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Author Topic: The Great Wealth Transfer
AnglsWeHvHrdOnHiRdr
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by Mad Jay:
The CEO, CTO and CFO of my company could drop dead and the company would keep functioning and going in the same direction it is going. If all of the 10 managers under them dropped dead, it would still be business as usual. The company would lose all it's clients if 50 low-level managers who are a level above me, dropped dead. Hell, they might even lose a client or two if I dropped dead, and I'm not at management level.

I think the people getting stiffed are the 50 low-level managers. There is not a big differrence between my supervisors and my salary. The CXO's are grossly overpaid because the board doesn't know how important the low-level and middle-level management is, and the CXO's are much too eager to take the credit, but not so eager to give pay raises.

I wonder if the CxOs' compensation packages are so generous compared to lower-level managers because of the amount of face time the CxOs get to put in with the board, who would determine the CxOs' compensation.

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"When a stupid man is doing something he is ashamed of, he always declares that it is his duty."--George Bernard Shaw

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hoitoider
It Came Upon a Midnight Clearance


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quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
quote:
Originally posted by hoitoider:
Cantor Fitzgerald, a bond trading company, had 658 employees (about two-thirds of its workforce) slaughtered on 9-11. The CEO survived & rebuilt the company.

Not on his own, and the company today is very different than it was on 9/11.
What point are you making? Too busy to cut & paste some quotes?

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No man has a right in America to treat any other man "tolerantly" for tolerance is the assumption of superiority. -Wendell L. Willkie

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AnglsWeHvHrdOnHiRdr
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by GenYus:
quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
If the 300 employees that dropped dead were all store general managers, I contend that would have a far greater impact than the CEO dropping dead.

But store general managers are not going to be making 1/300 of what the CEO makes. And since Wal-Mart has 3,900 stores with 1.8 million employees, a loss of 150 store general managers (this assumes store managers make 2x the lowest-paid Wal-Mart employee) would not be a huge hurdle as they could shift experienced assistant managers from other stores to fill the gaps.

I have been unable to find the statistics for what the average store general manager makes at Wal*Mart, but the lowest paid employee is likely making something under $10k/year (because the lowest paid employee is likely to be a part-timer). I doubt highly a store manager is only making $20k/year.

quote:
As to how valuable a good CEO is, look at what a bad CEO can do. USA Today
I am not saying CEOs are unimportant by any stretch of the imagination. I am saying that the day-to-day operations of companies generally do not lie in the hands of CEOs. They generally are responsible more for the big picture nature of the organization.

--------------------
"When a stupid man is doing something he is ashamed of, he always declares that it is his duty."--George Bernard Shaw

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AnglsWeHvHrdOnHiRdr
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by hoitoider:
quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
quote:
Originally posted by hoitoider:
Cantor Fitzgerald, a bond trading company, had 658 employees (about two-thirds of its workforce) slaughtered on 9-11. The CEO survived & rebuilt the company.

Not on his own, and the company today is very different than it was on 9/11.
What point are you making? Too busy to cut & paste some quotes?
Beg your pardon?

--------------------
"When a stupid man is doing something he is ashamed of, he always declares that it is his duty."--George Bernard Shaw

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GenYus
Away in a Manager's Special


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quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
I have been unable to find the statistics for what the average store general manager makes at Wal*Mart, but the lowest paid employee is likely making something under $10k/year (because the lowest paid employee is likely to be a part-timer). I doubt highly a store manager is only making $20k/year.

The more a store manager makes, the less store managers have to die to equate to the CEO checking out for the final time. So if a store manager makes $40K, then the death of 75 store managers would be equivilent to the death of one CEO. As 75 stores is 2% of Wal-Mart, a loss of 25% of sales in each dead-store manager would reduce Wal-Mart sales by 0.5% until the dead managers were replaced. That might cause a drop in stock price, but not much. I wonder what a dead CEO would do to stock prices?

quote:
I am not saying CEOs are unimportant by any stretch of the imagination. I am saying that the day-to-day operations of companies generally do not lie in the hands of CEOs. They generally are responsible more for the big picture nature of the organization.
And the big-picture is where the long-term health of a company is. A good coach is important to a sports team, but so is a good GM.

