<p>Ariesathena, I’m not engaging with you over startup CEOs because that’s not what’s under discussion. We’re talking about the finite universe of CEO’s of the largest corporations in America, and the fact that their pay, relative to the pay of, yes - everyone else - has increased in relative terms by a factor of 8X in just 30 years. That’s what I’m commenting on.</p>
<p>If you want to talk about how wonderful turnaround artists are - and some are, some aren’t - or how much CEO’s of small local companies are - and I know several - that’s fine.</p>
<p>I’m talking about how a favored class of Americans has been able to determine that their piece of the pie will get bigger, and there’s no mechanism to govern that.</p>
<p>I happen to know plenty of CEO’s, including a turn around guy who is worth his pay. The other turn around guy? Eh.</p>
<p>I simply think that Henry Ford was right. The best thing for America and the best thing for business is to have car makers who can afford the things they are making. (For carmakers fill in any other group of laborers, for those who will miss the metaphor)</p>
<p>As for the Penny’s debacle, if these guys weren’t so busy navel gazing, they’d recognize that the people in retail who are doing great things aren’t old entrenched guys who don’t buy anything they make, but women like the head of JCrew and the Urban Outfitters group, which includes Free People, and even the young woman who will be running True Religion soon. </p>
<p>the old models don’t work. They ought to hire somebody with a proven track record who actually buys things.</p>
<p>The Penny’s situation just goes to prove how incestuous the board rooms are, NOT that there is any dearth of real talent out there.</p>
Hammering away on the same point that is ignored by the “I know better than shareholders, Boards, and the free market what people are ‘worth’” group: CEOs are often running bigger companies than they were back in the day. (In 1980, there were approximately one million mobile devices in the United States, and not many more abroad; today, there are more cell phones than human beings.) What kind of nutbar thinks that a CEO who sells to a market that is three hundred times as large deserves the exact same compensation? How does that even involve the same skill set?</p>
<p>I would be interested in having a discussion that does an actual, non-hack comparison of 1980 to present. We could compare average salaries of college graduates to average CEO salaries, or average revenue of a Fortune 500 company to average CEO pay. We could compare the average S&P 500 salary with the average S&P 500 CEO salary. But this hack study is not worth discussing, except to mock and refute.</p>
<p>I’ve actually been thinking about this ever since I saw Argo. People in America used to care about some things more than they cared about money. I don’t know when that changed, or why, but it’s a sad thing. We’ve lost a lot. </p>
<p>I think it has to do with the loss of manufacturing and the increase in finance, and I probably shouldn’t say that, since I’ve benefitted from it so much, myself, but the ethics of making things is a better one, for some reason, than the ethics of finding new ways to manipulate money.</p>
<p>ETA: Go ahead ariesathena, gather up the data and put it out there to compare. That’s what most of us do when we are interested in making a comparison. Link us the numbers that interest you and we will take a look. Also, stop with name calling, like “nutbar,” etc… It’s against the Terms of Service of the site.</p>
<p>Ron Johnson worked at Apple for 11 years and is often given credit for making numerous brilliant marketing decisions such as creating the genius bar at the apple stores. He gave up $107 million in stock when he left Apple in order to take over the CEO job at JCP. He left JCP with very little relatively speaking. </p>
<p>Ariesathena, calm down. My point is precisely that there is no “free market” (or shareholder) control of CEO compensation. I understand that you mock, but nothing you say “refutes.” Sure 2013 is different than 1982 - it’s different for everyone. Lots of low-skill jobs don’t even exist anymore. The average worker is more productive and uses more complex technology. This is true for everyone, not just CEOs. </p>
<p>Again, the point being made - which is not, in my opinion, reasonably subject to dispute - is that CEO’s of major corporations are paid much more relative to the income of everyone else than they were 30 years ago. And not more by a small fraction - we’re talking about an 8X increase in the differential. </p>
<p>For that to be an economically rational event CEO’s would have to be worth 8 times what they were worth to a company 30 years ago. (Or, conversely, that they were only paid a fraction of their value to companies back then.) It doesn’t matter what the methodology of the study is, as long as the same methodology is used for both 1982 and today. I’m not presuming to say what they “deserve” - only a “nutbar” would do that - I’m questioning how their relative economic value added to the company could increase eightfold in that period of time. </p>
