How Much Is A CEO Worth?

1poverty sucks

From the Metropolis Fishwrapper:

An Unstoppable Climb in C.E.O. Pay

WHEN we made our annual foray into the executive pay gold mine in April, chief executives’ earnings for 2012 showed what appeared to be muted growth on the year. The $14 million in median overall compensation received by the top 100 C.E.O.’s was just a 2.8 percent increase over 2011, the figures showed.

Well, what a difference a few months and a larger pool of C.E.O.’s make. According to an updated analysis, the top 200 chief executives at public companies with at least $1 billion in revenue actually got a big raise last year, over all. The research, conducted for Sunday Business by Equilar Inc., the executive compensation analysis firm, found that the median 2012 pay package came in at $15.1 million — a leap of 16 percent from 2011.

So much for the idea that shareholders were finally getting through to corporate boards on the topic of reining in pay.

At least the stock market returns generated by these companies last year exceeded the pay increases awarded to their chiefs. Still, at 19 percent in 2012, that median return was only three percentage points higher than the pay raise.

In other words, it’s still good to be king.

There is a bunch more if you want to read it. What is missing is an explanation as to why high CEO salaries are a bad thing.

Are CEO’s overpaid? Sure, but so are professional athletes, movie stars and television personalities. I like Bill Clinton and Sarah Palin but I think they are both overpaid for giving speeches. If I start making a list of people who are overpaid it will be a long list.

How much are your services worth? I dunno, how much can you get? There is a legal maxim that “The value of a thing is what the thing will bring.” Businesses exist to make profits. It is hard to argue logically that a CEO is overpaid if the company is making a profit.

On the other hand if the company is losing money the salary problem tends to be self-correcting. The company either goes broke or cuts costs.

If you own stock in a company then you have some say in how much the executives get paid. But unless you are an investor it’s really none of your concern. The last thing we need is a government bureaucracy deciding how much everybody should be paid.

If you have a better idea I’d love to hear it.

About Myiq2xu - BA, JD, FJB

I was born and raised in a different country - America. I don't know what this place is.
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16 Responses to How Much Is A CEO Worth?

  1. 1539days says:

    Someone once defined “rich” as anyone who makes more than you.

    I had this argument with a co-worker this week when he read about CEO pay being something like 500 times more than the pay of their lowest worker. I suppose one can be upset by this figure, but it might mean low paid workers are lower paid than they used to be. As long as we continue to allow illegal and “guest” workers into this country at a faster pace, that trend will continue.

    CEOs are paid by companies. Those companies are usually owned by stock owners and institutional investors. They buy stock based on which CEO takes over a company at any one time. It may not be fair, but your 401K is probably perpetuating it.

    The other problem is actually Big Labor. In 2008, when the auto companies needed tens of billions of dollars in loans, they went to the government. The UAW pension fund at the time was about $80 billion. They could have bought a controlling interest in the auto makers and possibly seats on the board of directors. Hell, they could start an auto company. Remember, when companies can’t pay union raises, they always complain about CEO pay and mismanagement.

    If the people at the top are the problem, why don’t unions use their financial power to buy the companies and fix management? I suspect because there’s no money in it. When Obama controlled the auto bailout, he violated financial rules by allowing the union pension fund be saved and preferred stock owners to be shafted. If I were an investor, I would never invest in American manufacturing again.

    History has shown that unions generally get all they can from a host, then bail before it dies. Instead of accepting give-backs, Hostess bakers opted to lose their jobs and never be hired back, because the new owners of Twinkies won’t be hiring union labor. Maybe they should have asked for stock options, since they presumably are some kind of ill-gotten gains.

    • myiq2xu says:

      Capping CEO salaries is nice in theory, but if the shareholders won’t do it who will?

      The free market does not guarantee profits or good management. But competition works better than anything else ever devised.

  2. SHV says:

    Alea iacta est.

    I think that the die was cast when Obama read Ben Rhodes’ speech in Cairo.

    • cynic says:

      If Obama is the puppet, who is the puppet master? I have a feeling that it is becoming evident what their goal is, however.

      Some time ago, when Wikileaks release some reports, I found an article on an Egyptian with ties to Google was being held for questioning. Apparently, the authority had found that he had attended a Youth Movement in NY, and had the literature on it. I did research on that Movement and it took place in early Dec., 2008. the Obama team was involved in it, and I thought that it was very presumptuous that they would have been involved, seeing that it was so soon after the election, and what would have happened if he hadn’t won. Would people attend a seminar being put on by a losing team? I’m sure this three-day event took months to plan.

      The link has disappeared, but it was VERY interesting. You could watch on-line, and I did. They had animated videos on how to use the new media to stage a protest, and they taught you how to go on line and stay under the radar.

      Is there any question that they helped this Egyptian get the protest going that ousted Mubarak? Someone had to guide them how to do it.
      Here’s another link to that Youth Movement from 2008:

  3. yttik says:

    Something else everyone seems to be forgetting, money sure isn’t worth what it used to be. A million dollars still sounds like great riches to me, but it’s hardly even “wealthy” anymore. It’s two major medical events or owning three houses. Forget private planes and caviar, you need several more million for that lifestyle.

    When people talk about lowering ceo pay and raising minimum wage, it makes me crazy because there’s no cause and effect. The problem really isn’t wages at all, it’s the way our government’s borrowing has made the dollar so worthless. Soon we’ll all be earning a million…and it will cost 100 grand for a week’s worth of gas and groceries.

  4. votermom says:

  5. Man, I do not give a shit how much someone else is getting paid. I do wish I was paid more, and think I’m worth more, but it is what it is.

    What I do care about is this KICK ASS Cuban chicken noodle soup I just made. Whole thing is from scratch, including my own no-salt vegetable broth and chicken bone broth, plus left over Cuban chicken I’d made a few nights ago, grilled plantains, red potatoes, fideo noodles, and plenty of cumin, cilantro, and lemon. It is rocking my world, and judging by the size of the pot I made, it will rock it for days. I might be a superhero by the end of the week.

    • HELENK says:

      sounds really good

      if no one makes good money what is there to aspire to? When you get a job most places pay a beginning wage. As you learn and progress you get raises. Why shouldn’t a person who makes decisions on the direction of a company make good money? Maybe someday that could be you. Wouldn’t you want to make what ever the market will bear for your experience?

  6. Pingback: Always on My Mind | Days of Change

    • Lizzy says:

      I didn’t realize when I did the link I got the third page of the article. There are three pages. The article gives the names and earnings of the top five executives and discusses ways to evaluate their earnings.

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