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(Forbes)   The highest paid CEOs are often the worst performers   (forbes.com) divider line 86
    More: Obvious, CEO, market cap, negative number, stock options, Larry Ellison  
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1899 clicks; posted to Business » on 16 Jun 2014 at 7:05 PM (13 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2014-06-16 04:40:13 PM
Boards of Directors:
folkonfolks.com
 
2014-06-16 04:59:49 PM
Yeah, but their wealth totally trickles down.
 
2014-06-16 05:41:41 PM
My login name says it all.

The reason is that for some reason they have the Board of Directors under their control enough to get a high salary and therefore they are not answerable to anyone. Power controls not its own mistakes but rather the reporting of such mistakes.
 
2014-06-16 07:11:06 PM
By that metric, I would be a great CEO.
 
2014-06-16 07:11:08 PM

Because People in power are Stupid: My login name says it all.

The reason is that for some reason they have the Board of Directors under their control enough to get a high salary and therefore they are not answerable to anyone. Power controls not its own mistakes but rather the reporting of such mistakes.


Not quite.

The overpaid CEO of your company is governed by a board of directors, many of which are CEO's in their own right.   And guess what your CEO does for them?  He sits on their board of directors and ensure that they are overpaid as well.

It is nothing other than a capital theft club.

/ Best and brightest!
 
2014-06-16 07:20:03 PM

ZZ9 Plural Z Alpha: Boards of Directors:


How does one solve that kind of problem? From the comic, I mean.
 
2014-06-16 07:21:27 PM
www.accountingweb.com
 
2014-06-16 07:42:06 PM
Wonder how much of that is due to CEOs getting a high "payday" (i.e. a severance package) when they get fired. Could be a factor although the study seems to have looked at multi-year performance as well.
 
2014-06-16 07:46:27 PM
its like the four people who applied for that university president job together.

A company could hire a team of people to handle decision making... they could do more and cost far less than a CEO.
 
2014-06-16 07:51:27 PM
Gee, I wonder if the fact that CEOs are often paid a large amount to try to turn around failing companies has anything to do with this correlation?

You can believe what you want, but when you link high-paid CEOs with poor performing companies, you should at least pretend to have considered and ruled out the causation going in the opposite direction.
 
2014-06-16 07:55:12 PM

clancifer: Yeah, but their wealth totally trickles down.


that sounds hot. how can i get some of that action?
 
2014-06-16 07:58:02 PM

Arkanaut: Wonder how much of that is due to CEOs getting a high "payday" (i.e. a severance package) when they get fired. Could be a factor although the study seems to have looked at multi-year performance as well.


High paid CEO's looting the companies they were hired to run may figure in to it as well.
 
2014-06-16 07:59:28 PM
The highest paid CEOs tend to be from the largest companies.

The largest companies already own most of their market space.

Companies that dominate the market already have low growth.

If growth is low performance is low.

Pretty obvious.
 
2014-06-16 08:00:23 PM
Supposedly The Economist wrote an article years ago comparing highly paid "star" CEOs to highly paid star athletes, in which they concluded that you could show that the athletes usually increased revenue to the team's owners to a degree that justified their salaries; not so the CEOs.
 
2014-06-16 08:05:38 PM

itcamefromschenectady: Gee, I wonder if the fact that CEOs are often paid a large amount to try to turn around failing companies has anything to do with this correlation?

You can believe what you want, but when you link high-paid CEOs with poor performing companies, you should at least pretend to have considered and ruled out the causation going in the opposite direction.


Yeah. If you're desperate and sinking, you're more likely to go for one of these hired guns who makes big promises and cleans house when he shows up.
Then the company goes to shiat anyway.
 
2014-06-16 08:14:02 PM
I'm no MBA or law talking dude, but suppose you had a roofing company that had 100k in assets and were going bankrupt.  If you liquified all your assets and paid your brother-in-law 100k to mow your yard, and THEN declared bankruptcy, I'm pretty sure you would be going to jail.  Or at least the courts would come after the brother-in-law.

But that would be using the justice system we have for regular people, not the one we have for richer, better, people.  So I guess it's apples to oranges.
 
2014-06-16 08:17:04 PM

BigLuca: I'm no MBA or law talking dude, but suppose you had a roofing company that had 100k in assets and were going bankrupt.  If you liquified all your assets and paid your brother-in-law 100k to mow your yard, and THEN declared bankruptcy, I'm pretty sure you would be going to jail.  Or at least the courts would come after the brother-in-law.