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IIRC, it wasn't the shoe bomber's loud prayers that sparked the takedown by the other passengers; it was that he was trying to light his shoe on fire. Very, very different. Canuckistan

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hoitoider
It Came Upon a Midnight Clearance


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quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
Beg your pardon?

Fine, I'll make your point for you: Being a CEO is easy b/c anyone can sit in a nice office, talk on the phone, play golf & go to lunch. It doesn't take any effort at all.

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No man has a right in America to treat any other man "tolerantly" for tolerance is the assumption of superiority. -Wendell L. Willkie

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Lainie
Ding Dong! Merrily on High Definition TV


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quote:
Originally posted by hoitoider:
quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
Beg your pardon?

Fine, I'll make your point for you: Being a CEO is easy b/c anyone can sit in a nice office, talk on the phone, play golf & go to lunch. It doesn't take any effort at all.
If that was an effort at clarification, it failed miserably.

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How homophobic do you have to be to have penguin gaydar? - Lewis Black

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hoitoider
It Came Upon a Midnight Clearance


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quote:
Originally posted by Lainie:
quote:
Originally posted by hoitoider:
quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
Beg your pardon?

Fine, I'll make your point for you: Being a CEO is easy b/c anyone can sit in a nice office, talk on the phone, play golf & go to lunch. It doesn't take any effort at all.
If that was an effort at clarification, it failed miserably.
Beg your pardon?

--------------------
No man has a right in America to treat any other man "tolerantly" for tolerance is the assumption of superiority. -Wendell L. Willkie

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Lainie
Ding Dong! Merrily on High Definition TV


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quote:
Originally posted by hoitoider:
quote:
Originally posted by Lainie:
quote:
Originally posted by hoitoider:
quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
Beg your pardon?

Fine, I'll make your point for you: Being a CEO is easy b/c anyone can sit in a nice office, talk on the phone, play golf & go to lunch. It doesn't take any effort at all.
If that was an effort at clarification, it failed miserably.
Beg your pardon?
Very well. Granted.

--------------------
How homophobic do you have to be to have penguin gaydar? - Lewis Black

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Silas Sparkhammer
I Saw V-Chips Come Sailing In


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quote:
Originally posted by hoitoider:
quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
Beg your pardon?

Fine, I'll make your point for you: Being a CEO is easy b/c anyone can sit in a nice office, talk on the phone, play golf & go to lunch. It doesn't take any effort at all.
Correct. Absolutely correct. I have watched higher-level management for my entire career, and that's about what they do.

Oh, you left out: get roaring drunk over a three-hour lunch break, come back into the office red as a beet, make a pass at one of the single women in the finance department, scream obscenities at the V.P. of Sales, and leave early to go to a strip club.

You would be an excellent corporate leader, judging from your behavior in this thread.

Silas

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AnglsWeHvHrdOnHiRdr
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by hoitoider:
quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
Beg your pardon?

Fine, I'll make your point for you: Being a CEO is easy b/c anyone can sit in a nice office, talk on the phone, play golf & go to lunch. It doesn't take any effort at all.
Did you read the articles I linked? Have you read the points I have been attempting to make in this thread?

Because I think that, if you had, you would realize that what you claim is my point is not, in fact, my point. See also, my post above to GenYus.

--------------------
"When a stupid man is doing something he is ashamed of, he always declares that it is his duty."--George Bernard Shaw

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AnglsWeHvHrdOnHiRdr
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by GenYus:
quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
I have been unable to find the statistics for what the average store general manager makes at Wal*Mart, but the lowest paid employee is likely making something under $10k/year (because the lowest paid employee is likely to be a part-timer). I doubt highly a store manager is only making $20k/year.