<p>This goes hand in hand with the equally indisputable fact that the GINI coefficient of wealth in America has grown in the same period - i.e, the rich are getting richer, relative to everyone else. Now before people start screaming about leftist class envy, etc. note what I’m saying - it’s not that there’s a differential - I’m perfectly OK with that - it’s that the differential is growing. Or exploding, in the case of major corporate CEO’s. Poetgrl’s point is well taken - if this keeps up, who will buy the widgets?</p>
<p>Historically, greater disparity in wealth between the wealthy and middle classes have seen less economic growth and more social unrest. I don’t see that as a good thing.</p>
<p>Ron Johnson was widely recognized as among the most talented marketing managers in the world. He was behind some of the most significant marketing decisions every made at apple. He had a Harvard MBA and he studied at the hand of the most brilliant CEO who has ever lived, Steve Jobs. There was no better candidate than Johnson and the ceos you cite are nobodys compared to Johnson.</p>
I’m sorry - I didn’t realize that you didn’t bother to glance at the story I linked to, which identifies the subject as “Chief executives of the nation’s largest companies…” in the first sentence.</p>
<p>And that is completely nonsense, kluge. Shareholders nominate and elect the board. The board determine who to hire as CEO and what the CEO should be paid. In general, if the board hires the wrong CEO the CEO gets booted. What a manager demands to be paid to take over the CEO job and what the board will pay for a prospective CEO is negotiated in the free market.</p>
<p>Carl Ichan is constantly buying big stakes in companies and replacing their board members with his nominees when he thinks existing management is incompetent.</p>
<p>razorsharp, that’s every bit as true as the fact that the Communist governments in Russian and Eastern Europe were routinely reelected by overwhelming majorities. “Shareholders nominate and elect the board” - do you really believe that fairy tale? I’m a shareholder, and I assume you are too. Has your opinion regarding any prospective board member ever been a matter of significance to any company you’ve ever owned stock in? “Negotiated in the free market?” Really? Where did that happen? You forget - I’ve actually gone over the minutes, memos, etc. of the actual process. I’ve seen it inside and out. There’s nothing “free market” about it. It’s a totally inward-looking process.</p>
<p>Icahn is notable precisely because he’s the exception - and he can only be an exception because he controls a vast amount of wealth.</p>
<p>I don’t think you have an accurate understanding of the free market. Nobody ever said the free market is pretty. You can always cite individual exceptions but the vast majority of public corporations get rid of CEOs who don’t create profits (the pay of a fired CEO is zero) and pay big money to those who enable the company to earn big money. It’s all about profit and that is precisely what corporations should be focusing on in a free market.</p>
<p>My CEO is on that list, and he is underpaid. If not for him, none of his hundreds of thousands of employees would have their jobs, and the world would be a different place. Nobody will be able to fill his spot as well when he dies… I’m sure he won’t retire. This was his baby, and he should get a raise. Though I doubt he cares much about money.</p>
<p>"“It’s a great irony that spectacular failure is rewarded lavishly,” John J. Donohue, a professor at Stanford law school and the president of the American Law and Economics Association, told me. “It is a terrible mistake to set up a structure where the top person walks away with millions even if the company is laid waste by their poor decision-making, yet this is what’s happening. It’s a shocking departure from capitalist incentives if you lavish riches on the losers.”</p>
<p>He added that it’s especially shocking at H.P., which fired its previous two chief executives before Mr. Apotheker and had to make multimillion-dollar payments as a consequence. “After what H.P. had gone through, you’d think the board would have been on their toes rather than asleep at the switch again,” he said."</p>
<p>argybargy - again, HP is notable because it is an exception, with a board divided into factions which have been squabbling over the company’s fading business. Still, the top 8 executives were paid a total of $65M last year - down from $87M the year before. Not a bad reward for leading a company that’s bleeding money and has lost half of its stock value over the past 5 years.</p>
<p>HP should never have fired Mark Hurd. He made them millions. They replaced him with an idiot, Apotheker. Whatever money Hurd was due, HP was obligated to pay and should have paid for the way they mistreated him. Hurd is now a star with Oracle. Larry Ellison is no fool and he scooped up Hurd quickly.</p>