A question, CEO pay versus regular worker pay ?

[joeea]

OK Joe. At least we know which side of this discussion you are on.

I'm not sure you do.

 

[joeea]

What has changed is that CEOs are now more legally responsible for many aspects that they weren't in years past. You can also be personally sued in certain instances.

What percent of CEOs have ever been personally sued, let alone jailed?
When did that percentage start increasing as you appear to imply?

 

[marko]

What percent of CEOs have ever been personally sued, let alone jailed?
When did that percentage start increasing as you appear to imply?

Don't know the percent. But I know of two CEOs in my old industry who were personally sued for something his company did/didn't do. One was found not liable and the other was eventually covered by insurance but it was such an ordeal that the not liable one had a stroke and never worked again. And these guys weren't making tens of millions; they were CEOs of mid-sized companies.

I think most of the new regulations started after the Enron fiasco. Enron was a mess but the regulations lumped all public companies into one bucket and created all sorts of new liability onto management and costs onto companies who were already playing by the rules.

It's one of the main reasons that some companies have gone from public to private.

 

[RetireBy90]

IMO employees of a company shouldn't be worried about this... investors, perhaps should (well, be worried about CEO compensation, not the ratio). As an owner of the company, you're paying that gals/guys salary. If s/he is worth it, GREAT! If s/he isn't then fire him/her!

I think the ratio comes into play in relation to the diminishing middle class when folks say has been happening for a while. As pay gaps increase (which are represented by this ratio) the middle class either get sucked into the upper class or pulled into the lower class... at least that is the theory.

I, for one, believe that, while some of us get better/easier opportunities than others (often by connections, luck of the draw, or being born into the right family), anybody can make good decisions and improve their livelihood. If you think the CEO has such a good gig, figure out how to get his job!

I own my own company, and I can tell you that those who put in 110% get way better bonuses and raises than those who put in 90% at my company... and it irritates the cr*p out of me when legislatures try and standardize pay to avoid discrimination... as managers, business owners, or whoever else has control of the purse strings, we need to be able to compensate those who work hard better than those who hardly work. I've tried to explain this to the 90% group at my company, but they still just think they're getting discriminated against. The alternative, if standardized wages get enforced, is the 90%ers get fired and we only keep the 110%ers on staff and hire more of them!

MIMH

I strongly agree ! If you aren't getting compensated what you think you are worth, improve your worth by education, experience and performance. If you still don't get what you think you are worth, find a job where you are closer to your worth. Also you need to get past the message that moving from fries to flipping burgers is a career path.

I have 2 boys, but if I had a daughter, I would want her to be treated fairly just as anyone else. However, lots of things come into the pay level equation. When I used to have responsibility for setting pay and raises, I would think about what this person has done for me and what would I do if he/she were to leave for a better paying position.

/rant

 

[eytonxav]

The thing that always amused me about CEO compensation is that the CEO's will say they have no say over their compensation as its decided by a compensation committee. However, such committees are usually made up of individuals from other corporation holding similar high level positions. Kind of like the fox guarding the hen house. The other amusing or should I say disturbing thing, is when executes fabricate meeting certain goals to achieve additional compensation. I was at a high enough level to see this happen several times during my career.

 

[MoneyIsMyHobby]

It had always been difficult to help people acknowledge their own privilege, especially gender privilege and racial privilege, but it has gotten even more difficult in the last year or two. More and more we are seeing a return to the corrupt belief that institutionalized discrimination and systemic economic disadvantage is the fault of the victims, even as we see some small sectors, such as Hollywood, finally acknowledging those failings, and doing something about it.

As I said, some folks certainly have an easier path to success than others, but you see so many folks self-sabotage their financial situation. I'm sure my tenants think that the man is keeping them down... as the Amazon truck shows up with their weekly delivery of "stuff they don't need" while they're racking up late fees to me for not being able to pay their rent on time. They're living room TV is literally twice the size of mine - just one more example.

Furthermore, as you say, it may be hard for people to acknowledge their privilege, but I think it is just as hard to get people to admit their own fault in their situation instead of thinking it is something outside their control (such as prejudice, discrimination, birthright, etc.).