The more a store manager makes, the less store managers have to die to equate to the CEO checking out for the final time. So if a store manager makes $40K, then the death of 75 store managers would be equivilent to the death of one CEO. As 75 stores is 2% of Wal-Mart, a loss of 25% of sales in each dead-store manager would reduce Wal-Mart sales by 0.5% until the dead managers were replaced. That might cause a drop in stock price, but not much. I wonder what a dead CEO would do to stock prices?

The impact on stock prices of two dead CEOs of McDonalds in a very short span of time was referenced to earlier. Long-term, there was no impact.

And I am not trying to argue that CEOs are more or less important than middle/low-level managers, but I am trying to argue that a CEO is not 300 times more important than the average employee. Malruhn seems to think they are, however.

quote:
quote:
I am not saying CEOs are unimportant by any stretch of the imagination. I am saying that the day-to-day operations of companies generally do not lie in the hands of CEOs. They generally are responsible more for the big picture nature of the organization.
And the big-picture is where the long-term health of a company is. A good coach is important to a sports team, but so is a good GM.
I don't disagree with that.

--------------------
"When a stupid man is doing something he is ashamed of, he always declares that it is his duty."--George Bernard Shaw

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GenYus
Away in a Manager's Special


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quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
The impact on stock prices of two dead CEOs of McDonalds in a very short span of time was referenced to earlier. Long-term, there was no impact.

True. I think the drop-dead argument is a bit misleading. Since CEOs don't deal in short-term stuff, a short term problem like death wouldn't affect them as much. But being without a CEO for long-term might.

quote:
And I am not trying to argue that CEOs are more or less important than middle/low-level managers, but I am trying to argue that a CEO is not 300 times more important than the average employee. Malruhn seems to think they are, however.

I think the problem is that the benefit is hard to quantify at the level of a CEO as there isn't anyone in the same company to measure the CEO against. One cashier can be measured against another cashier.

Maybe one way to look at how valuable they are is to look at how much damage they can do if they aren't good or are crooked. Consider the Enron mess. Could 1,200 low-level of the crookedest employees do the same amount of damage to Enron as 4 employees at the top?

--------------------
IIRC, it wasn't the shoe bomber's loud prayers that sparked the takedown by the other passengers; it was that he was trying to light his shoe on fire. Very, very different. Canuckistan

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AnglsWeHvHrdOnHiRdr
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by GenYus:
quote:
Originally posted by AnglsWeHvHrdOnHiRdr:
[qb] [QUOTE]And I am not trying to argue that CEOs are more or less important than middle/low-level managers, but I am trying to argue that a CEO is not 300 times more important than the average employee. Malruhn seems to think they are, however.

I think the problem is that the benefit is hard to quantify at the level of a CEO as there isn't anyone in the same company to measure the CEO against. One cashier can be measured against another cashier.

Maybe one way to look at how valuable they are is to look at how much damage they can do if they aren't good or are crooked. Consider the Enron mess. Could 1,200 low-level of the crookedest employees do the same amount of damage to Enron as 4 employees at the top?

Didn't Skilling, Lay, and Fastow try to say it was lower-level employees, though? Or maybe that was Skilling and Lay saying that. [Wink]

--------------------
"When a stupid man is doing something he is ashamed of, he always declares that it is his duty."--George Bernard Shaw

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Archie2K
Happy Xmas (Warranty Is Over)


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Out of interest, AnglRdr, let's assume that a CEO isn't worth 300 times a low-level employee? What would you propose instead of letting the CEO's wage be determined by the market? A cap on wages? Much higher tax rates for the uber-wealthy? Anyone else is free to chime in.

CostCo's CEO taking a relatively low wage is excellent. The saving to the company is proportionaly very small, but it sets a good example to staff. I'll bet that the good publicity generated makes a decent return too.

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Vox populi vox canem

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MaxKaladin
The First USA Noel


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quote:
Originally posted by Mad Jay:
The CXO's are grossly overpaid because the board doesn't know how important the low-level and middle-level management is, and the CXO's are much too eager to take the credit, but not so eager to give pay raises.

