What do CEOs do that makes them worth millions, while...

[AmyStrange]

-

almost all the people who do ALL the hard labor, get paid shit.

Sure, CEOs are the front man for their company, but I'd sure like to know what they do that is more important than what the laborers do.
========

[mahatmakanejeeves]

1. Run the company. Do you think you could do that? NT

[AmyStrange]

5. I ran my own company once, and yes I could. n/t

[ProfessorGAC]

12. A Lot(!) Of People Within A Given Corporation...

...know enough about the business itself, enough about business principles, and have company specific expertise that would make them competent as chief executive.
Not everyone, of course, but much more than a handful.
I knew at least 20 at the company from which I retired. That's not including me. All in middle to upper middle management.
And, our CEO was not one of those making 250x the line worker, (closer to 60x) and he was very competent & successful. So, this opinion was not based upon a feeling he was a boob!
But, every company has people who could also do that job!

[edhopper]

26. Probably better than a lot of them

who run their company into the ground.
I suppose you also approve of CEO getting multi-million dollar pay outs when they are fired or their company goes bankrupt.

[tenderfoot]

43. And that justifies the 940% growth in compensation since 1978?

Did Carly Fiorina do a good job running Hewlett/Packard? She sure cashed in though.

[mahatmakanejeeves]

44. That's a separate issue. As an HP shareholder, I'm well aware of that debacle. NT

[Yavin4]

49. They don't run companies. That's a myth.

Do you think that Zuckerberg is writing code all day long? Or Bezos is monitoring the AWS cloud servers?

They sell the stock. They sell stock to big investors. Pension funds. Hedge funds. Sovereign wealth funds.

[jimfields33]

2. Only thing they claim is that a typical CEO gets fired after 3 years on average.

Yes some stay whole careers but a lot have two bad quarters and are gone. At least that’s the excuse I’ve heard.

[ProfessorGAC]

6. If They Have Multiple Bad Quarters...

...absent obvious extrinsic influences, perhaps they never should have been CEOs!

[jimfields33]

15. I'm sure that many are thought to be good but just don't work out

Interviews and work experience can only predict so far.

[ProfessorGAC]

22. External Searches Can Cause That

Last edited Thu Sep 10, 2020, 06:14 PM - Edit history (1)

Big companies talk about succession planning, but too often fill executive vacancies from outside.
Missed assessments from interviews would be much more uncommon if positions were up filled, as there would be a lot of traceability.
That is what happened at the CEO level at the company from which I retired. EVP of Marketing became CEO. Wasn't much doubt he knew the biz, and he was very successful. (Revenues tripled in the first 18 years, profitability quadrupled, and the company ended the dominant market player in 12 of the 22 countries where we had operations.). He was not at all a problem.
BTW: there has not been a layoff at that company in 35+ years, except for a few people who did not relocate when an overseas site was shuttered and operations were moved 150 miles away to a bigger, newer site. Had those people been willing to move, it would have truly been zero.
But, pulling in someone from outside, lacking overall knowledge of the company, existing culture, (can't change a culture if one doesn't know from what they're changing), and strategic customer/supplier relationships is a high wire act.
Best left to circuses.

[jimfields33]

35. That is a brilliant point

I agree it’s odd some go outside the company when they have a huge bank of expertise right before them. I’m glad the company you worked for did they smart thing.

[ProfessorGAC]

3. It's Not Just More Money

But, US CEOs make 250-300x the median worker in their company.
In Japan, the ratio is a bit more than 16:1.
In western Europe, depending upon country, it's 120-160.
So, here in the US, CEO pay is nearly double even western Europe, and around 16x that of Japan.
Even if one considers Japanese CEOs a bargain, those here are still paid at a rate not justified by the activities, since there isn't a 100% difference in responsibility between here &, for instance, Germany.
They are simply overpaid, even on a CEO scale.

[AmyStrange]

9. I didn't know that, and...

-

thank you for sharing.
========

[gratuitous]

34. Robert Samuelson, of all people, wrote a good column back in the 80s

It was during one of those brief spasms about CEO pay, and Samuelson wrote a column that the various boards of directors should ask their CEO a series of questions to determine if they were getting good value from the big cheese.

