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This might make you cry...
Comments
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And shareholders can (in theory) vote out non performing CEOs.
My point though was that comparing CEOs pay to employees pay within a company is meaningless.
Why? Why is it fair that CEOs can get massive rises 10%-30% PA when employees get stuck with freezes.
This is not me supporting the workers, merely arguing that if a company is performing badly/well the punishment & rewards should at least be shared equitably.
It's an economic arms race with CEOs that has caused CEO pay to balloon massively compared to the average worker, even in a time of financial crisis for the general populace.Thinking critically since 1996....0 -
somethingcorporate wrote: »Why? Why is it fair that CEOs can get massive rises 10%-30% PA when employees get stuck with freezes.
This is not me supporting the workers, merely arguing that if a company is performing badly/well the punishment & rewards should at least be shared equitably.
It's an economic arms race with CEOs that has caused CEO pay to balloon massively compared to the average worker, even in a time of financial crisis for the general populace.
If a CEO has increased profits by lowering wages, I would suggest he has done what he is paid to do.0 -
If he has done what he is paid to do why is his annual salary increase a massive % of his salary compared to that of the rest of the company?
If I meet my objectives this year I will get an increment of about 5% IF I am very lucky. If my CEO got 25% for meeting his how is this fair? They often cited argument is paying the going rate for a CEO - that's foolhardy though and leads to the issues we see in footballers salaries. Someone is always willing to pay more which leads to a huge never-ending escalation at the top which only serves CEOs and never benefits the employee.
It has led to CEOs salaries being 5-10 times the average employees salary (back in the 70s) to being 40-50+ times the average employees salary.
It's just musing - I don't feel strongly either way. When you get past about £150k it's just numbers!Thinking critically since 1996....0 -
somethingcorporate wrote: »If I meet my objectives this year I will get an increment of about 5% IF I am very lucky. If my CEO got 25% for meeting his how is this fair?
Perhaps because the CEO meeting his targets has a much greater impact on the company and it's profitability than you meeting your targets? Hence his remuneration is therefore that much higher to reflect this?
As to your earlier point about share prices... Often the CEO's target is not to sustain a high share price, but to invest for growth and increate market share. This sort of internal investment can often reduce or eliminate dividend payments (i.e. the profits are being re-invested rather than going to shareholders) which in turn can drive down the share price.
A low share price doesn't necessarily mean that the company is knackered, it just means that institutional shareholders (such as pensions companies) are investing elsewhere to get a higher dividend.0 -
If a CEO has increased profits by lowering wages, I would suggest he has done what he is paid to do.
I would say that the CEO has only done half the job. As a shareholder I would like to see him generating new business and ideas, not simply hacking around demoralising the workforce for his own ends."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »I would say that the CEO has only done half the job. As a shareholder I would like to see him generating new business and ideas, not simply hacking around demoralising the workforce for his own ends.
Reducing overheads and making a company leaner and therefore their products cheaper is often the first step towards generating new business and increasing market share.0 -
Eellogofusciouhipoppokunu wrote: »Perhaps because the CEO meeting his targets has a much greater impact on the company and it's profitability than you meeting your targets? Hence his remuneration is therefore that much higher to reflect this?
It's valid point but when you consider a 5% increase on a CEOs £1m+ salary is quite a lot higher than 5% increase on my salary I can assure you, his 5% on £1m would be more than my entire annual salary, surely that would be good enough?
Eellogofusciouhipoppokunu wrote: »As to your earlier point about share prices... Often the CEO's target is not to sustain a high share price, but to invest for growth and increate market share. This sort of internal investment can often reduce or eliminate dividend payments (i.e. the profits are being re-invested rather than going to shareholders) which in turn can drive down the share price.
A low share price doesn't necessarily mean that the company is knackered, it just means that institutional shareholders (such as pensions companies) are investing elsewhere to get a higher dividend.
Again, completely valid strategies and reasons for shareprice fluctuations and lack of dividend but that's not always true of this economy - we expect high and fast results otherwise CEOs find themselves out on their ear. Generally "performance" is reflected in the shareprice (which is partially derived from the confidence the City has in the CEO/company). It's a complete money-go-round partially built on confidence and often those paying the highest divis are companies failing and looking for investment to turn things around!
It's impossible to delineate complex beasts like corporations into simple organisms but it is fun trying! I recommend a book called images of organisation (by Gareth Morgan) which uses the human body as a metaphor for a company.Thinking critically since 1996....0 -
somethingcorporate wrote: »we expect high and fast results otherwise CEOs find themselves out on their ear.
Yes and look what happened to the banks, especially Northern Rock, with that sort of short-term 'get rish quick' mentality. Better to upset the shareholders and have a sustainable business model than to try and be a stockmarket 'darling' and end up bust.0 -
somethingcorporate wrote: »I think you will find the shareholders are the owners of a company not the CEOs.
I remember reading a stat last year that the bonus pool for Barclays was in the multiple billions whilst the dividend was about 10% of that. Is that rewarding the owners or the employees?
You are right in the legal world that the partners are the owners but my post deliberately referred to CEOs and I was referring to companies.
Not if it's a partnership. In a partnership the partners own the company.0 -
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