Do companies need to pay CEOs etc. so much?

Wanderer78

KyussBeeshop wrote:

I think the problem with these discussions, is that people who are reasonably well off due to the current structure of the economy, don't actually give a shít about the way inequalities in this system harm people on a mass scale - and will just keep on repeating the same mythical claims about the economic system (e.g. that things like CEO pay are meritocratic), in order to justify their own position to themselves (and many people probably aren't even conscious that they do this).

Ha-joon Chang appropriately calls this, 'kicking away the ladder'!

steddyeddy

I don't actually mind what CEOs get paid. That's the business of the company. Where society comes in is making sure anyone with the talent can get to that position.

Earthhorse

witchgirl26 wrote: »

I do think there are some areas where the pay of CEO's should be examined and that is especially in terms of social sector and charities but private businesses should be free to pay what they like to get who they want for the job. I worked at a large multinational who were going through CEO's like they were going out of fashion as they were trying to find one who could actually make a difference to the fortunes of the business. If there was no change in the bottom line, the board kicked them out. There are checks and balances in a private business for this.

I don't get this; why shouldn't charities or social sector (not sure what that is) organisations be free to pay what they like to get who they want for the job? Charities are private organisations too.

Despite what you say about there being checks and balances in private businesses regarding CEOs pay and performance the evidence suggests that these are not working and that there is no meaningful correlation between CEO pay and performance for the most part.

Walter H Price wrote: »

I think what allot of people miss here with this argument is that most companies operate a pay scale , as a way to incentives people to move up through the organisation. CEO roles are not easy there is allot of extra stress , pressure and time commitment involved in taking that step up even compared to being a Senior Executive, you need a different skill set in many cases you need to be a bit more politically minded , you need to build alliances within the senior Management team and with Board member in order to protect yourself and your position, as a senior exec you may be responsible for 1 or 2 areas of the business strategy and performance as a CEO you would be responsible for maybe 15+ areas , imagine the time involved the pressure of delivering while knowing that if performance dips or profits fall your heads first on the block. who's taking that role without some serious incentive. My father has turned down interviewing for thees type of roles on a number of occasions despite the fact that the pay increase associated with the roles would have been been 80k + , it wouldn't be enough for him to sacrifice so much more time and his job security.

I don't think anyone is ignorant of pay scales or the fact that a CEOs job is stressful. Running a business, even a small one like a shop or pub is stressful. No one is saying CEOs shouldn't be the best paid people in most organisations. Just that in general they are overpaid.

Beasty wrote: »

In my own view the gap is totally unjustifiable but alas that is the world we live in. I certainly now benefit massively as a result, but equally there will be little incentive for anyone on the inside (including the likes of me) to change things without a completely new and co-ordinated approach pretty much across the globe.

The incentive is already there; they could get the same performance from their CEOs for less money. It's just that unfettered belief in the market system reduces all business thinking to - if the market has priced something then that price is correct.

I know of a man who makes his living as a troubleshooter. Failing companies hire him to come in and turn their business around. His approach is to talk to the people at the top and then the people below them. The people at the top have no idea why the business is failing (if they did it wouldn't be) so he fires them and promotes the people who understand the business into their roles. He says it's always the same and that his job is actually very easy. This guy spends half the year sailing on his boat and only really works when he wants to.

It's only anecdotal but I think this is indicative of a much broader problem in our system which is belief in the meritocratic nature of our system when in fact it isn't merit based at all.

Walter H Price

steddyeddy wrote: »

We're not all of equal intellect or ability but that's not always the main factors of success. For instance we know that private schools, such as the one you went to, have a significant effect on grades outside of ability. I.E a dumber privately educated kid will lilely do the same or better as a state educated one. That's been well researched at this stage.

it's not like they give you the answers , yes you probably get a better standard of education , but to be honest no amount of grinds and tutoring can make it up if someone is genuinely lacking in ability , there were lads i went to school with who struggled the whole way and either didn't make it to third level or if they did didn't get much further.

KyussBeeshop wrote: »

I think the problem with these discussions, is that people who are reasonably well off due to the current structure of the economy, don't actually give a shít about the way inequalities in this system harm people on a mass scale - and will just keep on repeating the same mythical claims about the economic system (e.g. that things like CEO pay are meritocratic), in order to justify their own position to themselves (and many people probably aren't even conscious that they do this).