But that would be using the justice system we have for regular people, not the one we have for richer, better, people.  So I guess it's apples to oranges.


this. well put, and lulzy
 
2014-06-16 08:20:17 PM

gnosis301: ZZ9 Plural Z Alpha: Boards of Directors:

How does one solve that kind of problem? From the comic, I mean.


It isn't a problem.  There is nothing to solve there.
 
2014-06-16 08:20:46 PM
CEOs CEOs CEOs!!!
 
2014-06-16 08:25:27 PM

Rent Party: Because People in power are Stupid: My login name says it all.

The reason is that for some reason they have the Board of Directors under their control enough to get a high salary and therefore they are not answerable to anyone. Power controls not its own mistakes but rather the reporting of such mistakes.

Not quite.

The overpaid CEO of your company is governed by a board of directors, many of which are CEO's in their own right.   And guess what your CEO does for them?  He sits on their board of directors and ensure that they are overpaid as well.

It is nothing other than a capital theft club.

/ Best and brightest!


This is what farklibs actually believe.

Less than 20% of Fortune 500 board members are CEOs of other Fortune 500 companies.
 
2014-06-16 08:28:10 PM

Arkanaut: Wonder how much of that is due to CEOs getting a high "payday" (i.e. a severance package) when they get fired. Could be a factor although the study seems to have looked at multi-year performance as well.


It's not that they want a severance package. Although my background is relevant, I will attempt to explain what goes on with an example, rather than saying, "Hey I know this."

A CEO such as the current head of Citigroup, Michael Corbat, receives a salary pegged at $1.5 million per year. If his enormous company, C, does well he gets a bonus (about 3X his salary, OK, I guess) but his big payoff is his incentive stock options and that is performance based. Reflect on that first figure for a moment. Michael Corbat, current CEO of Citigroup, has a take-home salary about half of Sarah Palin's salary at Fox News.

The previous CEO of C, Vikram Padit, negotiated compensation over $50 million per year.

Let's compare the two CEOs? Under Vikram Padit, C stunk out industry. He was replaced. Under Michael Corbat, C has grown 30% per year.

Why is that? Vikram Padit enjoyed his ridiculous salary very much and he spent most of his effort at C in CYA, not for the interests of C. Michael Corbat spent most of his efforts building C.
 
2014-06-16 08:43:09 PM

Pythagorean Thermos: By that metric, I would be a great CEO.


By that metric, the best CEO ever would be the Mexican with the leaf blower.

They're getting paid a lot because they aren't there to make the company more solvent, they're there to make a metric ass-ton of money in the short term for the board/shareholders and dump everything when the ship goes down. That, or they're "too big to fail" and they know that no matter what they do, they're going to get free money.
 
2014-06-16 09:09:27 PM

gnosis301: ZZ9 Plural Z Alpha: Boards of Directors:

How does one solve that kind of problem? From the comic, I mean.


Really can't cause it's (A+B)/C is greater then D^-2


which makes no sense
 
2014-06-16 09:26:48 PM

Mr. Eugenides: The highest paid CEOs tend to be from the largest companies.

The largest companies already own most of their market space.

Companies that dominate the market already have low growth.

If growth is low performance is low.

Pretty obvious.


Didn't RTFA, but I'd hope they at least corrected for market cap and industry.

But even if you take that out of the equation, this makes sense. Those who spend all their effort gaming the system to squeeze as much money out of the company for themselves will almost always make note money in the short term than those who try to build sustainable long term growth.

And the best CEOs often take tiny salaries because they'll make it up in stock gains, anyway. If Steve Jobs was making $100 million per year at Apple he would have been underpaid compared to the ROI of anyone else that could have had that job.
 
2014-06-16 09:35:49 PM
My personal take: fantastically wealthy and accomplished CEOs have nothing to prove. They're going to phone it in.

The upstarts are the ones that are driven like mad to do a good job.

Of course, this all presumes that CEOs actually do anything.
 
2014-06-16 09:40:38 PM
There are many people more talented than others. I also feel however that it's hard to be supremely talented in many fields. One, apparently very popular, skill set is getting and maintaining the position of CEO and building a network of cronies to improve bonuses all around. Another might be having the vision to take a reasonably self-running business and, instead of looting it, using visionary ideas to make it more profitable and deliver innovations to the public.

The second is much less popular it seems.
 
2014-06-16 09:59:23 PM

AlgaeRancher: its like the four people who applied for that university president job together.

A company could hire a team of people to handle decision making... they could do more and cost far less than a CEO.