I don't remember all the questions, but the ones I do remember are:

What do we pay you? Not just the salary, but the value of your benefits, perks, stock options, and other assorted little goodies not available to mere mortals.

Could you get this kind of compensation package from any of our competitors? (And the board should check into the compensation package for other CEOs in their field.)

What are your qualifications for this job? What do you do to remain qualified (e.g., continuing education, mentor, etc.)?

Who is your successor, and if you went down in the company jet tomorrow, could that person step right in? If not, why not? What do we pay that person?

[ProfessorGAC]

36. All Good Points

Good memory, too! Nice one, grat!

[AmyStrange]

37. I like the first question, but...

-

I'd also like to know why the mere mortals who work under thwm don't get the same thing?

After all, without them, you'd be in charge of nothing.
========

[Claustrum]

4. Replacing a line worker is easy, so they worth less.

They make CEO an exclusive club so replacing CEO is hard so their "time" and "work" is more valuable and not easily replaceable.

Though, a good CEO that can lead the company in positive direction is worth more than a line worker. But one that runs the company into the ground still gets paid handsomely and that's where the problem lies.

[AmyStrange]

8. They should replace the CEO with a line worker n/t

[Claustrum]

10. I wish it was that way and the decision made would be much better.

Unfortunately, those top executive roles are filled by some MBA type with no direct connection to the industry.

[AmyStrange]

18. It's kind of a club isn't it? n/t

[onethatcares]

7. in the new capitalist system we have

they get together with friends and take over the boards of directors. Then they load the company up with debt and take bonuses equal to a workers lifetime wages.

After a little dalllying around, they say they have to bring the company back to profitability so they lay off most of the people that really knew what they were doing and shed pensions/healthcare and benefits for the working stiffs.

They then split the stock and cash in to collect a few more millions while shuttering the company and turning whatever liabilities they have over to the government that kisses their asses.

Then they get in front of a teevee camera and cry about how the high wages in America caused them to go bancrupt.

Meanwhile they buy two islands a fleet of boats, an airplane or two and live the life, The LIFE.

Well, at least that's my take on the entire scam.

[Claustrum]

11. Spot on!!!!

[AmyStrange]

14. While laborers are finding it increasingly impossible...

-

to afford a house, or even an apartment.

Thank you for sharing.
=======

[lpbk2713]

19. And a hospital stay could wipe them out completely.

They could lose their house and be in debt the rest of their life.

[AmyStrange]

21. Yup, even if they had insurance... n/t

[DSandra]

16. America has WAY too many conartists

Unfettered capitalism has made America the golden land for conartists and other white collar criminals.

[honest.abe]

13. Generally speaking its decision making and leadership..

that makes people in higher level positions valuable. Of course that is clearly not always the case.

[AmyStrange]

17. Can't really argue with that, but...

-

I don't think they're more valuable than the people who ACTUALLY do the work.

Thank you for sharing.
==========

[honest.abe]

20. Certainly not 100 times or 10 times more valuable.

Its really outrageous what some of them get paid.

[AmyStrange]

24. Totally agree. The more you make, the less you actually work.

-

I've actually had a couple bosses who actually didn't mind helping us out with the hard labor when we needed it..

Unfortunately, most of the other ones just sat around and watched us work.

When I owned my own company, I was always helping with the labor, and I even paid them more than I got, because without them, I wouldn't have had a company.
========

[hack89]

29. Management is real work.

I know - it what I do for a living. I put a lot of effort in to ensuring that not only do my people have jobs now but they will have jobs 10 years from now.

[AmyStrange]

32. Laboring with "effort" is not the same thing as digging a ditch.

-

I know how much "work" goes into owning and managing a company, but I wouldn't call it physical labor.

I always paid my laborers well (more than I got), because without them, I wouldn't have had a company.