My favorite example of this is from personal experience in 1999. I was working as a consultant for a large IT consulting company. They'd made record profits the year before. In August of 1999, we were called in to a special meeting at the local office. We were told that the company was doing great. We were going to be making even more profit than we were last year. Unfortunately, the CEO had promised the board we'd make even more profit than we were set to make (which, remember, exceeded the previous years record profits). Therefore, all salary reviews (read, raises) were cancelled, the holiday party was cancelled, cash bonuses cancelled and so forth. The money saved by doing this would get profits to where the CEO promised the board they would be. In other words, we were more profitable than ever before but we, the employees who did the day to day work, were going to be penalized so the CEO could keep her overoptimistic promise to the board (and presumably get a bonus).
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Lainie
Ding Dong! Merrily on High Definition TV


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quote:
Originally posted by Archie2K:
Out of interest, AnglRdr, let's assume that a CEO isn't worth 300 times a low-level employee? What would you propose instead of letting the CEO's wage be determined by the market? A cap on wages? Much higher tax rates for the uber-wealthy? Anyone else is free to chime in.

Boards of Directors set CEO salaries, IIRC. Some restraint on their part would be nice.

--------------------
How homophobic do you have to be to have penguin gaydar? - Lewis Black

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AnglsWeHvHrdOnHiRdr
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by Archie2K:
Out of interest, AnglRdr, let's assume that a CEO isn't worth 300 times a low-level employee? What would you propose instead of letting the CEO's wage be determined by the market? A cap on wages? Much higher tax rates for the uber-wealthy? Anyone else is free to chime in.


Oh, no, I'm not advocating anything like formal controls. I would hope that old-fashioned shame would work. [Wink]

quote:
CostCo's CEO taking a relatively low wage is excellent. The saving to the company is proportionaly very small, but it sets a good example to staff. I'll bet that the good publicity generated makes a decent return too.
And that's the sort of thing I would hope would follow to other companies. I really offered up the Costco v. Wal*Mart example to answer BeachLife's request that someone show him an example of EQ Taft's hypothesis that
quote:
if they [CEOs] paid workers a little more and took a little less themselves, we'd all be better off in the long run...


--------------------
"When a stupid man is doing something he is ashamed of, he always declares that it is his duty."--George Bernard Shaw

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MaxKaladin
The First USA Noel


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quote:
Originally posted by Archie2K:
Out of interest, AnglRdr, let's assume that a CEO isn't worth 300 times a low-level employee? What would you propose instead of letting the CEO's wage be determined by the market? A cap on wages? Much higher tax rates for the uber-wealthy? Anyone else is free to chime in.

I am fond of Peter Drucker's idea that the CEO should be paid no more than 20 times what the average worker at the company makes.

I also think the new SEC rules concerning the disclosure of CEO compensation are a step in the right direction..

ETA: I'm proposing the former as a step for the board in case that's not clear. The latter makes it easier for shareholders to see the true compensation CEOs are getting and, presumably, allow them to vote accordingly.

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Hero_Mike
Happy Holly Days


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This is silly - the loss of the CEO of any company would have little impact on the continuing day-to-day operations of the company. There is never, *ever*, any urgency to make the big, long-term, and wide-reaching decisions that a CEO (and board, and assistants) would make. If one CEO vaporizes, the immediate void would be filled by the infrastructure immediately below them.

By the time it is necessary to make such decisions, a new or interim CEO will be in place. Consider that at some point, companies will promote from within, and anyone who is, for example, deputy CEO, would have similar, if not slightly lower levels of experience, skills, and qualifications as the CEO themselves.

A football team fires its head coach, however, the assistants would still remain, and the team would still play the next day. No problem.

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"The fate of *billions* depends on you! Hahahahaha....sorry." Lord Raiden - Mortal Kombat

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ThistleSoftware
Little Sales Drummer Boy


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quote:
Originally posted by GenYus:
a short term problem like death

Sorry, I know this makes sense in context, but it made me giggle quite a bit.