It reminds me of the quote from the physicist Max Planck - except applied to politics/economics rather than science:

"A scientific truth does not triumph by convincing its opponents and making them see the light, but rather because it’s opponents simply die off. Science progresses one funeral at a time."

Most of us here have seen the same myths perpetuated and debated/debunked many times over - but many of those who benefit from an unequal economic system and want it to stay in place, will (consciously or not) purposely remain ignorant of the flaws in these myths, and will just keep parroting these myths out - as they stand to gain from this system remaining in place, even if it is at cost to others.

It's not a logical debate, it's not a debate where people aim to find the truth (e.g. it's visible that many people simply don't want to know-about/acknowledge the harm of accelerating inequality), it's where people (consciously or not) try to shape the debate to fit the worldview that benefits/comforts them the most - and any deviation from that is almost like a personal attack on people, on the worldviews/moral-systems that allow people to tell themselves that what they do is just, and that they're still good people.

That's kind of what 'Free Market' economic theory is - an entire framework/system of myths that people tell themselves, to justify the state of the current economic system (which is fúcking light years away from working, in the manner of the economic theory people spout to justify it).

Riddle me this though if the system is working for me as an individual, i'm happy out working , earning , saving , spending. I have wealth , maybe i'm not a millionaire , billionaire elite 1%'er type , but i'm comfortable a nice house good holidays no financial worries and the opportunity to acquire more wealth through my own work and perseverance. why would i vote to give any of what i have to the less well of , if there is inequality in my favor and in favor of my kids why would i look to change that and give up mine and their "advantage" , why as the proverbial Turkey would i vote for Christmas.

If the system was truly failing as in really honestly broken, most people wouldn't be the turkey and you see votes for change , but that's not what im seeing to be hones , here we went centerist , america went right , The UK went Conservative , Gemany Conservative , France about to go back right or extreme right as is the Netherlands. all the fantasy economics stuff is great to talk about and spark debat and honestly i respect Chomsky as a commentator and he has many valid points about prevailing issues in American society , however most of these are applicable here or anywhere else in Europe.

But really ask yourself why would the Turkeys vote for Christmas , if the system is working for me , what incentive is there for me to upset the apple cart for someone else s gain ?

steddyeddy

Walter H Price wrote: »

it's not like they give you the answers , yes you probably get a better standard of education , but to be honest no amount of grinds and tutoring can make it up if someone is genuinely lacking in ability , there were lads i went to school with who struggled the whole way and either didn't make it to third level or if they did didn't get much further.



Riddle me this though if the system is working for me as an individual, i'm happy out working , earning , saving , spending. I have wealth , maybe i'm not a millionaire , billionaire elite 1%'er type , but i'm comfortable a nice house good holidays no financial worries and the opportunity to acquire more wealth through my own work and perseverance. why would i vote to give any of what i have to the less well of , if there is inequality in my favor and in favor of my kids why would i look to change that and give up mine and their "advantage" , why as the proverbial Turkey would i vote for Christmas.

If the system was truly failing as in really honestly broken, most people wouldn't be the turkey and you see votes for change , but that's not what im seeing to be hones , here we went centerist , america went right , The UK went Conservative , Gemany Conservative , France about to go back right or extreme right as is the Netherlands. all the fantasy economics stuff is great to talk about and spark debat and honestly i respect Chomsky as a commentator and he has many valid points about prevailing issues in American society , however most of these are applicable here or anywhere else in Europe.

But really ask yourself why would the Turkeys vote for Christmas , if the system is working for me , what incentive is there for me to upset the apple cart for someone else s gain ?

Well we know private schools make easier for dumber students to get into uni over brighter poorer kids. So it's not based on intelligence or ability ect.

I suppose you wouldn't vote to change things. There's some old dinosaurs from Oxford who work in the same lab as me. They yearn for the days where Rosalind Franklin could have her work stolen and credit given to the males who robbed it. The system worked for people like them so why would they change it? Well for the simple reason most people realise that a meritocracy is better for the organisation and society.

KyussBeeshop

Walter H Price wrote: »

Riddle me this though if the system is working for me as an individual, i'm happy out working , earning , saving , spending. I have wealth , maybe i'm not a millionaire , billionaire elite 1%'er type , but i'm comfortable a nice house good holidays no financial worries and the opportunity to acquire more wealth through my own work and perseverance. why would i vote to give any of what i have to the less well of , if there is inequality in my favor and in favor of my kids why would i look to change that and give up mine and their "advantage" , why as the proverbial Turkey would i vote for Christmas.

