CEO Pay Up 298%, Average Worker's? 4.3% (1995-2005) « Columbus Underground Messageboard

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CEO Pay Up 298%, Average Worker's? 4.3% (1995-2005)

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Started 5 years ago by ddavis
Latest reply from twistofreality

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ddavis
Westgate
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Consumerist wrote ...It looks like while CEO pay rose 298.2% by 2005, and corporate profits by 106.7%, the average worker pay has only risen by 4.3%.
The chart seems to show no direct relationship between CEO pay and profit performance, however, CEO pay does track nearly parallel with the S&P 500. That stock options are included in the CEO pay, and those have gotten more popular in recent years, might be a factor. Another is that the CEO population is smaller than that of the average workers, so naturally there's going to be more volatility...
Read more at Consumerist.
Full article

Posted 5 years ago #
Brewmaster
Portland, OR
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I'd like to see the comparison in total dollars. I'm sure a 4.3% increase for millions of people is going to amout to a HELL of a lot more dollars than a 298.2% increase for a few hundred people.

Posted 5 years ago #
James the Battle Axe
In my kitchen, fryin bacon butt naked with a loaded pistol.
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Thats sad.

Posted 5 years ago #
ddavis
Westgate
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Brewmaster wrote I'd like to see the comparison in total dollars. I'm sure a 4.3% increase for millions of people is going to amout to a HELL of a lot more dollars than a 298.2% increase for a few hundred people.
Yea, I guess that's kinda obvious since there are way more rank and file workers than CEOs. But as a comparison to rates of increases.....
:cry:

Posted 5 years ago #
twistofreality
Northwest
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Brewmaster wrote I'd like to see the comparison in total dollars. I'm sure a 4.3% increase for millions of people is going to amout to a HELL of a lot more dollars than a 298.2% increase for a few hundred people.
Personally, I think that the percentages are much more telling than raw dollar values. Consider this: by comparing how much all of average workers' compensations went up with how much all of CEOs' compensations went up in dollar values, that those numbers would be similar or that average workers' numbers would be higher is likely. Knowing, however, that just a (comparatively) few, already well-paid individuals; salaries increased by almost 300% compared with the just over 4% of average workers is really kind of disgusting.
The rich get richer, as they say, and so the income disparity in this nation of ours continues to loom over the proletariat like a cocked forearm with an open palm.
Something else that I thought was interesting about this graph is the apparent correlation between average CEO compensation and the S&P index, both of which seemed almost unrelated to corporate profits. I wonder if an increase in stock values causes CEOs to be paid more, or if an increase in salaries causes CEOs to invest more and raise the value of the index.

Posted 5 years ago #
mellotron
Arena District
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At their level, CEO base salaries could be, say $500k (untied to market and profits) and several million $s in options (directly tied to the market). So it's the market driving what the options are worth.
This brings up another point I've been thinking of lately. This "gap" between wealthy and poor is widening, we hear it all the time. But it never seems to be accompanied by any metric of how that is determined. Sure, I'm sure we all have anecdotal experience of how the gap is widening, but certainly this must be measurable.
For example, to compare the current welfare wage to a CEO's compensation I don't think is incredibly insightful. To compare it to a median home income in Columbus would be. I'd be curious to see the recent trend between those two groups. There are lots of engineers and McDonalds workers alike constrained by that 4.3% wage increase.

Posted 5 years ago #
20thousandinmypocket
upper arlington
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jesus, you guys love to complain.
Surprised no one mentioned Ray Irani the head of occidental petroleum's compensation for 2006, it was about 400 million dollars. Oxy isnt even that big compared to the other oil companies. Now thats a payday.
If you are not happy with what you are being paid, you can always quit, and work for yourself.
http://www.thestreet.com/_yahoo/newsanalysis/energy/10348959.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Posted 5 years ago #
Walker
The KLD / Downtown
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20thousandinmypocket wrote If you are not happy with what you are being paid, you can always quit, and work for yourself.
I don't think many people realize that it's as easy as you say it is.

Posted 5 years ago #
20thousandinmypocket
upper arlington
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No one is saying its easy. If you feel you are stuck in a rut, and everyone else is making millions while you struggle, then what other choice do you have? Well, you can sit and complain, or you can take some action and take control of your life. People who play it safe will never be the person making 400 million a year. If you are scared of risk, then dont expect the reward. Complaining about what executives make surely will not make you one of them. Would you rather move up to their income level, or would you rather force them to give up their income and move down to your level? Complaining about what others have will never get you anywhere. You can complain that you werent born to a family like Paris Hilton but that will never get you Paris Hilton money.

Posted 5 years ago #
joshua
Columbus
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How much risk is there in getting a degree in chemistry then applying for a job at and oil company? This particular CEO had nothing to do with the founding of the company, its growth through most of its history or its current market position. His salary is more based upon the price of oil which is fixed, mostly by a cartel.
On the other hand true innovators Gates, Ellison, Jobs, etc etc income are somewhat more justifiable since they actually created something.

Posted 5 years ago #
ChrisSunami
King-Lincoln District
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This is (link) an essay I wrote explaining the connection between high CEO salaries and meaningless work.

Posted 5 years ago #
gramarye
In Exile
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I tend to empathize with Joshua's second point: there's a difference between a CEO who is also the founder of the enterprise and a CEO who is just a caretaker who got an exorbitant compensation package primarily by being a guy with connections to the incumbent board. There is a difference between creating wealth and merely capturing it. Sergey Brin and Larry Page are different creatures than Robert Nardelli. CEOs getting lavish "thanks for playing" packages and golden parachutes are simply shrugged off by libertarians and economic conservatives as the market at work, but that dismissal begs the real question of whether the market really is working ... that's what critics are challenging when we see phenomena like that. Markets are not higher entities of Aristotelian perfection. They have failures. Likewise, they cannot exist without government of some kind (not even black markets can), so there is definitely room for talk about whether the legal incentive structures we've set up are actually motivating people in the right ways.