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Officially Heartless

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GenYus
Away in a Manager's Special


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quote:
Originally posted by ThistleSoftware:
quote:
Originally posted by GenYus:
a short term problem like death

Sorry, I know this makes sense in context, but it made me giggle quite a bit.


Giggling at death? I guess you deserve that official stamp of heartlessness.

PS. Since the dead person has no long-term, I would think it is a short term problem for the dead person as well.

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IIRC, it wasn't the shoe bomber's loud prayers that sparked the takedown by the other passengers; it was that he was trying to light his shoe on fire. Very, very different. Canuckistan

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Silas Sparkhammer
I Saw V-Chips Come Sailing In


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quote:
Originally posted by Archie2K:
Out of interest, AnglRdr, let's assume that a CEO isn't worth 300 times a low-level employee? What would you propose instead of letting the CEO's wage be determined by the market?

How about...letting the CEO's wage be determined by the market?

I am *absolutely certain* that there are people out there who could do the job, competently and well, for 1/100 of the money paid to these oligarchs. The fact that they're getting this kind of money proves that the market is *not* free, but is fixed.

Silas

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GenYus
Away in a Manager's Special


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But is the only draw for a CEO how they can do the job? Could there be name recognition to where a CEO known for doing an excellent job could draw in more investment money than a CEO who is unknown, but would do as well? If so, then this situation is just like the movies where a big name actor can draw in fans even if another actor could do just as good a job.

Also, how do you propose to actually open up the market?

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IIRC, it wasn't the shoe bomber's loud prayers that sparked the takedown by the other passengers; it was that he was trying to light his shoe on fire. Very, very different. Canuckistan

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snapdragonfly
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by GenYus:
But is the only draw for a CEO how they can do the job? Could there be name recognition to where a CEO known for doing an excellent job could draw in more investment money than a CEO who is unknown, but would do as well? If so, then this situation is just like the movies where a big name actor can draw in fans even if another actor could do just as good a job.

Also, how do you propose to actually open up the market?

The following query is sincere, not snark, cause I don't know. ~ apparently the salary of the CEO is determined by some board, right? If the salary were at least in a good part DIRECTLY determined by the many many stockholders ~ and that would include people who had stock as part of their IRA mutual fund or other small ordinary investers, squirreling away their wee little hundred bucks or so a month - wouldn't that change the dynamic?

I assume it's not done this way now because I don't ever remember getting anything in the mail, back when we had mutual funds, saying, "so you think this dude is worth 600 bazillion bucks or not?" ~if this actually happened, which I doubt, they sure didn't make it easy to find. (And had our Janus stocks asked us this, I'd have said HELL NO in fact I want them to RETURN THE MONEY!!)

Legislation (such as the recent ones that allow people to even find out the real compensation, as was mentioned earlier) seems to me to be a very signficant factor in shaping just how business is run.

Seems to me - again, not my area of expertise so correct me if I'm wrong - that it is as Silas indicates - rather a fixed system.

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"Wolves, dragons and vampires, man. Draw the nut-bars like big ol' nut-bar magnets." ~evilrabbit

(snurched because one of my nutbar family members is all about wolves and another one is all about dragons...)(with apologies to surfcitydogdad)

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Jordashe
I'll Be Home for After Christmas Sales


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How come no one has mentioned the importance of what industry/business it is?

Upper management is usually important for making large decisions the direct the way that the company plans on functioning.

The low-end workers are only considered unimportant because their positions are easy to refill, although if all X of those low-level walmart employees died simultaneously, that would severely cripple the function of those stores.

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MaxKaladin
The First USA Noel


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quote:
Originally posted by snapdragonfly:
The following query is sincere, not snark, cause I don't know. ~ apparently the salary of the CEO is determined by some board, right?

Yes. Most corporations have a board of directors who take care of big decisions like hiring CEOs.

quote:
Originally posted by snapdragonfly:
If the salary were at least in a good part DIRECTLY determined by the many many stockholders ~ and that would include people who had stock as part of their IRA mutual fund or other small ordinary investers, squirreling away their wee little hundred bucks or so a month - wouldn't that change the dynamic?