MIMH

 

[travelover]

The issue really goes beyond just the money paid to CEOs. The CEO leads by example and everyone in the company pays attention to that signal. If the CEO is seen as a greedy, grab all you can person, that ethic is transmitted through the ranks.

At MegaMotors, there was a lot of petty and not so petty theft and I heard from co-workers repeatedly that the CEO was paid millions, so a little pilfering on their part was justified. That feeling of "grab all you can" also fueled labor negotiations and eventually helped to lead to the bankruptcy of GM and Chrysler from over generous benefits and pay to the unionized employees.

 

[bUU]

Furthermore, as you say, it may be hard for people to acknowledge their privilege, but I think it is just as hard to get people to admit their own fault in their situation instead of thinking it is something outside their control (such as prejudice, discrimination, birthright, etc.).

a Having a good bit of experience with both, I cannot agree. I have found very few of those disadvantaged unwilling to acknowledge the portions of their predicament which are of their own doing, while many people doggedly refuse to admit how privilege works in society so as to benefit them and disadvantage others.

 

[exnavynuke]

It's simple supply and demand. The demand for people to carry out such roles has increased while the supply of people willing to take them, and deemed qualified to be in them, has not. Conversely, the demand and supply for low-level workers has not seen a corresponding change in relative supply and demand.

 

[bUU]

Conversely, the demand and supply for low-level workers has not seen a corresponding change in relative supply and demand.

This. Automation and globalization have combined to inflect the labor market such that the value of work, itself, is now in decline. It used to be that automation created more jobs than it replaced. Taking the nation as a closed system that hasn't been the case for over a decade.

 

[marko]

It had always been difficult to help people acknowledge their own privilege, especially gender privilege and racial privilege, but it has gotten even more difficult in the last year or two. More and more we are seeing a return to the corrupt belief that institutionalized discrimination and systemic economic disadvantage is the fault of the victims, even as we see some small sectors, such as Hollywood, finally acknowledging those failings, and doing something about it.

This. Automation and globalization have combined to inflect the labor market such that the value of work, itself, is now in decline. It used to be that automation created more jobs than it replaced. Taking the nation as a closed system that hasn't been the case for over a decade.

All interesting talking points and eloquently made on your part. But, however well put, just pointing things out is one thing; are there any practical solutions? I'm not talking about radical social/political changes but within the framework of our current system. What would you change to rectify these things?

 

[youbet]

This. Automation and globalization have combined to inflect the labor market such that the value of work, itself, is now in decline. It used to be that automation created more jobs than it replaced. Taking the nation as a closed system that hasn't been the case for over a decade.

I think you meant to say "the value of menial work, itself, is now in decline." For example, the value of engineers designing and implementing edgy, reach-out automation has never been greater. Their work is in high demand while supply grows slowly.

 

[bUU]

All good talking points and eloquently made on your part. But, however well put, just pointing things out is one thing; are there any practical solutions?

What is a "solution" is subjective. If you are asking if there are changes that can be applied and accommodations that can be made to mitigate some of the harm inherent in what I outlined, then the answer is, "Yes." However, even those measures are hindered by a lack of acknowledgement of the problem, or perhaps more precisely, active denial.

 

[bUU]

I think you meant to say "the value of menial work, itself, is now in decline." For example, the value of engineers designing and implementing edgy, reach-out automation has never been greater. Their work is in high demand while supply grows slowly.

Even there there is a change. The work has been restructured so that fewer engineers do the highly valued work, and there are more underemployed engineers serving as foundation for that work.

A good example of this is software test automation, and how what used to be the work of ten highly-skilled engineers is now the work of two highly skilled engineers and a handful of "menial" analysts.

 

[youbet]

Even there there is a change. The work has been restructured so that fewer engineers do the highly valued work, and there are more underemployed engineers serving as foundation for that work.

A good example of this is software test automation, and how what used to be the work of ten highly-skilled engineers is now the work of two highly skilled engineers and a handful of "menial" analysts.

Yep. Great example proving my point.

