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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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1918 clicks; posted to Business » on 16 Jun 2014 at 7:05 PM (27 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2014-06-17 02:59:56 AM  

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!


No one has posted the diagram yet?
 
2014-06-17 03:02:25 AM  
Do y'all remember back in history class. When we used to laugh about the excesses of royalty in Mayan civilizations, or back in the Baroque period on Europe...

...Yeah, these folks aren't much better.
 
2014-06-17 03:03:42 AM  

eventhelosers: Rent Party:
No one has posted the diagram yet?


I'm trying to think how I can make a human centipede/oroborus mashup look tasteful.
 
2014-06-17 03:20:21 AM  

BMFPitt: 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?


It's quite a technical challenge - a computer / robot that plays golf, holds pointless meetings and attends long, boozy lunches with other parasites.
 
2014-06-17 03:28:16 AM  

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


zOMG SOOOOOOOCIALISM!  Why do you hate America?
 
2014-06-17 04:59:30 AM  

gnosis301: ZZ9 Plural Z Alpha: Boards of Directors:

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


If you're smart, you fire the teacher in the picture, since clearly that's the real issue.  Problem solved.
 
2014-06-17 05:01:56 AM  

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


How a nation treats its most affluent is very important.  Ours, for example, treats them like literal royalty.  We need to pay attention to that shiat, cause it's dangerous and needs to be stopped.
 
2014-06-17 07:29:45 AM  

Debeo Summa Credo: Less than 20% of Fortune 500 board members are CEOs of other Fortune 500 companies.


One in five and you think that's a small amount? RTFA -What is it about? It's about the highest paid CEO's and by your reckoning, it only matters if it's all of them.
 
2014-06-17 08:04:36 AM  
The greatest political victory in North America is that they very poorest of people, the least educated, the massive amount of people most unlikely to escape their situation, love to defend overpaid executives, "free" markets, and ridiculous wealth. It's confounding.
 
2014-06-17 08:48:26 AM  

kg2095: BMFPitt: 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?

It's quite a technical challenge - a computer / robot that plays golf, holds pointless meetings and attends long, boozy lunches with other parasites.


I see no particularly good reason why the program needs a semblance of artificial intelligence. A Watson programmed to make business evaluations and prefictions would probably do just fine, and we could outsource the boozy meetings to a lowly paid flunky.
 
2014-06-17 08:49:27 AM  

Cluckity: The greatest political victory in North America is that they very poorest of people, the least educated, the massive amount of people most unlikely to escape their situation, love to defend overpaid executives, "free" markets, and ridiculous wealth. It's confounding.


Because they're convinced that they're five minutes from being ridiculously wealthy.
 
2014-06-17 10:06:09 AM  

Smackledorfer: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.


Doh.  I got it mixed up with similar sounding talking points.

That still doesn't mean that basing it on the lowest wage is in any way logical, of course.

SphericalTime: I see no particularly good reason why the program needs a semblance of artificial intelligence. A Watson programmed to make business evaluations and prefictions would probably do just fine, and we could outsource the boozy meetings to a lowly paid flunky.


Just in case you're serious, think about this.  We've spent decades developing image recognition software that can tell faces apart to a mediocre degree of accuracy based on limited known information.  One very specific, well-defined task that humans can do much better.

Now imagine writing software that can process entire scenes and not only recognize people and objects in it, but interpret what is going on and why.  That type of thing is far beyond current technology, but requires much less ability to see the big picture than you would need for even basic open-ended decision making.
 
2014-06-17 10:24:10 AM  

Because People in power are Stupid: Debeo Summa Credo: Less than 20% of Fortune 500 board members are CEOs of other Fortune 500 companies.

One in five and you think that's a small amount? RTFA -What is it about? It's about the highest paid CEO's and by your reckoning, it only matters if it's all of them.


This. The equation should be flipped around. It should be, How many ceo's sit on boards of other companies? The answer is, most of them. It goes without saying that there are far more board positions that ceo positions.
 
2014-06-17 10:43:07 AM  
How long before some moron uses this in order to suggest that minimum wage workers shouldn't receive a higher minimum wage?

/haven't read this thread yet
//so that moron could likely be one of you Farkers
 
2014-06-17 10:46:19 AM  
My company had a trend of hiring pretty well spoken people that had no idea how to do their job whatsoever. They could talk a good game and charm you, but when it came to getting anything done they would fold. I had one that when things were good he would just sit in his office talking golf with his buddies, rubber stamping things and going to meetings, while he ignored the important things like payroll, HR paperwork and any report. He got a new job right about when they were going to fire him.
 
