believe the CEO of Lincoln Electric (welder MFG) made 3x the lowest employee.

I admire that.

CEO salary is supposedly inverse of company performance - according to some smart folks.

The issue? Weak stupid boards. The BOD is in control and they are afraid to act.

You don't need to pay 20MM to run a company.

[Bill Douglas]

Originally Posted by seafeye

I only ask because my CEO is making a killing and managers are getting huge bonuses all the while we are losing revenue and market share.

It pisses me off when you see what their priorities are ME ME ME. And they get paid a great bonus and told what a great guy they are just to F' off.

Another thing too is, companies that are up and running, nothing changes, why the huge pay. They don't do much other than eat lunch with other fat pricks.

I like the sound of the Lincoln Electric guy.

[93nav]

What was Steve Jobs worth to Apple?

What was McGuire worth to United Healthcare?

From Wikipedia
When McGuire joined United, it was an unprofitable regional health maintenance organization with annual revenues around $400 million.[3] When he left, United was one of the largest, most profitable, and most diversified healthcare companies in the world, with more than $70 billion in annual revenues, more than 50,000 employees, and more than sixty million health plan members.

Some other posts make good points.

- Why should the government decide on a CEO's salary? It is the Board of Directors job to make those kinds of decisions
- Big companies, big salaries
- Compare CEO salaries to sports figures or other celebrities.

[pwd72s]

The opening post was another attempt to promote class hatred...divide and conquer, soak the rich. I fail to see how reducing a CEO's compensation helps the little guy one iota.

But hey, let's hate the rich...just because.

[gordner]

Anything other than "it's worth what the market will pay" would require a monumental culture shift, and to what?
A better question would be at what point does compensation become surreal to the point of being sort of offensive, because the offended doesn't make that rare atmosphere. That's a shifting target of course.
Mbtarga's example above seems reasonable to me, 2 Mil per year salary is not ridiculous, and bonus based on company performance, ie stocks etc, is huge in that example, but that's down to negotiations with the board, and what you can do with the company.

[island911]

Originally Posted by afterburn 549

I dont feel bad about what they earn, I feel really angry about the theft done by the politicians.
They are all on welfare and just keep on getting richer on the backs of those working hard.

This.

How is it that politicians become multi-millionaires on a low 6-fig salary? (rhetorical)

oh, right.. they suddenly become rich authors. coughMoneyLaunderingcough

[Bill Douglas]

Originally Posted by pwd72s

But hey, let's hate the rich...just because.

Not quite correct. We are rich, we just hate some other rich.

[aap1966]

Company profit

[tabs]

But again none of you .genius's can answer why? Hint it is not a Board phenemonen.

[pavulon]

Originally Posted by seafeye

I only ask because my CEO is making a killing and managers are getting huge bonuses all the while we are losing revenue and market share. All profits are going to stock buybacks, not buying new machinery.

This.

The part I love is how CEOs get passed from company to company running off the rails everywhere they go. You'd never know in reading their applications or CVs. I once had a CEO tell me 5 years is a great run as CEO. It was my observation that he had 2 years of getting the benefit of the doubt as he was "new" (despite the press release calling him a proven leader) a couple as an absent CEO of a failing organization then another before finally being found as a liar and addict...which explained his tremor from day 1.

The guy only valued "alignment" (aka blind loyalty) and perpetuation of perception as everything culture courtesy of the Studer Group headed by a delusional, recovering alcoholic, cult leader.

At the role out of the organization's affiliation with Studer Group, "leadership" had actual glasses of Kool-Aid lined up that they insisted people drink. I wouldn't believe it if I hadn't been there. Jim Jones would have been proud--but he used Flavor aid.