I am firmly of the position that we should be looking into replacing CEOs with computers.  There really isn't anyone more wasteful on the payroll than a corporate CEO, and if we replace them with something that can work 24 hours without sleep, personal time, or boredom, then productivity should improve substantially.

Why would a board pay for a human CEO when they provide such bad ROI?
 
2014-06-16 10:18:54 PM

Debeo Summa Credo: Rent Party: Because People in power are Stupid: My login name says it all.

The reason is that for some reason they have the Board of Directors under their control enough to get a high salary and therefore they are not answerable to anyone. Power controls not its own mistakes but rather the reporting of such mistakes.

Not quite.

The overpaid CEO of your company is governed by a board of directors, many of which are CEO's in their own right.   And guess what your CEO does for them?  He sits on their board of directors and ensure that they are overpaid as well.

It is nothing other than a capital theft club.

/ Best and brightest!

This is what farklibs actually believe.

Less than 20% of Fortune 500 board members are CEOs of other Fortune 500 companies.


So 1 in 5 for Fortune 500 firms.  Care to guess how many sit on boards of 501-thanks for all the fish?  I'll give you a hint.  It's 1 in 2, and that's down from a decade ago.
 
2014-06-16 10:21:04 PM

SphericalTime: I am firmly of the position that we should be looking into replacing CEOs with computers.  There really isn't anyone more wasteful on the payroll than a corporate CEO, and if we replace them with something that can work 24 hours without sleep, personal time, or boredom, then productivity should improve substantially.

Why would a board pay for a human CEO when they provide such bad ROI?


So do you think that some kind of advanced science fiction AI that we're keeping a secret, or are you just saying in general that it would be nice if such a thing existed and human labor was no longer needed?
 
2014-06-16 10:22:16 PM

Rent Party: Debeo Summa Credo: Rent Party: Because People in power are Stupid: My login name says it all.

The reason is that for some reason they have the Board of Directors under their control enough to get a high salary and therefore they are not answerable to anyone. Power controls not its own mistakes but rather the reporting of such mistakes.

Not quite.

The overpaid CEO of your company is governed by a board of directors, many of which are CEO's in their own right.   And guess what your CEO does for them?  He sits on their board of directors and ensure that they are overpaid as well.

It is nothing other than a capital theft club.

/ Best and brightest!

This is what farklibs actually believe.

Less than 20% of Fortune 500 board members are CEOs of other Fortune 500 companies.

So 1 in 5 for Fortune 500 firms.  Care to guess how many sit on boards of 501-thanks for all the fish?  I'll give you a hint.  It's 1 in 2, and that's down from a decade ago.


Jeez you'd think the "thanks for all the fish" shareholders would stop electing CEOs to their boards if it's so bad for their investments.

Stupid shareholders. What do they know? Farklibs know business better!!
 
2014-06-16 10:57:05 PM
Regard a nation not by how it treats its most affluent, but by how it treats its least affluent.
 
2014-06-16 11:10:18 PM
I've been lied too? I thought CEO were exceptional people that have unique skills that only they can do to get the job done, thus justifying their pay; like 80 million dollars for 4 months of work to sell the company to a competitor?
 
2014-06-16 11:30:03 PM

loonatic112358: gnosis301: ZZ9 Plural Z Alpha: Boards of Directors:

How does one solve that kind of problem? From the comic, I mean.

Really can't cause it's (A+B)/C is greater then D^-2


which makes no sense


That's what I thought.  I just don't know that much mathematical symbols and thought the lefty alligator could mean something else from some higher math.
 
2014-06-16 11:46:24 PM

gnosis301: loonatic112358: gnosis301: ZZ9 Plural Z Alpha: Boards of Directors:

How does one solve that kind of problem? From the comic, I mean.

Really can't cause it's (A+B)/C is greater then D^-2


which makes no sense

That's what I thought.  I just don't know that much mathematical symbols and thought the lefty alligator could mean something else from some higher math.


It's also got the = at the end, so it's waiting to be declared either true or false, I guess. The D-subscript-2 is what really gives the cartoon away as a sad little illustration that you don't have to be smart to make smart little remarks.
 
2014-06-17 12:07:40 AM
Not to the CEOs.
 
2014-06-17 12:18:31 AM

Delay: Arkanaut: Wonder how much of that is due to CEOs getting a high "payday" (i.e. a severance package) when they get fired. Could be a factor although the study seems to have looked at multi-year performance as well.

It's not that they want a severance package. Although my background is relevant, I will attempt to explain what goes on with an example, rather than saying, "Hey I know this."

