US CEOs Underpaid

CLAPTON

Graham_Devon wrote: »

A link to a salary doesn't mean "earn less".

A link could mean can't earn more then 20x or whatever the lowest salary. (Which would mean earning a measly £130 per hour).

it would seem to me that if a company employed cleaners on 6.50 per hour

and another outsourced that function so its lowest employee was on 10 per hour
then

6.50 x 20 = 130 per hour
10 x 20 = 200 per hour

on figure seems a little lower than the other

Graham_Devon

CLAPTON wrote: »

it would seem to me that if a company employed cleaners on 6.50 per hour

and another outsourced that function so its lowest employee was on 10 per hour
then

6.50 x 20 = 130 per hour
10 x 20 = 200 per hour

on figure seems a little lower than the other

Indeed.

And a company paying their cleaners £15 an hour would see 20x as £300 per hour.

For clarity here though, my initial feeling would be that it would be a multiplication of an actual employee. The use of a contracted service wouldn't really count as an employee in my mind (which may well up the top wages).

The overall idea is the more you pay your lower end staff, the larger the salary of the CEO. Therefore there would be more of a financial incentive for the CEO to make sure his workers are paid a decent amount. Any CEO taking a position in such a company would not ultimately be run by greed though as they know when they take the position the salary is capped and the only way they can increase it is to increase the welfare of their entire workforce.

the_flying_pig

Generali wrote: »

http://www.haygroup.com/downloads/us/WSJ%20Hay%20Group%202014%20CEO%20compensation%20study.pdf

CEOs are employed by shareholders in order to increase the value of their investments.

On average, over the last year, the total shareholder return (or TSR) to investors measured as change in share price + dividend was 34.6%, company net income rose by 6.6% whereas the poor CEOs got a measly 4.1% rise on average to just $3,700,000.

CEO pay should reflect company success or failure surely?

i think you're perhaps falling into the trap of assuming that 2014 CEO pay [relative to shareholder returns] was in some sense in 'equilibrium' or 'fairly priced'!

i'd be tempted to compare 2015 CEO pay with perhaps a wider range of indicators than simply 2014 levels.

i suppose also that shareholder returns will always be far more volatile than pay, reflecting in part the insanity of the markets... of course there's a huge component of returns that's systematic/non-diversifiable & has nothing to do with CEO performance.

maybe comparing dividend payouts only, rather than total returns, with CEO pay might be a better place to start.

PasturesNew

Generali wrote: »

So the CEO of a company that employs cleaners directly should earn less than one that contracts the job to an outside firm.

See, there's always somebody trying to work the system to their own advantage and to the detriment of the little guy

A link doesn't have to be a direct link, but ultimately they are able to earn the big bucks because of all the little people's efforts, who never see a reward, improvement or hope at the end of their relentless days of hard work when they're trudging through the cold/wet to catch the (late) bus, to go home to their pokey room to make a Pot Noodle for tea.

CLAPTON

Graham_Devon wrote: »

Indeed.

And a company paying their cleaners £15 an hour would see 20x as £300 per hour.

For clarity here though, my initial feeling would be that it would be a multiplication of an actual employee. The use of a contracted service wouldn't really count as an employee in my mind (which may well up the top wages).

The overall idea is the more you pay your lower end staff, the larger the salary of the CEO. Therefore there would be more of a financial incentive for the CEO to make sure his workers are paid a decent amount. Any CEO taking a position in such a company would not ultimately be run by greed though as they know when they take the position the salary is capped and the only way they can increase it is to increase the welfare of their entire workforce.

an interesting proposition

the CEO salary should be increased artificially by increasing company costs of the entire workforce at the expense of the customers and owners.

What could go wrong?

Corbyn eat your heart out

Graham_Devon

CLAPTON wrote: »

an interesting proposition

the CEO salary should be increased artificially by increasing company costs of the entire workforce at the expense of the customers and owners.

What could go wrong?

Corbyn eat your heart out

Abolsutely nothing - UNLESS the CEO is driven by personal greed and is willing to risk the entire company for personal gain.

Which it appears you assume they all would be judging by your response.

First were told CEO's deserve massively more than everyone else due to their talents (and we were told that those cleaner et all were "lifes losers" on the other thread) - the next minute it's assumed that they will destroy their own company to increase their personal wealth.

Confused.com

PasturesNew

A billionaire business owner was once told by a small business owner "Yes, but you can afford to pay your little people more...." and he replied "... it's because I DO pay them more that the company is so successful"

CLAPTON

Graham_Devon wrote: »

Abolsutely nothing - UNLESS the CEO is driven by personal greed and is willing to risk the entire company for personal gain.

Which it appears you assume they all would be judging by your response.

First were told CEO's deserve massively more than everyone else due to their talents (and we were told that those cleaner et all were "lifes losers" on the other thread) - the next minute it's assumed that they will destroy their own company to increase their personal wealth.

Confused.com

Risking the company for personal gain doesnot seem to be unheard of.

If you believe what you are told about lifes loses then more fool you.

Graham_Devon

CLAPTON wrote: »

Risking the company for personal gain doesnot seem to be unheard of..

OK, and the underlying point of this thread is that these people you are describing are underpaid and should get more?

What exactly is wrong with this idea that if the CEO is part of a team which steers the company towards increeased profits, the CEO's pay goes up if the workers pay goes up?

A 10% wage rise across the board would see the £6.50 worker get a 65p an hour rise. The CEO would get a £13 an hour rise.

There is absolutely nothing stopping the CEO (or any other worker for that matter) investing in the company for greater returns. Will give them an extra incentive to do even better.

I fail to see why this would be such a bad thing for a company - and I doubt you could give me a reason as to why it's a bad thing either.

There are very successful companies who already run similar type models.

kabayiri

I don't have a problem with the CEO of Tesco or Shell etc and what they earn.

I am a bit uncomfortable with the concept of benchmarking when setting executive pay. It was encouraged to an extent by recruitment agencies and their "head hunters" (I presumed you would want the whole person, not just the head!).

I've seen arguments in DW's HR journals that the top bod in a large council should earn the same as a boss of a big company because the council turnover is many millions of pounds.

To me this is daft. Running a borough council is not like running Boots.