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(Forbes)   The highest paid CEOs are often the worst performers   ( ) divider line
    More: Obvious, CEO, market cap, negative number, stock options, Larry Ellison  
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1955 clicks; posted to Business » on 16 Jun 2014 at 7:05 PM (2 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»

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2014-06-16 08:14:02 PM  
2 votes:
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 04:59:49 PM  
2 votes:
Yeah, but their wealth totally trickles down.
2014-06-17 01:13:38 AM  
1 vote:
But enough about Carly.
2014-06-17 12:45:12 AM  
1 vote:

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.
2014-06-16 07:59:28 PM  
1 vote:
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 07:51:27 PM  
1 vote:
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 07:11:06 PM  
1 vote:
By that metric, I would be a great CEO.
2014-06-16 05:41:41 PM  
1 vote:
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.
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