A CEO such as the current head of Citigroup, Michael Corbat, receives a salary pegged at $1.5 million per year. If his enormous company, C, does well he gets a bonus (about 3X his salary, OK, I guess) but his big payoff is his incentive stock options and that is performance based. Reflect on that first figure for a moment. Michael Corbat, current CEO of Citigroup, has a take-home salary about half of Sarah Palin's salary at Fox News.

The previous CEO of C, Vikram Padit, negotiated compensation over $50 million per year.

Let's compare the two CEOs? Under Vikram Padit, C stunk out industry. He was replaced. Under Michael Corbat, C has grown 30% per year.

Why is that? Vikram Padit enjoyed his ridiculous salary very much and he spent most of his effort at C in CYA, not for the interests of C. Michael Corbat spent most of his efforts building C.


You have done a great job. Proving that some CEO's absolutely suck and can still make $50 million bucks a year. The whole idea is nonsensical.

I believe a lot of CEOs are supremely talented brilliant people who have a big hand in creating lots of wealth and helping to provide jobs. I think supremely talented brilliant people should be well compensated.

But I also know that ceo compensation has grown far out of proportion to the pay the proles get. You can tell me all day long how awesome ceo's are - there should still be some connection to lower wage people that makes some kind of basic sense. Ain't no one ever been born that's worth $50,000,000 a year. That's 1,000 50k a year jobs. No one is worth that much more than another person even if the other person really, really sucks.
 
2014-06-17 12:32:38 AM

JohnBigBootay: But I also know that ceo compensation has grown far out of proportion to the pay the proles get. You can tell me all day long how awesome ceo's are - there should still be some connection to lower wage people that makes some kind of basic sense.


Why?  Why should the CEO of a billion dollar fast food company get paid significantly less than an equally skilled CEO of a billion dollar engineering company?  Why doesn't "because

Ain't no one ever been born that's worth $50,000,000 a year.

I can think of a few people who bring in way more than $50 million per year.  That seems to be a pretty basic metric of what an employee should be able to get in compensation.

That's 1,000 50k a year jobs. No one is worth that much more than another person even if the other person really, really sucks.

There aren't many jobs that pay millions of dollars that could be done better by 1,000 people.
 
2014-06-17 12:37:10 AM

BMFPitt: I can think of a few people who bring in way more than $50 million per year.


All by themselves?
 
2014-06-17 12:45:12 AM

JohnBigBootay: Delay: Arkanaut: Wonder how much of that is due to CEOs getting a high "payday" (i.e. a severance package) when they get fired. Could be a factor although the study seems to have looked at multi-year performance as well.

It's not that they want a severance package. Although my background is relevant, I will attempt to explain what goes on with an example, rather than saying, "Hey I know this."

A CEO such as the current head of Citigroup, Michael Corbat, receives a salary pegged at $1.5 million per year. If his enormous company, C, does well he gets a bonus (about 3X his salary, OK, I guess) but his big payoff is his incentive stock options and that is performance based. Reflect on that first figure for a moment. Michael Corbat, current CEO of Citigroup, has a take-home salary about half of Sarah Palin's salary at Fox News.

The previous CEO of C, Vikram Padit, negotiated compensation over $50 million per year.

Let's compare the two CEOs? Under Vikram Padit, C stunk out industry. He was replaced. Under Michael Corbat, C has grown 30% per year.

Why is that? Vikram Padit enjoyed his ridiculous salary very much and he spent most of his effort at C in CYA, not for the interests of C. Michael Corbat spent most of his efforts building C.

You have done a great job. Proving that some CEO's absolutely suck and can still make $50 million bucks a year. The whole idea is nonsensical.

I believe a lot of CEOs are supremely talented brilliant people who have a big hand in creating lots of wealth and helping to provide jobs. I think supremely talented brilliant people should be well compensated.

But I also know that ceo compensation has grown far out of proportion to the pay the proles get. You can tell me all day long how awesome ceo's are - there should still be some connection to lower wage people that makes some kind of basic sense. Ain't no one ever been born that's worth $50,000,000 a year. That's 1,000 50k a year jobs. No one is worth that much more than another person even if the other person really, really sucks.


If they only made 800 times a normal salary their would be no incentive for them to work hard. The creative ones would choose to stop thinking.


It would be just like how no good music was created before they could become millionaires. All the best songs are written and performed by those interested in money and fame.

Or something. Excuse me I think I have a 0.1%er's ball hair in my teeth.
 