2014-06-17 11:11:14 AM  

BMFPitt: 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.


I'm firmly in the "You didn't build that." camp. No one makes that much without help.
 
2014-06-17 11:14:43 AM  

Cluckity: The greatest political victory in North America is that they very poorest of people, the least educated, the massive amount of people most unlikely to escape their situation, love to defend overpaid executives, "free" markets, and ridiculous wealth. It's confounding.


THIS
 
2014-06-17 11:26:03 AM  

Sergeant Grumbles: I'm firmly in the "You didn't build that." camp. No one makes that much without help.


So.....Company X would make $100 million more with some guy doing a job than it would with anyone else doing that job, but he should only make some arbitrary multiple of what the janitor makes because roads or something?
 
2014-06-17 11:59:59 AM  
Quickly reading the article it shows that at a minimum the author didn't understand the study. The author offers up conflicting positions: that CEO pay is inversely proportional to company performance and/or that increases in pay are inversely proportional to performance.

The latter seems to be what the study confirms, and this is true at any level.

You want a raise. You work really hard to get that raise. You're motivated and you perform. Then... you've got the raise. You're excited, you work hard for some time... then you start going back to where you were before, posting on Fark.


On the part discussing pay to performance, the author mentioned some top paid CEOs. One thing they all had in common: they were from the banking sector. The data used for the study was coincidentally cherry picked from 1994 to present. We had the dot com bust, the war on terror recession and the housing recession. Basically a 5 year cycle that we have these kind of issues. The canary in the mine is the banking sector. They hold risk on all loans, so when any companies start struggling, so do the banks. So if you look at any 3 year stretch, you're basically 50-50 on getting "a decline" as your result.
 
2014-06-17 12:05:58 PM  
Maybe they just need a raise. You know, a little incentive to motivate them.
 
2014-06-17 12:09:36 PM  

BMFPitt: Sergeant Grumbles: I'm firmly in the "You didn't build that." camp. No one makes that much without help.

So.....Company X would make $100 million more with some guy doing a job than it would with anyone else doing that job, but he should only make some arbitrary multiple of what the janitor makes because roads or something?


Because if the first guy had to clean his own office, he wouldn't get as much work done.
 
2014-06-17 12:28:59 PM  

Sergeant Grumbles: BMFPitt: Sergeant Grumbles: I'm firmly in the "You didn't build that." camp. No one makes that much without help.

So.....Company X would make $100 million more with some guy doing a job than it would with anyone else doing that job, but he should only make some arbitrary multiple of what the janitor makes because roads or something?

Because if the first guy had to clean his own office, he wouldn't get as much work done.


The problem here is we are arguing with someone whose views on the subject are ultimately tautological and reflexive.  On top of that he deliberately changes wordings to move goalposts, as we saw earlier with his inability to understand what someone meant when they said the pay of CEOs should be brought to some reasonable level of what the little guys in a society make. 

The level of CEO pay is correct in his opinion because capitalism/free market/invisible hand/whatever is correct, which in turn is correct because he believes it to be correct by its very nature. Therefore, of course, the CEOs are being paid accordingly.  He says it right here, in this thread, quite clearly.

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

He can think of people who DO get paid that, therefore they MUST be being paid appropriately.

I'm not a socialist or a communist or anything, but the faith people place on capitalism to set the best price for everything is very similar to religious beliefs.  And, like most of the religious, they get the very system they adore wrong much of the time anyways.

This is, with respect to CEO salaries, quite easily proven.  Different countries have different acceptable levels of just how much they will pay their CEOs. These cultures all believe the price is being set properly by the invisible hand, but either the leaders of Japanese and German companies are breaking the proper capitalistic process with their massively lower salaries than the American ones, or it is the other way around. To add to that, we see that the heads of many companies sit on the boards of other companies to decide the salary of those companies' heads who in turn decide the first persons salary by being on the board of that one.  There is so much interconnected backscratching that the actual process of a company taking an accurate look when hiring a CEO and determining how much they have to pay to get what quality CEO is out the window, and even that rests on the assumption that every human being involved is acting rationally, with appropriate interests in mind, and with all of the knowledge they need to make their decision.

FWIW, I think that most CEOs are very hard workers, very skilled workers, and experts at what they do.  This does not mean that they are irreplaceable to the extent they and their worshipers would have us believe, and it certainly never suggests that an increasingly small number of individuals should quite literally own the resources of the world.
 