Yes, in theory, but it's currently difficult to overturn the boards decisions because many people give them their proxy (the right to vote their shares for them). There are movements trying to encourage more activism on the part of shareholders to reduce this power.

quote:
Originally posted by snapdragonfly:
I assume it's not done this way now because I don't ever remember getting anything in the mail, back when we had mutual funds, saying, "so you think this dude is worth 600 bazillion bucks or not?" ~if this actually happened, which I doubt, they sure didn't make it easy to find. (And had our Janus stocks asked us this, I'd have said HELL NO in fact I want them to RETURN THE MONEY!!)

If you own a mutual fund, it generally owns stock in a number of companies and the directors of the fund exercise the voting powers for that stock rather than the shareholders in the mutual fund. They generally give proxy power to the board.

If you do own stock and are entitled to vote with it (there are forms of stock that don't always have voting rights), the first paperwork you would probably see that is related to the voting rights is a proxy form so you can give someoen the right to vote your shares by proxy.

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AnglsWeHvHrdOnHiRdr
Happy Xmas (Warranty Is Over)


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I think that is what we have been addressing for the past little while, Jordashe.

--------------------
"When a stupid man is doing something he is ashamed of, he always declares that it is his duty."--George Bernard Shaw

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BeachLife
The Bills of St. Mary's


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quote:
Originally posted by Silas Sparkhammer:
quote:
Originally posted by Archie2K:
Out of interest, AnglRdr, let's assume that a CEO isn't worth 300 times a low-level employee? What would you propose instead of letting the CEO's wage be determined by the market?

How about...letting the CEO's wage be determined by the market?

I am *absolutely certain* that there are people out there who could do the job, competently and well, for 1/100 of the money paid to these oligarchs. The fact that they're getting this kind of money proves that the market is *not* free, but is fixed.

Silas

Not at all. Proof that several of these CEOs (of public corporations) had nothing more in the way of a resume than a family pedigree, might prove the it's a fixed system of oligarchs.

Though I'd be interested in who qualifies for that job and that kind of money.

--------------------
Wisdom comes with age, but sometimes age comes alone.
Jack Dragon, On Being a Dragon
Confessions of a Dragon's scribe
Diary of my Heart Surgery

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El Camino
We Three Blings


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Okay, so the death thing doesn't really work, because you guys are right, CEOs really only work with long term strategy and have little or nothing to do with short term stuff.

But really, what evidence is there that the market doesn't dictate CEO pay? I see none. Just because people would be willing to do it for less doesn't mean anything. Hell, I'd do it for less, but I don't expect to see any companies coming out to hire me as CEO, even if I post my resume on monster.com. Obviously I'm not well qualified, but it's all matters of degree, isn't it? I'm presumably better qualified than a lot of people. Then you work your way up a sort of pyramid of skill, and the people at the top are in high demand and short supply. That's why they make so much. (Compare CEOs with baseball players. Sure, you can get players who are almost as good for a lot cheaper, but if you follow that strategy, you end up with the Pittsburgh Pirates.)

If you think otherwise, and you think that there's some sort of conspiracy going on, and that these CEO salaries are in place for some reason other than to maximize the profits of the companies, then I'd like to see some evidence of it. And no, "Well there's no other explanation for these high salaries! I mean, this is ridiculous!!!" is not evidence. Sorry.

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snapdragonfly
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by MaxKaladin:
quote:
Originally posted by snapdragonfly:
The following query is sincere, not snark, cause I don't know. ~ apparently the salary of the CEO is determined by some board, right?

Yes. Most corporations have a board of directors who take care of big decisions like hiring CEOs.

quote:
Originally posted by snapdragonfly:
If the salary were at least in a good part DIRECTLY determined by the many many stockholders ~ and that would include people who had stock as part of their IRA mutual fund or other small ordinary investers, squirreling away their wee little hundred bucks or so a month - wouldn't that change the dynamic?