2014-06-17 12:50:58 AM

BMFPitt: JohnBigBootay: But I also know that ceo compensation has grown far out of proportion to the pay the proles get. You can tell me all day long how awesome ceo's are - there should still be some connection to lower wage people that makes some kind of basic sense.

Why?  Why should the CEO of a billion dollar fast food company get paid significantly less than an equally skilled CEO of a billion dollar engineering company?  Why doesn't "because

Ain't no one ever been born that's worth $50,000,000 a year.

I can think of a few people who bring in way more than $50 million per year.  That seems to be a pretty basic metric of what an employee should be able to get in compensation.

That's 1,000 50k a year jobs. No one is worth that much more than another person even if the other person really, really sucks.

There aren't many jobs that pay millions of dollars that could be done better by 1,000 people.


Engineering companies hire low wage employees too.

Unless you believe there is a guy with a mom and pop engineering firm bringing in fifty mil a year. Seems hard to believe.

The one percent won't sleep with you.
 
2014-06-17 12:53:27 AM

Sergeant Grumbles: All by themselves?


Quite a few entertainers do.  And that's just the easiest to correlate to an individual.  Probably some athletes, but hard to separate their earnings from what a team would make otherwise.  You might argue that the people who are at the top of teams for major technologies can have impact on earnings in the billions (i.e. the guy who is in charge of Android.)  And then there are guys like Warren Buffett, who would be a bargain at $50 million if he wanted to give himself a raise.
 
2014-06-17 01:01:21 AM

Smackledorfer: Engineering companies hire low wage employees too.


So you are saying that you believe the average wage at McDonald's is about the same as the average wage at Microsoft?

Unless you believe there is a guy with a mom and pop engineering firm bringing in fifty mil a year. Seems hard to believe.

I have no idea what that has to do with anything, but definitely.

The one percent won't sleep with you.

That's just adorable.
 
2014-06-17 01:02:12 AM
Considering how many CEOs these days are hired guns brought in from outside, this is not a surprise. And why should they worry about doing well? They haven't spent their lives at the companies thy run, so it's not like they have any deep personal feeling for the place. If it tanks, can just brush off their hands and move on to the next company.
 
2014-06-17 01:13:38 AM
But enough about Carly.
 
2014-06-17 01:14:46 AM

BumpInTheNight: Regard a nation not by how it treats its most affluent, but by how it treats its least affluent.


i2.cdn.turner.com

"The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."
 
2014-06-17 01:20:51 AM

Bith Set Me Up: BumpInTheNight: Regard a nation not by how it treats its most affluent, but by how it treats its least affluent.

[i2.cdn.turner.com image 475x324]

"The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."


Geez. to some you may as well have posted a picture of hitler.
 
2014-06-17 01:45:26 AM

Rent Party: The overpaid CEO of your company is governed by a board of directors, many of which are CEO's in their own right. And guess what your CEO does for them? He sits on their board of directors and ensure that they are overpaid as well.


When the common rabble do that, they're Union Thugs and it's Class Warfare and zOMG SOOOOOCIALISM!
 
2014-06-17 02:09:49 AM
Larry Ellison is their example? Really?

I don't think they should use CEOs who actually founded the company in the study. Those people won't give up the reins easily at all and boards of directors will be highly reluctant to fire them. It stands to reason that founders syndrome is alive and well and skewing the results.
 
2014-06-17 02:44:47 AM

BMFPitt: Smackledorfer: Engineering companies hire low wage employees too.

So you are saying that you believe the average wage at McDonald's is about the same as the average wage at Microsoft?

Unless you believe there is a guy with a mom and pop engineering firm bringing in fifty mil a year. Seems hard to believe.

I have no idea what that has to do with anything, but definitely.

The one percent won't sleep with you.

That's just adorable.


Who said anything about average wages?

You really need to learn that words have meanings. Go ahead and reread this post chain until you figure it out.
 
2014-06-17 02:55:32 AM

WhyteRaven74: Considering how many CEOs these days are hired guns brought in from outside, this is not a surprise. And why should they worry about doing well? They haven't spent their lives at the companies thy run, so it's not like they have any deep personal feeling for the place. If it tanks, can just brush off their hands and move on to the next company.


Hardley-Ableson & Erik Buell come to mind.

A comment from "Piney" in 2010:

Harley has a new CEO. The guy is a bean counter who Doesn't come from a motorcycle backround. It was his decision to dump Buell and cut-off all the potential young motorcycle enthusiasts that Harley desperately needs to continue. It was also his brainstorm to shovel millions of Harley dollars towards opening a dealer network in India. Like another commercial states, "Good luck with THAT catching on".
 
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