2014-06-17 12:46:12 PM  

Sergeant Grumbles: Because if the first guy had to clean his own office, he wouldn't get as much work done.


So you don't even understand the poorhouse of division of labor?

Smackledorfer: The problem here is we are arguing with someone whose views on the subject are ultimately tautological and reflexive.


Even more hilarious given who you are responding to and his previous statement.

The level of CEO pay is correct in his opinion

imgs.xkcd.com

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

He can think of people who DO get paid that, therefore they MUST be being paid appropriately.


So not only did you fail to comprehend that I wasn't talking about what people got paid, but that other than Buffett none of the examples were executives.

I'm not a socialist or a communist or anything, but the faith people place on capitalism to set the best price for everything is very similar to religious beliefs.  And, like most of the religious, they get the very system they adore wrong much of the time anyways.

Please propose a system for setting prices that would work better.  Preferably one that hasn't empirically failed multiple times.

This is, with respect to CEO salaries, quite easily proven.  Different countries have different acceptable levels of just how much they will pay their CEOs. These cultures all believe the price is being set properly by the invisible hand, but either the leaders of Japanese and German companies are breaking the proper capitalistic process with their massively lower salaries than the American ones, or it is the other way around.

As already stated, by and large the Americans are doing it terribly wrong.
 
2014-06-17 12:47:42 PM  

BMFPitt: So you don't even understand the poorhouse of division of labor?


Well you're just going to love that autocorrect.

Premise, dammit.
 
2014-06-17 12:56:20 PM  

BMFPitt: So you don't even understand the poorhouse of division of labor?


Ah, fun, already at the ad hominem.
It's irrelevant. The janitor has contributed to the CEO's success, even if that just means a clean bathroom and a trashcan that gets emptied every day. The janitor should share in that success in one way or another. Otherwise you get what we have now, the worst wealth disparity in more than a century, lagging demand, and a sluggish economy.
 
2014-06-17 01:25:52 PM  

Sergeant Grumbles: Ah, fun, already at the ad hominem.


Pointing out the fact that you don't understand something based on you making a statement that indicates that you don't understand it is not an ad hominem.

It's irrelevant. The janitor has contributed to the CEO's success, even if that just means a clean bathroom and a trashcan that gets emptied every day. The janitor should share in that success in one way or another.

The janitor gets paid.  He gets paid less because basically anyone else on Earth can do that job, and if he doesn't do it well it doesn't make much of a difference.  A bad CEO can completely rib a company, and the pool of people qualified to do the job is much smaller, so they get paid more.  The same math applies to everyone else in between.

And there is an epidemic of underperforming, overpaid CEOs out there due to apathetic shareholders not keeping the compensation in check for those who aren't truly unique and talented.  This has nothing to do with the pay off burger flippers.
 
2014-06-17 01:42:48 PM  

BMFPitt: Pointing out the fact that you don't understand something based on you making a statement that indicates that you don't understand it is not an ad hominem.


Not understanding it and not using it as an excuse are two different things. Your claims that I don't understand the subject are an ad hominem or a strawman. Your pick, I suppose.

BMFPitt: The janitor gets paid. He gets paid less because basically anyone else on Earth can do that job, and if he doesn't do it well it doesn't make much of a difference. A bad CEO can completely rib a company, and the pool of people qualified to do the job is much smaller, so they get paid more. The same math applies to everyone else in between.


And hey, I never said the CEO shouldn't get more, just that he didn't do it alone, and everyone contributes to the success and should share in it.
 
2014-06-17 01:57:47 PM  

Sergeant Grumbles: And hey, I never said the CEO shouldn't get more, just that he didn't do it alone, and everyone contributes to the success and should share in it.


So please be specific.  How much more should the janitor at a highly profitable company make than one at a struggling company, all else being equal?  Why should he get a pay cut if earnings take a hit based on things that are completely outside of his control?
 
2014-06-17 02:13:21 PM  

BMFPitt: How much more should the janitor at a highly profitable company make than one at a struggling company, all else being equal?


Seems like it should be based on just how profitable the company is, wouldn't it?

BMFPitt: Why should he get a pay cut if earnings take a hit based on things that are completely outside of his control?


Aw, that's cute. You think this doesn't already happen. Never had a furlough? Reduced hours? A pay freeze? More out of your paycheck to pay for benefits? The janitor already gets hit with this.
 
2014-06-17 02:23:03 PM  

Sergeant Grumbles: Seems like it should be based on just how profitable the company is, wouldn't it?