If the system was truly failing as in really honestly broken, most people wouldn't be the turkey and you see votes for change , but that's not what im seeing to be hones , here we went centerist , america went right , The UK went Conservative , Gemany Conservative , France about to go back right or extreme right as is the Netherlands. all the fantasy economics stuff is great to talk about and spark debat and honestly i respect Chomsky as a commentator and he has many valid points about prevailing issues in American society , however most of these are applicable here or anywhere else in Europe.

But really ask yourself why would the Turkeys vote for Christmas , if the system is working for me , what incentive is there for me to upset the apple cart for someone else s gain ?

The problem with the way you frame that, is it implies that you're happy to live in an economic system which holds many people down, so long as you and your family get to achieve success/contentment in such a system.

That's not how societies and economies are supposed to work. That's not a just way for societies/economies to work, because it involves a system which actively holds people back, for others to succeed, when the former have done nothing to deserve that.

Free Market economic theory (which bears no resemblance to our actual economies), exists to soothe our conscience, to tell us that those who are held back, have fallen behind due to their own failures - rather than the failures of the economic system they are in (e.g. the myth that the unemployed are all lazy - instead of being victims of a dysfunctional economic system).

The problem with that though, is that it's those myths/beliefs, which are culturally holding us back from fixing a broken economic system - and the content/well-off don't even need to give up their position in society, in order for our economic systems to be run in a way that genuinely benefits all, and doesn't leave people behind (you don't need huge changes to fix it either - the necessary changes are quite modest).

The people benefiting from the current system though, who believe and perpetuate those myths, are too short-sighted to see that though, are too busy clutching to what they have - so things are just going to have to get worse and worse over the coming decades, until things come to a head and there is a serious political/social revolt (even bigger than Trump/Brexit).

Sleepy

Earthhorse wrote: »

Even when the problem is in the private sector the problem is really in the public sector; Jesus wept.

If the CEO of a private company is overpaid the losers are the shareholders. If they under-deliver, they'll be fired (albeit usually with a golden parachute of some kind).

If the Chief Executive of a semi-state or public sector body is overpaid, everyone loses, from the overpaid chief executive having to pay high taxes on that income right down to the special needs child whose needs aren't being met by the public healthcare system due to the misallocation of public resources. If he or she under-delivers, they'll usually get shuffled along to another over-paid position in the (semi)state sector to fail again (John Tierney being appointed head of Irish Water after colossally screwing up as city manager in Dublin City Council would be a case in point).

Unfortunately, we a political class that deems it acceptable to vastly overpay certain insiders and a population who don't punish them for it. It's not a Public v Private thing either btw, most public sector workers I'm familiar with consider these same insiders to be grossly overpaid too.

Walter H Price

KyussBeeshop wrote: »

The problem with the way you frame that, is it implies that you're happy to live in an economic system which holds many people down, so long as you and your family get to achieve success/contentment in such a system.

That's not how societies and economies are supposed to work. That's not a just way for societies/economies to work, because it involves a system which actively holds people back, for others to succeed, when the former have done nothing to deserve that.

Free Market economic theory (which bears no resemblance to our actual economies), exists to soothe our conscience, to tell us that those who are held back, have fallen behind due to their own failures - rather than the failures of the economic system they are in (e.g. the myth that the unemployed are all lazy - instead of being victims of a dysfunctional economic system).

The problem with that though, is that it's those myths/beliefs, which are culturally holding us back from fixing a broken economic system - and the content/well-off don't even need to give up their position in society, in order for our economic systems to be run in a way that genuinely benefits all, and doesn't leave people behind (you don't need huge changes to fix it either - the necessary changes are quite modest).

The people benefiting from the current system though, who believe and perpetuate those myths, are too short-sighted to see that though, are too busy clutching to what they have - so things are just going to have to get worse and worse over the coming decades, until things come to a head and there is a serious political/social revolt (even bigger than Trump/Brexit).

The point is the majority , the vast majority to be honest are not in dire poverty most people are living relatively comfortable lives in Ireland. we have plenty of mechanisms to support the less well off people, from disadvantaged backgrounds. |In global terms this is a wealthy society , you are in the global top 10% if you have about €55'000 in cash and assets total combined http://www.bbc.com/news/business-35339475 , average income here is around €30k per annum as far as i can remember. Like i'm falling to see how any of this stuff really applies here.

