Average CEO makes 354 times the average worker

[razorsharp]

<p>

As for Ron and JCPenny, he just never had any experience working with a company that wasn’t “hip.” JCPenny has an audience. They just aren’t “hip.” It would take a good long time to make them hip and cool, and nobody in retail has that kind of time right now.

</p>

<p>It’s clear you are just making stuff up poetgrl. </p>

<p>Ron Johnson worked at Target before going to Apple in 2000. Johnson was vice president of merchandising, where he was responsible for launching the Michael Graves line of consumer products. Target’s business is not materially different from JCP’s business. They are both box consumer goods retailers. He performed so well at Target, he was hired by Apple.</p>

[poetgrl]

<p>Yes, I know he worked at Target. That was the joke.</p>

<p><a href=“http://www.businessinsider.com/heres-how-ron-johnson-is-destroying-jc-penney-2012-10[/url]”>Ron Johnson Really Is Destroying JC Penney;

<p>

The problem with the transition to JCP, however, is that both Target and Apple offered Johnson a chance to “shoot retail fish in a barrel” — the financial and demographic winds were at his back. Instead of re-inventing a storied retailer, Johnson had the opportunity to “trap” consumers already eager to shop within these stores. At JCP, however, Johnson (and the store’s Board and shareholders) has mistaken his previous, entrepreneurial exploits and successes as “re-inventing” retail at all levels — something he can re-engineer in his new role.
JCP represents a different challenge, however: A storied retailer with opportunities to restructure and grow, yes, but not necessarily reinvent the retail wheel. In JCP’s case, Johnson’s experience serves as an impediment. JCP is, for all intents and purposes, a discount-quality department store catering to lower and lower-middle-class consumers (similar to those who frequent Sears and Wal-Mart). To introduce concepts that worked at both Target and Apple is to miss the purchaser mark entirely.
Despite the color, tone, and substance of JCP’s recent ads, this isn’t Target (or Apple), Mr. Johnson. Please strategize accordingly.

</p>

[argbargy]

<p>“The comparison is CEO pay vis a vis average worker pay 1982 vs. CEO pay vs. average worker compensation 2013”</p>

<p>I dont know why you think its comparing CEO pay. It isnt- BusinessWeek total compensation.</p>

<p>And employer spending on health care has been increasing for decades to the point where they are a significant percentage of the salary a employee gets.</p>

<p>

Prof. Nicole Huberfeld, an expert on health law at the University of Kentucky, who received her W-2 form on Monday, said, “Most people who get health insurance from their employers have no idea how much it costs.”</p>

<p>“People are often shocked when they see the cost, $12,000 to $16,000 a year,” Ms. Huberfeld said. “Many Americans believe this is something they get free. But employers pay lower wages because they provide insurance.”</p>

<p>…Jay J. Makled, a union steward for the United Automobile Workers at the Ford plant in Dearborn, Mich., described his reaction after seeing that his health coverage cost nearly $16,000 last year: “It’s quite expensive. I was surprised to see how much the company was paying for that benefit.”
…
“Health coverage is a big piece of people’s income and a large part of the social welfare budget,” said C. Eugene Steuerle, a tax economist at the Urban Institute. “But the benefits are not taxable, and most of the spending is hidden, so we don’t consider the trade-offs. If we want to get control of health care costs, people have to be aware of them.”

[Eye-popping</a> Costs for Employer Provided Health Insurance | Galen Institute](<a href=“http://www.galen.org/newsletters/eye-popping-costs-for-employer-provided-health-insurance/]Eye-popping”>Eye-popping Costs for Employer-Provided Health Insurance)</p>

[mnmomof2]

<p>Shareholders can vote OUT current directors when their terms expire. Many companies do have a requirement for a certain number of independent/unaffiliated directors. Not perfect check/balance, but a step in the direction of reasonableness.</p>

[RacinReaver]

<p>

I only invest in companies that I think the market capitalization will increase through stock price appreciation. The purpose of the CEO is to run the public company to make money and a lot of it. The more money the company makes, the higher is its market capitalization.

</p>

<p>Wouldn’t it be the higher the stock price the higher the market capitalization and not the higher the profits? I mean, if I was the CEO of a public company, wouldn’t the best strategy for me in running the company to seek a short term maximization of my company’s profits? Stock price goes up, I’m seen as a turn-around guy, and then things fall apart when I leave. What better way to show how good you are at your job than by setting up your replacement for failure?</p>

<p>A great strategy to me would be to take a company that is known for producing great quality products and come out with a “discount” version that looks like it has all the features of my full price version. Only difference is the build quality. Sales go up because people think they’re getting a great brand for really cheap, but it turns out they’re getting the same POS that all the other brands sell. Short-term profits are great, I look good, but give it a little time and consumers will wise-up. Our company’s name isn’t worth what it was before, but it doesn’t matter to me, because I’ve already made my name as someone that brings in business.</p>

[dstark]

<p>Ok argbargy, do the math. </p>

<p>Let’s say benefits of workers equals fifty percent of pay…</p>

<p>That is a little high… But I am generous and want to give you the benefit of the doubt. </p>