Posted 5 years ago #
Brewmaster
Portland, OR
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They are no different from a professional athlete making millions. It comes down to contract negotiations, and these guys duped the boards of the companies they used to work for. Shareholders are starting to hold them accountable. Even the President made an appearance at the NYSE this year and talked about the out of control CEO compensation packages. The markets are working, it just takes time for the investors to determine how much is too much.

Posted 5 years ago #
20thousandinmypocket
upper arlington
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How much risk is there in getting a degree in chemistry then applying for a job at and oil company? This particular CEO had nothing to do with the founding of the company, its growth through most of its history or its current market position. His salary is more based upon the price of oil which is fixed, mostly by a cartel.
i was refering to risks as in starting a new business, responding to walkers statement. Having a cushy 100ik a year job is easy, quitting that job to do your own thing and possibly make 10x the amount is taking the risk. As far as oil companies, for the most part, education does not matter, its all typical corporate brown nosing.

Posted 5 years ago #
ddavis
Westgate
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I thought it was an interesting chart that would elicit reactions.
There's no doubt that you can work for yourself, but that doesn't mean you'll succeed. And everything I've ever heard about people starting their own businesses is that they end up working way more than they would as a rank and file employee.
Do you really think someone like Carly Fiorina deserved the money she got ($21 mil, 2.5 times her base annual salary) because she did HP such a great service?
I think pay for some professions has gotten out of hand. And now they're just expected. Jobs like CEOs, athletes, musicians, actors/actresses, etc. Sure we can say that's capitalism at work, but it just seems out of control...

Posted 5 years ago #
20thousandinmypocket
upper arlington
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If you can get the money, then get it, why criticize the ceo's? Criticize the boards for being retarded. I mean if Exxon offerered you 300 million including options you are going to tell them, no that is too much? Come on, that is absurd. If you place blame on anyone you place the blame on the board and the corporate lawyers for allowing this compensation.

Posted 5 years ago #
gramarye
In Exile
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20thousandinmypocket wrote If you can get the money, then get it, why criticize the ceo's? Criticize the boards for being retarded. I mean if Exxon offerered you 300 million including options you are going to tell them, no that is too much? Come on, that is absurd. If you place blame on anyone you place the blame on the board and the corporate lawyers for allowing this compensation.
Oh, I certainly do criticize boards, particularly those of public companies. Obviously, these exorbitant CEO packages take two to tango, the boards to make the offer and the CEO to accept it, just like any contract. But the public interest is more concerned with the result, not the process itself, even if some defect in the bargaining or decision-making process is responsible for the result. I'm not really concerned with ascribing blame to people (CEOs, directors, lawyers, SEC regulators) as much as fixing the market failure, to the extent there is one. Almost by definition, market failures cannot be blamed on any specific individual; markets are aggregate collective decision-making mechanisms over which all individuals exercise some influence and no individual exercises complete influence. Thus, problems are caused by chains of individual decisions within an established legal and economic framework, not specific decisions by individuals outside any established framework. Market failures are not individual failures.

Posted 5 years ago #
Anne
King Lincoln
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If you bring in a lot of money to a company, I think you should be compensated fairly for it. Actors and entertainers and athletes and such bring loads of money into systems. I don't have a problem with them being paid a lot for it. Yeah, it seems crazy, but when a movie brings in millions of dollars, why shouldn't the main actors get a nice pay from that? Then they can decide how they want to spend their money and a lot of them give quite a bit back to the community. Sure, not all of them do, but celebrities give a lot of money and other things away.
Running your own business is of course a lot of work, but if you can do it and you have a good idea, why not? I think it is much more satisfying to do something you are really happy with that you thought of than to be working an unsatisfying job for money. And if you do succeed at your own business, that is awesome! Everything worth doing in life is hard and time consuming. :)

Posted 5 years ago #
20thousandinmypocket
upper arlington
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gramarye wrote
20thousandinmypocket wrote If you can get the money, then get it, why criticize the ceo's? Criticize the boards for being retarded. I mean if Exxon offerered you 300 million including options you are going to tell them, no that is too much? Come on, that is absurd. If you place blame on anyone you place the blame on the board and the corporate lawyers for allowing this compensation.
Oh, I certainly do criticize boards, particularly those of public companies. Obviously, these exorbitant CEO packages take two to tango, the boards to make the offer and the CEO to accept it, just like any contract. But the public interest is more concerned with the result, not the process itself, even if some defect in the bargaining or decision-making process is responsible for the result. I'm not really concerned with ascribing blame to people (CEOs, directors, lawyers, SEC regulators) as much as fixing the market failure, to the extent there is one. Almost by definition, market failures cannot be blamed on any specific individual; markets are aggregate collective decision-making mechanisms over which all individuals exercise some influence and no individual exercises complete influence. Thus, problems are caused by chains of individual decisions within an established legal and economic framework, not specific decisions by individuals outside any established framework. Market failures are not individual failures.
I agree with that 100% but there jsut seems to be a consensus in america, not necessarily you, that talks about ceos and how terrible they are for making all this money. I know the ceo is supposed to look out for the good of the company, and in turn the stockholders, but lets be honest, I am putting myself before any stockholder. If they are stupid enough to give it to me, I am going to take it.

Posted 5 years ago #
ddavis
Westgate
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I'm not blaming any one person in particular. I'd take the golden parachute if I had the chance.
I'm saying society as a whole needs to re-evaluate this. Is it not possible to be fairly compensated without it being some absurd amount?

Posted 5 years ago #