We have the supports , Welfare , Grants , State funded education and health , medical cards for those who cant afford primary care , prescriptions and with long term disability. Nearly all kids will go national primary school and only a few will be privately educated at second level , even at that colleges have access programs for kids from disadvantaged background to level that playing field. We have state pensions to ensure old people have some standard of living and a minimum wage to ensure people in low paying employment have a reasonable income.

This is all the likes of Chomsky and Bernie Saunders were looking to implement in the states, to be honest i cant see how the cards are stacked against anyone here . i have seen it in the states and its obvious , like glaringly obvious people born into poverty die in poverty and have little or no way out, that's not the case here , it simply is not the case. Here you can be born into a poor family and educated to 3rd level with state support if you apply yourself. It really irritates me when people compare here to the states there not even nearly similar systems.

witchgirl26

Earthhorse wrote: »

I don't get this; why shouldn't charities or social sector (not sure what that is) organisations be free to pay what they like to get who they want for the job? Charities are private organisations too.

For me social sector would mean semi-state bodies.

They should be free to pay what is deemed a necessary amount to the CEO of course but we've seen cases recently where a CEO was being paid a very high wage but money was coming from charitable donations. People give money to charities in good faith that this money will help towards the cause, not help towards paying a CEO's wage when the charity itself isn't doing great. The public do have a higher say as such in the charity sector as they contribute in that way as opposed to being consumers of a traditional private organisation.

Earthhorse

Sleepy wrote: »

If the CEO of a private company is overpaid the losers are the shareholders.

If the Chief Executive of a semi-state or public sector body is overpaid, everyone loses, from the overpaid chief executive having to pay high taxes on that income right down to the special needs child whose needs aren't being met by the public healthcare system due to the misallocation of public resources.

If the CEO of a private company is overpaid he doesn't lose out by paying high taxes? What? That makes no sense.

What if the CEO of the private company is providing medical equipment to our health service and as a result of being overpaid fewer devices are produced? Is it still only the shareholders that lose out? And I have already explained several times that a less equal society is bad news for all of us; beyond the immediate impact on shareholders.

If they under-deliver, they'll be fired (albeit usually with a golden parachute of some kind).

If he or she under-delivers, they'll usually get shuffled along to another over-paid position in the (semi)state sector to fail again (John Tierney being appointed head of Irish Water after colossally screwing up as city manager in Dublin City Council would be a case in point).

I think it's naive to believe that private sector CEOs find it hard to find work after failing. They are often allowed fail again and again. Even hugely successful CEOs like Steve Jobs had huge failures.

Unfortunately, we a political class that deems it acceptable to vastly overpay certain insiders and a population who don't punish them for it. It's not a Public v Private thing either btw, most public sector workers I'm familiar with consider these same insiders to be grossly overpaid too.

How could the population punish them for it? By what mechanism? Why don't shareholders punish overpaid private sector CEOs? Because they don't really have a way of doing it. The truth is if you want to concern yourself with overpaid top level execs in the public sector you can't separate it from the same phenomenon in the private sector; if we tolerate it one place, we'll tolerate it elsewhere, that's just how societies and cultures work.

witchgirl26 wrote: »

For me social sector would mean semi-state bodies.

They should be free to pay what is deemed a necessary amount to the CEO of course but we've seen cases recently where a CEO was being paid a very high wage but money was coming from charitable donations. People give money to charities in good faith that this money will help towards the cause, not help towards paying a CEO's wage when the charity itself isn't doing great. The public do have a higher say as such in the charity sector as they contribute in that way as opposed to being consumers of a traditional private organisation.

There's no meaningful difference as far as I can see aside from the morality of it. Consumers of a traditional private organisation have as much say as donators to charity; they can spend their money elsewhere. They have equal influence in both cases.

KyussBeeshop

Walter H Price wrote: »

The point is the majority , the vast majority to be honest are not in dire poverty most people are living relatively comfortable lives in Ireland. we have plenty of mechanisms to support the less well off people, from disadvantaged backgrounds. |In global terms this is a wealthy society , you are in the global top 10% if you have about €55'000 in cash and assets total combined http://www.bbc.com/news/business-35339475 , average income here is around €30k per annum as far as i can remember. Like i'm falling to see how any of this stuff really applies here.

