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.
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.
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.
Pythagorean Thermos: By that metric, I would be a great CEO.
gnosis301: ZZ9 Plural Z Alpha: Boards of Directors:How does one solve that kind of problem? From the comic, I mean.
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.
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.
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.
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.
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.
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.
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