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Old 10-04-2011, 09:19 AM
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d-ray657 d-ray657 is offline
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Executive pay is not based on results.

One of the excuses for executive pay that has been that a good executive can make decisions that create hundreds or thousands of jobs. So what happens when the company loses thousands of jobs and stockholders lose equity. Why you give the CEO a raise, of course. According to this article the greatest factor influencing executive pay is "peer benchmarking." Companies contend that they have to pay more than the median executive salary to retain their talented executives. What happens if they are not that talented, though. Aw, heck, give them a raise and it will validate hiring them.

One thing that the folks walking Wall Street are well aware of is this:
"Since the 1970s, median pay for executives at the nation’s largest companies has more than quadrupled, even after adjusting for inflation, according to researchers. Over the same period, pay for a typical non-supervisory worker has dropped more than 10 percent, according to Bureau of Labor statistics."
I thought one of the primary elements of a market-based system is incentive to perform. If the leaders of our largest companies don't need to perform well to receive obscene amounts of money, where is the incentive to make the companies succeed?

Regards,

D-Ray
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Old 10-04-2011, 10:44 AM
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If the stock price goes up they get a bonus, if the stock price goes down they still get a bonus. Funny when you are the one running a company it doesn't matter anymore which way the company is heading.

A bonus is warranted because everybody else is doing it right?

Why is it OK for a CEO to be making 100's of times the salary of the average employee but let that same employee want a living wage with benefits then there is a problem!



Barney
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Old 10-04-2011, 10:57 AM
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I think a big part of the problem is there are only so many available CEO's to run these huge companies, that they can write their own contract and pay. Granted, a company could hire someone that hasn't beena a huge CEO, but then they are taking big risks. Companies don't like to look like they are taking that kind of risk, nor look like they are hiring someone that isn't up to doing the job. So, in order to get the big name, they have to pay stupid money.

A lot of companies aren't even basing raises for their employees on productivity and ability. A lot are giving a flat raise across the board. Not only can me and you see what's wrong with that, but I believe it causes a company to do even worse. The people that worked the hardest start backing off their productivity once they realize their hard work is getting them no where.

Really makes you wonder how these big CEO's can demand what they do, because it sure seems like their thinking is pretty flawed and they can't even see the simple...
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Old 10-04-2011, 11:46 AM
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Competent people for CEO? HP's board just hired Meg Whitman.

Strikes me that it is a shining example of the Peter Priciple in operation
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Old 10-04-2011, 11:52 AM
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Why can't I get that to apply to me? Anyone need a high priced CEO?

Pete
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Old 10-04-2011, 12:03 PM
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merrylander merrylander is offline
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When I worked for a non-profit the member companies sent their brass to the meetings, to say that their performance was under-whelming would not be an exaggeration.
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Old 10-04-2011, 05:05 PM
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Quote:
Originally Posted by simi View Post
I think a big part of the problem is there are only so many available CEO's to run these huge companies, that they can write their own contract and pay. Granted, a company could hire someone that hasn't beena a huge CEO, but then they are taking big risks. Companies don't like to look like they are taking that kind of risk, nor look like they are hiring someone that isn't up to doing the job. So, in order to get the big name, they have to pay stupid money.

A lot of companies aren't even basing raises for their employees on productivity and ability. A lot are giving a flat raise across the board. Not only can me and you see what's wrong with that, but I believe it causes a company to do even worse. The people that worked the hardest start backing off their productivity once they realize their hard work is getting them no where.

Really makes you wonder how these big CEO's can demand what they do, because it sure seems like their thinking is pretty flawed and they can't even see the simple...

I concur. In fact, you saved me some typing. I also think that just because a CEO did well in one industry doesn't mean they will do well in another. It does take some modicum of success to become a CEO in most cases. How much is someone like, say, Steve Jobs, worth to Apple? Ultimately, the BOD is responsible for the contract of the CEO.
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Old 10-04-2011, 05:11 PM
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Quote:
Originally Posted by merrylander View Post
Competent people for CEO? HP's board just hired Meg Whitman.

Strikes me that it is a shining example of the Peter Priciple in operation
I think she has a good track record unless I'm missing something:

Quote:
Whitman served as an executive in The Walt Disney Company where she was vice president of strategic planning throughout the 1980s. In the 1990s, she served as an executive for DreamWorks, Procter & Gamble, and Hasbro. Whitman served as President and Chief Executive Officer of eBay from 1998 to 2008. During her ten years with the company she oversaw expansion from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in annual revenue.
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Old 10-04-2011, 05:25 PM
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Meg Whitman was the one that screwed up ebay with all the new rules then left for HP.
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Old 10-04-2011, 06:58 PM
noonereal noonereal is offline
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Quote:
Originally Posted by simi View Post
I think a big part of the problem is there are only so many available CEO's to run these huge companies, that they can write their own contract and pay. Granted, a company could hire someone that hasn't beena a huge CEO, but then they are taking big risks. Companies don't like to look like they are taking that kind of risk, nor look like they are hiring someone that isn't up to doing the job. So, in order to get the big name, they have to pay stupid money.

...

No no no no no no no.

This is simply not the case.

CEO's and the executives of major corps are hired on association. Often time these people are proven faliures but they "run in" the elite circle. (and it is a circle)

The trick is to break into this circle. It can be done two ways, the easy way, born into it and the hard way go to school, make friends with the kids "in the circle."
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