We have the supports , Welfare , Grants , State funded education and health , medical cards for those who cant afford primary care , prescriptions and with long term disability. Nearly all kids will go national primary school and only a few will be privately educated at second level , even at that colleges have access programs for kids from disadvantaged background to level that playing field. We have state pensions to ensure old people have some standard of living and a minimum wage to ensure people in low paying employment have a reasonable income.

This is all the likes of Chomsky and Bernie Saunders were looking to implement in the states, to be honest i cant see how the cards are stacked against anyone here . i have seen it in the states and its obvious , like glaringly obvious people born into poverty die in poverty and have little or no way out, that's not the case here , it simply is not the case. Here you can be born into a poor family and educated to 3rd level with state support if you apply yourself. It really irritates me when people compare here to the states there not even nearly similar systems.

You're sidestepping the point, which is that we live in an economic system, where people are held down for others to succeed. That on its own is not just or acceptable (nor necessary to have a wealthy and functional economy) - neither is it sustainable in it's current form.

The rest of what you post there, are talking points aimed at justifying the current system - I disagree with those points, but I'm not going to go into them, because it's pointless when there is no acknowledgement of the flaws in the current system, only excuses aimed at justifying that system.

witchgirl26

Earthhorse wrote: »

There's no meaningful difference as far as I can see aside from the morality of it. Consumers of a traditional private organisation have as much say as donators to charity; they can spend their money elsewhere. They have equal influence in both cases.

The difference is that charities generally do not have shareholders who can hold a CEO accountable and people donate money to go towards a cause, to help those in need in some way, not to pay a sometimes over inflated salary to a CEO.

A traditional organisation buy a product knowing that it's produced to be sold at a price and for the company to make a profit and pay staff. There is a massive difference. Otherwise why were people so horrified with what happened at Rehab?

I don't get what is so difficult to grasp about that. It's not about morality, it's more about the basic make-up of the different type of organisations.

Water John

Whilst absolute poverty worldwide is dropping, this is the first generation in many parts of the world, worse off than the previous gen. That is the reason for so much unease, a la Brexit and Trump.
Before whilst not spectacular one had a solid job. The new gen have to make do with contracts, exceptionally long hours for little money or reward. Yet, at the same time senior management and CEOs are becoming more of an elite and much higher paid.
That is the point where societal fracture will erupt. We have a society moving in a less equal direction and CEO pay is the visible face of that.

Capt'n Midnight

GreenFolder2 wrote: »

In which case the contacts need to be written with far more focus on performance.

And most importantly the focus should not be on short term performance.

It's easy for a new exec to trade on a companies reputation for a quick profit , collect bonus and jump ship before the punters realise they've been sold a pup. Too many brands have been trashed over the years. Or pump and dump the stock. Or raid the pension fund. Or do a deal with your former company. Look at Nokia and Microsoft.

No exec should be rewarded for setting up a company for a major fall.

maninasia

TimeToShine wrote: »

The CEO is responsible for the companies vision and awareness as well as propelling it forward in the market.

Look what happened to Sears/Radioshack. CEO's who couldn't adapt to the environment and ended up running them into the ground. Now more than ever CEO's are earning their pay as they have to work in an incredibly fast-paced and dynamic environment. The tech world has exploded and one wrong move will bury you.

CEO's deserve what they get. Just because people at the bottom of the ant hill can't see what they do it doesn't mean they don't earn it. The real waste, especially in public companies, is the amount of money spent on useless middle and senior management roles.

The problem comes from the way they 'earn' their pay and how much they get paid.

Most get hired and then given a few years to see the performance of the company. Note- the performance of the company and it's stock is the prime rating mechanism. So that often depends on the smarts and ability of the company itself and it's management AND the macro environment. Usually far more than any one CEO. Big companies have teams of experienced senior management that effectively make most of the decisions.

The other issue is that CEOs get paid so much that they can still mess up and make million and millions within a few short years. Then it's off to the next gig or a nice early retirement.

We have a megabucks CEO in from
Another unrelated industrial company.
I know from hard experienceit will take at minimum one year and more like two before you can figure out what's going on in this market and technology side of things. In effect the CEO will need a couple of years to get up to speed meanwhile he's hired the usual expensive management consultants to justify whatever decisions that he will make in the end.

Wanderer78

great discussion happening on bbc news 24 program dateline london now regarding these issues

AndrewJRenko

Some interesting updates shared by Bernie Sanders on how things have changed in the US in recent decades, with vastly more income being retained at the top;

http://www.motherjones.com/politics/2016/12/america-income-inequality-wealth-net-worth-charts