 

[youbet]

the above Web page shows how some CEOs get away with a lot of bacon.

While it doesn't make unjustified CEO compensation right, the fact is the phenomena is not confined to CEO's. How about major sport pro athletes, folks at the top of the entertainment business, etc. ? The pay pyramid is very steep near the top of many professions.

Compare Tom Brady's salary to the guy who is working at the concession stand. Pretty high multiple, huh? Yet they're all in the same gig: providing entertainment on Sunday afternoon.

 

[marko]

What is a "solution" is subjective. If you are asking if there are changes that can be applied and accommodations that can be made to mitigate some of the harm inherent in what I outlined, then the answer is, "Yes."

That is what I'm asking. What the top 3 or 4 things you would change?

 

[Rustward]

<snip>

Compare Tom Brady's salary to the guy who is working at the concession stand. Pretty high multiple, huh? Yet they're all in the same gig: providing entertainment on Sunday afternoon.

Just a question: How many tickets are bought because of who is running the concession stand?

 

[youbet]

Just a question: How many tickets are bought because of who is running the concession stand?

Don't understand your question. Either I inadvertently misspoke or you misinterpreted. I clearly was not criticizing the delta in compensation between the QB and the concession employee. I was stating that there are other professional situations besides CEO's and rank and file employees that have high compensation ratios.

Get it?

 

[exnavynuke]

Just a question: How many tickets are bought because of who is running the concession stand?

Probably the same as the number of copies of Microsoft Office that are bought because of who the janitor at their office is.. 0?

 

[marko]

I clearly was not criticizing the delta in compensation between the QB and the concession employee. I was stating that there are other professional situations besides CEO's and rank and file employees that have high compensation ratios.

But I think you make a good point aside from CEO's not being the only ones with skewed pay.

Brady makes big bucks because he's 'worth it', however you may want to quantify that.

Like pro athletes, a successful CEO today really has to have his act together or he doesn't stay CEO very long. With all due respect, anyone can run a concession stand; not everyone can do what Brady does.

As someone here noted it's a matter of supply and demand; finding someone who can run Disney, Coke or Delta Airlines is not a matter of putting an ad on Craig's list. These people are hard to find and end up with huge responsibilities.

We can argue the level of compensation but trying to equate difference between an elite level employee and the guy sweeping the floor are really unconnected.

 

[bUU]

Yep. Great example proving my point.

But don't lose sight of the implications. It means that the same level of hard work that you and I put in will yield substantially inferior results for our children, and fewer people overall will enjoy the success we have. The system has reduced the number of "winners of the game" while the number of players has increased.

 

[bUU]

That is what I'm asking. What the top 3 or 4 things you would change?

I don't want to get into that detail here because it has regularly led to rude exchanges in the forum.

 

[MoneyIsMyHobby]

But don't lose sight of the implications. It means that the same level of hard work that you and I put in will yield substantially inferior results for our children, and fewer people overall will enjoy the success we have. The system has reduced the number of "winners of the game" while the number of players has increased.

Of course, compensation has little to do with how hard the work is. Consider a teacher's salary as compared to an engineer. Consider a social worker's salary as compared to a veterinarian. While there is some connection between the toughness or risk (i.e. coal miner) of the job and compensation... there are other factors that have a much more significant impact. There is nobody at Tesla that will have a greater impact on the company's bottom line than Elon Musk... review the effects of his 2018 April Fools Joke...

Our lovely Country rewards people based on their unique advantages/aptitudes and how they apply those advantages/aptitudes, and we place higher value on certain advantages/aptitudes than others. My own wife worked in social work and found it very troublesome that I earned 5x what she earned as a Sales Engineer for the same quantity of hours, and arguably a less stressful job.

It is (mostly) about supply and demand. For teacher's and social worker's salaries to go up, more people have to be unwilling to do the job for the current going rate creating shortage. That said, I personally have considered going into teaching - trading the salary for summers off!

MIMH

 

[marko]

That said, I personally have considered going into teaching - trading the salary for summers off!

Come to Mass! Our niece in law is a second year third grade teacher making $80k. (And summers off)