Yes, in theory, but it's currently difficult to overturn the boards decisions because many people give them their proxy (the right to vote their shares for them). There are movements trying to encourage more activism on the part of shareholders to reduce this power.

quote:
Originally posted by snapdragonfly:
I assume it's not done this way now because I don't ever remember getting anything in the mail, back when we had mutual funds, saying, "so you think this dude is worth 600 bazillion bucks or not?" ~if this actually happened, which I doubt, they sure didn't make it easy to find. (And had our Janus stocks asked us this, I'd have said HELL NO in fact I want them to RETURN THE MONEY!!)

If you own a mutual fund, it generally owns stock in a number of companies and the directors of the fund exercise the voting powers for that stock rather than the shareholders in the mutual fund. They generally give proxy power to the board.

If you do own stock and are entitled to vote with it (there are forms of stock that don't always have voting rights), the first paperwork you would probably see that is related to the voting rights is a proxy form so you can give someoen the right to vote your shares by proxy.

Okay. *nods* So then - what if I get that paperwork and say, "no thanks on the proxy, I want my own decisions on my own vote." Would I actually be able to get it?

--------------------
"Wolves, dragons and vampires, man. Draw the nut-bars like big ol' nut-bar magnets." ~evilrabbit

(snurched because one of my nutbar family members is all about wolves and another one is all about dragons...)(with apologies to surfcitydogdad)

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snapdragonfly
Happy Xmas (Warranty Is Over)


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quote:
Originally posted by El Camino:
Okay, so the death thing doesn't really work, because you guys are right, CEOs really only work with long term strategy and have little or nothing to do with short term stuff.

But really, what evidence is there that the market doesn't dictate CEO pay? I see none. Just because people would be willing to do it for less doesn't mean anything. Hell, I'd do it for less, but I don't expect to see any companies coming out to hire me as CEO, even if I post my resume on monster.com. Obviously I'm not well qualified, but it's all matters of degree, isn't it? I'm presumably better qualified than a lot of people. Then you work your way up a sort of pyramid of skill, and the people at the top are in high demand and short supply. That's why they make so much. (Compare CEOs with baseball players. Sure, you can get players who are almost as good for a lot cheaper, but if you follow that strategy, you end up with the Pittsburgh Pirates.)

If you think otherwise, and you think that there's some sort of conspiracy going on, and that these CEO salaries are in place for some reason other than to maximize the profits of the companies, then I'd like to see some evidence of it. And no, "Well there's no other explanation for these high salaries! I mean, this is ridiculous!!!" is not evidence. Sorry.

From the impression I get about it, (and I have no idea where I got this impression - part of it is just my knowledge of how human nature always works no matter what setting - but I think I've read articles about how CEO's get such big bucks saying this) it's not so much a "conspiracy" as it is sort of a good old boys network, with the CEO scratching the back of the board and visa versa.

--------------------
"Wolves, dragons and vampires, man. Draw the nut-bars like big ol' nut-bar magnets." ~evilrabbit

(snurched because one of my nutbar family members is all about wolves and another one is all about dragons...)(with apologies to surfcitydogdad)

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Mad Jay
Let There Be PCs on Earth


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quote:
Originally posted by MaxKaladin:
quote:
Originally posted by Mad Jay:
The CXO's are grossly overpaid because the board doesn't know how important the low-level and middle-level management is, and the CXO's are much too eager to take the credit, but not so eager to give pay raises.

My favorite example of this is from personal experience in 1999. I was working as a consultant for a large IT consulting company. They'd made record profits the year before. In August of 1999, we were called in to a special meeting at the local office. We were told that the company was doing great. We were going to be making even more profit than we were last year. Unfortunately, the CEO had promised the board we'd make even more profit than we were set to make (which, remember, exceeded the previous years record profits). Therefore, all salary reviews (read, raises) were cancelled, the holiday party was cancelled, cash bonuses cancelled and so forth. The money saved by doing this would get profits to where the CEO promised the board they would be. In other words, we were more profitable than ever before but we, the employees who did the day to day work, were going to be penalized so the CEO could keep her overoptimistic promise to the board (and presumably get a bonus).
A similar thing happenned at my previous company. The company was in the habit of (as many large companies are) of projecting their quarterly earnings before the quarter starts. We made loads of profit, much better than the same quarter last year. Unfortunately, the earnings didn't meet projections.