No.  Feel free to attempt to make a case, though.

Aw, that's cute. You think this doesn't already happen. Never had a furlough? Reduced hours? A pay freeze? More out of your paycheck to pay for benefits? The janitor already gets hit with this.

Other than the reduced hours, I have had all of these in the past few years.  You should go yell at my evil rich CEO.

static1.businessinsider.com
Though you don't seem to understand the difference between cutting things to stay afloat and tying all pay to profits.
 
2014-06-17 02:28:18 PM  

BMFPitt: Though you don't seem to understand the difference between cutting things to stay afloat and tying all pay to profits.


Yaye. Another ad hominem/strawman. Stay classy!
 
2014-06-17 03:06:14 PM  

Sergeant Grumbles: BMFPitt: Though you don't seem to understand the difference between cutting things to stay afloat and tying all pay to profits.

Yaye. Another ad hominem/strawman. Stay classy!


Don't you see? If you don't agree with his fundamental beliefs, it means you must be saying something you didn't.

For Pittypie, I'll explain this slow-like:

BMFPitt: Why should he get a pay cut if earnings take a hit based on things that are completely outside of his control?


See, BMF, not one single bit of this question mentioned a single thing about someone getting a pay cut out of his control in a way that specified it would be due to profits and not other cuts. Not one.

Maybe your problem is that you are simply terrible at both reading and writing. You read things people don't say, then you type a response that only marginally implies what you mean to say, and then you pat yourself on the back for being so much more smrter than the rest of us. Must be tough maintaining that delusion. I'll give you credit for that at least.
 
2014-06-17 03:18:17 PM  

Smackledorfer: See, BMF, not one single bit of this question mentioned a single thing about someone getting a pay cut out of his control in a way that specified it would be due to profits and not other cuts. Not one.


So how to you think this statement can be interpreted that wouldn't imply that a janitor who was getting artificially high pay at a company that happened to be doing well would not get a pay cut if they started to struggle?

Seems like [pay for low level employees] should be based on just how profitable the company is, wouldn't it?
 
2014-06-17 03:42:17 PM  

BMFPitt: Smackledorfer: See, BMF, not one single bit of this question mentioned a single thing about someone getting a pay cut out of his control in a way that specified it would be due to profits and not other cuts. Not one.

So how to you think this statement can be interpreted that wouldn't imply that a janitor who was getting artificially high pay at a company that happened to be doing well would not get a pay cut if they started to struggle?

Seems like [pay for low level employees] should be based on just how profitable the company is, wouldn't it?


Introducing a distraction strawman to deflect from your initial one? Interesting tactic.

Is the word "and" or "not" the part that is confusing you?

From the top then:

You: 'how much more should a janitor make at a profitable company, and why should he take a corresponding pay cut if earnings take a hit for something out of janitorial control'

Sgt Grumbles, 'How much more would depend on the relative profits between the companies, and low-level employees already take cuts when profits go down'

A response that clearly implies that whether they should or not, they already do in the current system, so you are a horse's ass to pretend otherwise and present it as a negative of the profit-sharing system. Maybe you didn't realize that?

Here is a similar conversation I could envision us having.
Me, "I think we should run to the store instead of walk, we will get there faster"
You, "but why should we have to go outside to get to the store"
Me, "uhh, we already have to go outside to get to the store"
You, "duhh, you don't know the difference between walking and running"
Me, "dude, nobody ever suggested that running instead of walking would prevent us from going outside"
You, "so how to you think this statement can be interpreted that wouldn't imply that us running to the store would not involve us going outside?  Seems like it should get us to the store faster if we run, wouldn't it?"

Your response are borderline insane. You are just spewing diarrhea from your mouth.
 
2014-06-17 03:58:39 PM  

Smackledorfer: Introducing a distraction strawman to deflect from your initial one? Interesting tactic.


Trying to twist Grumbles' ramblings into something that makes sense sure looks exhausting.  I would feel bad for you if not for your absurd strawmen earlier.

A response that clearly implies that whether they should or not, they already do in the current system, so you are a horse's ass to pretend otherwise and present it as a negative of the profit-sharing system. Maybe you didn't realize that?

So basically you are trying to argue that because it is possible for someone to get laid off, everyone should get paid a volatile income based on company profits regardless of whether they have any measurable impact on those profits?  And that this should be dictated by law?
 
2014-06-17 11:59:23 PM  
You should stop smoking crack.
 
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