<p>So what is the CEO- worker pay ratio now?</p>

[poetgrl]

<p>And, Razor, again from my link: Don’t take MY word for it: “know your audience.”</p>

<p>

Customer Base: What’s perhaps most interesting — intellectually and psychologically, at least — is Johnson’s complete misread of JCP’s customers. Instead of taking the retailer — and consumer base — “where it’s at,” Johnson is treating his JCP like a retail start-up, as opposed to the 110 year-old retailer it is. That’s not to say significant changes couldn’t — or shouldn’t — be made to the retailer (read: Eddie Lampert’s Kmart push). But for Johnson to treat JCP as another Target or Macy’s is to wholly and completely misread who, traditionally, has loyally shopped at the retailer.
At JCP, Johnson wishes he headed up a store catering to an almost exclusively upper-middle class (and, let’s be honest, white), as opposed to a lower middle-class retailer featuring both power tools and discounted jeans. As appealing as leopard print panties and skin-tight faux-leather pants may be to the traditional Target shopper, JCP consumers traditionally seek out reasonable and reasonably-priced products. With traditional rival Sears famously faltering, Johnson is missing a significant opportunity to bring in the waves of shoppers now fleeing for Wal-Mart.

</p>

[dstark]

<p>Argbargy, health care tax free is a nice subsidy, isn’t it?</p>

[poetgrl]

<p>Here’s a company that does well:</p>

<p>[Walmart</a> Pays Workers Poorly And Sinks While Costco Pays Workers Well And Sails-Proof That You Get What You Pay For - Forbes](<a href=“http://www.forbes.com/sites/rickungar/2013/04/17/walmart-pays-workers-poorly-and-sinks-while-costco-pays-workers-well-and-sails-proof-that-you-get-what-you-pay-for/]Walmart”>Walmart Pays Workers Poorly And Sinks While Costco Pays Workers Well And Sails-Proof That You Get What You Pay For)</p>

[argbargy]

<p>CEO Salary: $1,000,000
Employee Salary: $40,000
ratio: 25:1</p>

<p>CEO Salary + Exec Heath: $1,020,000
Employee Salary + Health benefits: $55,000
ratio: 18.6:1</p>

<p>So comparing compensation to compensation greatly changes the ratio.</p>

[poetgrl]

<p>Right:</p>

<p>And then:</p>

<p>CEO Salary + Exec Health + Stock and Options</p>

<p>Employee Salary + Health - Employee contribution to Health</p>

<p>Carry on.</p>

[argbargy]

<p>Yeesh, you are jumbling everything</p>

<p>You are already comparing the fully loaded CEO compensation package. Options are already being included. </p>

<p>I am saying that 401K, health, additional benefits needed to be added to the “average worker”.</p>

<p>Its not a trivial modification since it has a disproportionate effect on the ratio.</p>

[dstark]

<p>Argbargy, are you joking? Why do you have CEO pay at 1 million? If it really was 1 million nobody would care…</p>

[busdriver11]

<p>^^True. The issue is hundreds of millions of dollars. For that kind of pay, you’d better be doing something extraordinary, that nobody else can do, or have created the product yourself. As a person who has the power of a CEO of a large company, you have responsibility beyond impressing your shareholders and lining your pocket with the companies money. You have a responsibility to turn out a useful, safe product or service, produce for the shareholders and take care of your employees. At least that’s what I think people in power have an obligation to do.</p>

[hayden]

<p>Anyone remember Larry Lasser? Created all sorts of value for his company, for a short time. However, his miscalculations almost brought his company down, and he got the boot. Along with a payout in the range of $13 million, if I remember right. Hard to believe: $13 million for nearly destroying a 100+ year old firm. </p>

<p>I could have destroyed a company for much less, and the company would have made out a lot better.</p>

<p>I really get ticked off when people talk about golden parachutes. You can talk all you want about the risk they take in assuming a tough job, but that’s such bs. I say they should be willing to stand on their accomplishments and be willing to work to keep their jobs and prove their worth every day, the same way the rest of us do.</p>

[GMTplus7]

<p>@argbargy,</p>

<p>Even if 401k, medical, etc add an addntl 20k to a 40k average worker income, the ratio would still be a scary 236:1.</p>

[argbargy]

<p>But it would be a more accurate comparison. </p>

<p>I dont know why people want to start off reasoning about a topic with deliberately inaccurate data.</p>

[dstark]

<p>You changed the numerator… Argbargy. </p>

<p>Do you think we are stupid?</p>

[DocT]

<p>This is an example of a ceo who created share value for his investors: [Home</a> Depot CEO Robert Nardelli resigns - Jan. 3, 2007](<a href=“http://money.cnn.com/2007/01/03/news/companies/home_depot/]Home”>Home Depot CEO Robert Nardelli resigns - Jan. 3, 2007)</p>

[GMTplus7]

<p>You are splitting hairs to argue whether the accurate ratio is 354:1 or 236:1. The point is that the ratio has increased by an order of magnitude in 3 decades.</p>