They laid off people. They sold an entire division. The division had done a lot of research, and they sold the research(and the people who did the research) with the division. A year down the line, someone realised "You know what? we shouldn;t have sold that division because we need all the research if we are to stay as market leaders". They bought it back in 2002 for much more than what they got it for. They still had to show profit in 2002, so they sold the division that goes after goverment projects. In 2002!!. When the Federal Goverment was ramping up budgets tremendously.

For a couple of mill, I can make half-assed "long-term" decisions like that. Why doesn't someone put me in that seat?

--------------------
Nico Sasha
In between my father's fields;And the citadels of the rule; Lies a no-man's land which I must cross; To find my stolen jewel.

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GenYus
Away in a Manager's Special


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quote:
Originally posted by snapdragonfly:
Okay. *nods* So then - what if I get that paperwork and say, "no thanks on the proxy, I want my own decisions on my own vote." Would I actually be able to get it?

Yes. I directly own a few stocks of Coca-Cola (KO). Every year or so, I get a ballot with the various board members or other shareholder-voting items on it.

--------------------
IIRC, it wasn't the shoe bomber's loud prayers that sparked the takedown by the other passengers; it was that he was trying to light his shoe on fire. Very, very different. Canuckistan

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El Camino
We Three Blings


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quote:
Originally posted by Mad Jay:
quote:
Originally posted by MaxKaladin:
quote:
Originally posted by Mad Jay:
The CXO's are grossly overpaid because the board doesn't know how important the low-level and middle-level management is, and the CXO's are much too eager to take the credit, but not so eager to give pay raises.

My favorite example of this is from personal experience in 1999. I was working as a consultant for a large IT consulting company. They'd made record profits the year before. In August of 1999, we were called in to a special meeting at the local office. We were told that the company was doing great. We were going to be making even more profit than we were last year. Unfortunately, the CEO had promised the board we'd make even more profit than we were set to make (which, remember, exceeded the previous years record profits). Therefore, all salary reviews (read, raises) were cancelled, the holiday party was cancelled, cash bonuses cancelled and so forth. The money saved by doing this would get profits to where the CEO promised the board they would be. In other words, we were more profitable than ever before but we, the employees who did the day to day work, were going to be penalized so the CEO could keep her overoptimistic promise to the board (and presumably get a bonus).
A similar thing happenned at my previous company. The company was in the habit of (as many large companies are) of projecting their quarterly earnings before the quarter starts. We made loads of profit, much better than the same quarter last year. Unfortunately, the earnings didn't meet projections.

They laid off people. They sold an entire division. The division had done a lot of research, and they sold the research(and the people who did the research) with the division. A year down the line, someone realised "You know what? we shouldn;t have sold that division because we need all the research if we are to stay as market leaders". They bought it back in 2002 for much more than what they got it for. They still had to show profit in 2002, so they sold the division that goes after goverment projects. In 2002!!. When the Federal Goverment was ramping up budgets tremendously.

For a couple of mill, I can make half-assed "long-term" decisions like that. Why doesn't someone put me in that seat?

No one's saying that all CEOs are great. Obviously there are plenty of bad ones - these seem like examples. But the fact that you run a significant risk of hiring a bad CEO makes companies even more willing to spend the big bucks if they think it gets them a better one, especially one with a good track record. Of course, even high salaries by no means guarantee good performance, and I'm sure there are plenty of "bust" stories.
Posts: 1048 | From: Brunswick, Maine | Registered: Oct 2005  |  IP: Logged | Report this post to a moderator
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