Reply #7: Don't like it. No, sir, I don't like it at all. [View All]

[Igel]

I've been a boardmember on a non-profit organization that had many thousands of stakeholders. I had fights over "CEO" compensation; the "business" was losing money, and we gave the CEO a raise.

"Freepers" had an easier time; they usually got it, since they hoped to be making at least that much as their starting salary. The worst were "progressives" who believed that the students that the organization employed should make $20/hr, while the management in the non-hierarchical structure they preferred should make $30k a year, on principle--they did nothing useful, just "business". They couldn't understand that they had neither the financial savvy or managerial skills necessary to evaluate the CEO or do her job--contrary to what they claimed, that anybody could be CEO and do a better job. They refused to believe that the board had looked at hundreds of resumes before interviewing a dozen people--and that was the *second* time, the first search simply crashed. We simply didn't want to lose the CEO we had, with the disruption that would cause, even though the organization was hemorrhaging money--not through anything she had done. Moreover, in spite of losses, she was doing a hell of a job. It's just that without going through spreadsheets and revealing personal information it was hard to justify.

It took 4 years; in year 4 we were in the black (way in the black by the accounting standards we used in year "-1"), and the CEO breathed a sigh of relief. She told us it wasn't easy staying in the black, but reversing losses of over a million a year on sales of $80 million was hell. She cut back to working 50 hours a week instead of 70.

I *do* believe that there should be a cap on CEO and top-tier managerial salary. I don't know whether I want it to be a multiple of the average wage paid to employees or some percentage of gross sales or something else. Both have problems. There should also be some requirement that boards outline justification for their wage decisions using other than boilerplate language.