Thank you for sharing.
=======

[hack89]

40. What elevates physical labor over mental labor?

Fully understandIng and supporting the need for a living wage, why does physical labor have a greater moral standing than management?

[AmyStrange]

48. Who would they manage if there was no labor?

-

I consider them equally important.
==========

[Blue_true]

45. They aren't worth the differential in salaries and benefits.

But CEOs that do their jobs properly are clearly worth more than any other person in a company. A line worker can’t make a billion dollar impact decision on a company, CEOs do that several times per year in many cases.

The argument that a low level worker is more valuable that a functioning CEO is patently insane.

I do believe that low level workers should get paid more and CEOs and executives paid less, but such a thing requires strategy and commitment that isn’t present in the typical American or even European company.

[AmyStrange]

52. I really can't argue with your reasoning, except...

-

who would they be managing if there were no line workers?
==========

[Blue_true]

55. Unfortunately, they are managing the output from intelligent machines more and more.

Even I depend upon automation and AI for consistency of outcomes.

I started my adult work career as an Engineer. I remember when there was around 10 times the line workers as existed in my corporate job at the time I left to run my own business. In the time since, my sense is the trend to robots and AI has only intensified.

The future challenge of societies will be how to keep everyone financially sound. That is why I believe working through the mechanics of GI (guaranteed income) should start NOW, we can’t put that off and not expect societal chaos.

[AmyStrange]

57. Crap, robots are gonna take over, but...

-

if the kids of today are smart (I think they are), they'll get into robotics as soon as possible.

I agree with you on GI, but republicans boo it because it's so much like socialism.

Their leader is buddies with Putin, and I'm sure there's a good reason why McConnell is called Moscow Mitch.

What a bunch of idiots.
========

[Blue_true]

60. Intelligent machines won't take over, they can't because at their core, they

are incapable of some forms of creative thought that many human beings do on a somewhat regular basis. What intelligent machines will do is eliminate jobs that require routine repetition, unfortunately pretty much all manufacturing jobs require just that.

There will always be human beings employed to design intelligent machines, though I believe that building and maintaining such machines will exclusively be taken over by machines instead of human beings. The main issue, is that unless we as a human being world go into vast population decline, there simply won’t be jobs for 85-95% of human beings eventually - we can argue about when that eventually is, I tend to believe within the next 40-50 years - but I believe that arguing that it won’t happen is a fool’s errand, that is why we must perfect GI over the interim.

[AmyStrange]

61. I tend to believe you, but...

-

who's going to buy all that stuff these robots are making if they're the only ones working?

It's a hell of a conundrum, that's for sure.
=======

[Blue_true]

62. People who get money from GI would buy the stuff.

Owners of intelligent machines would have to be willing to give a good amount of their profits to help fund GI, but those owners should get richer during that process, one downside of GI.

[AmyStrange]

64. Interesting theory and I like it.

-

The more money given as GI would mean more money would trickle up, but less money would mean less trickling up.

They'd be stupid not to give a good GI, but look who we're talking about. Mostly republicans, and they're too stupid to realize that it made more sense to give people more money, rather than less.
========

[Bettie]

23. It is easy to make risky decisions when you know

that you get paid millions no matter how it turns out.

CEOs have no actual risk anymore. Yeah, they might lose the job, but there's always another company ready to take them and they leave with cash and prizes anyway.

[AmyStrange]

25. A lot of them also get golden parachutes, and...

-

thank you for sharing.
=======

[edhopper]

27. The ratio to worker pay

has been growing ever since Reaganomics took hold.



And it's not based on the value of their companies.



This is what growing income inequity looks like.

[AmyStrange]

30. Trickle down economy sucks...

-

Increase the fed min wage to $20, $30, or even $40 an hour, and let's give trickle up economics a try.

Anyway, thank you for sharing.
========

[hack89]

28. Good ones create growth and therefore jobs

If a company is growing then it will employ more people.

Trust me - growing a company is real work. It takes unique talents and hard work.

[AmyStrange]

31. Do they pay their laborers more money?

-

What good is a job if you're getting paid shit.

I used to own a company, but I always paid my laborers well (more than I made), because without them, I wouldn't have a company.

Anyway, thank you for sharing.
===========

[hack89]

41. Good companies with good CEOs do

You are not the only decent person to ever run a company.

[AmyStrange]

51. I applaud those CEOs, and...

-

thank you for bringing it up.

It' is important to note that not all CEOs or companies are bad.
=============

[edhopper]

33. Like all the ones who used the massive Trump tax cut

to create more jobs instead of stock buy backs which increased their options and put more money in their own pockets, and not workers.

Nobody says they shouldn't be well paid, but 300 times that of an average worker?

[LanternWaste]

38. "Good ones" increase the board's stock margins, and in doing so decrease jobs.

"Trust me..."

No. Your consistent narrative instructs me otherwise.

[hack89]

42. Guns really warped your perspective,

Haven’t they? I thought you were simply doing Hoyt-like DU performance art but obviously not.

[Blue_true]

46. I found that out the hard way in the first company that I owned.

I always challenge people that incessantly rip business to buy or start a company. It is amazing how one’s insight changes when they are the first to arrive and the last to leave, there never is a vacation and even when excellent delegation of authority is done, the owner still can’t escape being the ONLY person that can make certain critical decisions.

There was a time when I was an employee earning a paycheck when I thought that paying people more and giving them benefits would motivate them. I can’t begin to explain how naive that view is. The key to succeeding is hiring people that are ethical, dependable and can work with others, if you fail to accomplish that, I don’t care how much you pay workers, you will fail.

[rownesheck]

39. CEOs don't do shit.

They have meetings, play golf, rake in millions and leave with a golden parachute. CEO pay needs to be capped at $150,000 a year. And I'm being generous with that number.

I'll feel differently when workers get paid what they're worth. Until then, f@#$ CEOs.

[Blue_true]

47. Have you ever owned a company where you were responsible for formulating or

approving new products or sales strategies, responsible for deciding the basic everyday direction of a company?

I am not talking about a lemonade stand as a kid or some college effort making tie-dye shirts that are sold at a fixed profit. I am talking about owning a company where daily revenue must exceed daily bills or you better find “magic” money somewhere if revenue doesn’t exceed bills. Running a company where any adverse surprise lands in your lap to solve, and you can’t put it off “until tomorrow”.

My point, stated bluntly, is that if you have never run a company, you don’t know a thing about what you are talking about.

[Yavin4]

50. They sell the stock.

They sell stock to big investors. Pension funds. Hedge funds. Sovereign wealth funds. That's their job. Keep the big institutional investors happy.

If the stock slips, they're gone.

[AmyStrange]

53. You're right of course, but...

-

in that case they should pay them with stock instead of money.

Personally, I think line workers should also get stock, after working there for a year.

Lot of companies do that, but not enough.
==========

[Yavin4]

54. They do pay them with stock

They're glorified stock salesmen.

The exploding use of stock options to compensate executives has increased CEO pay significantly. But the justification that CEOs and corporate boards most often give for generous stock options -- that they effectively link pay to performance -- is often scoffed at. And in years of academic research, study after study has shown little relationship between CEO compensation and corporate performance.

https://www.nber.org/digest/feb98/w6213.html

[AmyStrange]

56. That's all they should get n/t

[mtnsnake]

58. Yes they are overpaid, but the more responsibility you have, the more you get paid

and CEO's have more responsibility on their shoulders than anyone else in the company. Are they worth millions? Probably not.

[AmyStrange]

59. True, but without line workers, who would they manage? n/t

[jmowreader]

63. I once asked my company's CEO what he did for a living

He named four things.

1. "I have a lot of rich friends. I get them to invest their money in this company."
2. "I approve every company expense over $1 million." (We have a lot of those.)
3. "I find and hire the best people to run the Corporation's divisions."
4. "And I leave them the hell alone, so long as their division is running smoothly, and let them do what I hired them to do."

So...in essence, the purpose of a good CEO is to raise investment capital.

[AmyStrange]

65. In other words, keep the company stock and profits up. n/t