×

Announcing: Slashdot Deals - Explore geek apps, games, gadgets and more. (what is this?)

Thank you!

We are sorry to see you leave - Beta is different and we value the time you took to try it out. Before you decide to go, please take a look at some value-adds for Beta and learn more about it. Thank you for reading Slashdot, and for making the site better!

Are Bankers Paid Too Much? Are Technology CEOs?

timothy posted about 10 months ago | from the can't-even-count-that-high dept.

Businesses 712

DavidHumus writes with this excerpt from a New York Times article: "Big paydays on Wall Street often come under laserlike scrutiny, while Silicon Valley gets a pass on its own compensation excesses. Why the double standard? The typical director at a Standard & Poor's 500 company was paid $251,000 in 2012, according to Bloomberg News. Mr. Schmidt [Google's CEO] is above that range by over $100 million. ...The latest was the criticism of Jamie Dimon's pay for 2013, given the many regulatory travails of his bank, JPMorgan Chase. The bank's board awarded Mr. Dimon $20 million in pay for 2013, $18.5 million of which was in restricted stock that vests over three years. ...For one, the outsize pay for Mr. Schmidt doesn't square with Google's performance. Putting aside the fact that he is not even the chief executive, Google had net income of $12.9 billion last year. JPMorgan was higher at $17.9 billion...." DavidHumus notes "Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

Sorry! There are no comments related to the filter you selected.

tl;dr (5, Informative)

Anonymous Coward | about 10 months ago | (#46295885)

Yes

Re:tl;dr (3, Funny)

ArchieBunker (132337) | about 10 months ago | (#46295893)

and also yes.

Re:tl;dr (4, Interesting)

amicusNYCL (1538833) | about 10 months ago | (#46296037)

Seconded, yes.

Here's the difference: technology CEOs run companies that make things and contribute to society. Bankers earn a profit by moving other peoples' money around and taking some off the top. One of those jobs is necessary for us to progress.

Re:tl;dr (0)

Anonymous Coward | about 10 months ago | (#46296131)

Contribute to society?

Don't make me laugh. If the Big One hit tomorrow the world would merely get a little more boring.

Re:tl;dr (3, Insightful)

slapout (93640) | about 10 months ago | (#46296347)

I find having a bank account very handy for handling my money. Banks do contribute to society.

Re:tl;dr (5, Informative)

Anubis350 (772791) | about 10 months ago | (#46296503)

I find having a bank account very handy for handling my money. Banks do contribute to society.

Bear in mind that investment banks and savings banks used to have huge firewalls between them, so that the one you find useful wasn't the one taking huge risks (it is, or was, also the smaller banks that typically extend credit to local businesses, not the huge investment banks)

Re:tl;dr (1)

buchner.johannes (1139593) | about 10 months ago | (#46296385)

A car salesman is paid less than a real estate agent, because selling and buying houses is a bigger investment, happens less often and more things can go wrong.
A real estate agent is paid less than a banker, because selling and buying companies is a bigger investment, happens less often and more things can go wrong.

If you see their income it as a percentage of the successful sale, the analogy works and explains the figures.

Re:tl;dr (0, Flamebait)

CrimsonAvenger (580665) | about 10 months ago | (#46296403)

One of those jobs is necessary for us to progress.

The Banker? Because without him, those technology CEO's wouldn't have any money to make things and contribute to society.

Finance is a valuable activity (5, Insightful)

sjbe (173966) | about 10 months ago | (#46296455)

Bankers earn a profit by moving other peoples' money around and taking some off the top.

True, and the reason they can make money at this is because it is a VERY valuable activity to society. Far more valuable than the bit they keep for themselves most of the time. If you need evidence of how valuable it is, merely look at our recent financial crisis when the flow of money froze up.

There are plenty of jobs that don't involve making things but nevertheless are very valuable. Don't confuse the value of the activity with the behavior of the parties involved.

One of those jobs is necessary for us to progress.

Think so? Try building a company without access to banking or financial services. You won't get very far. Anyone who thinks banking and financial services aren't necessary for progress doesn't understand finance. It's like saying your car doesn't need oil. Technically true for a little while but it won't work very well or for very long.

Re:tl;dr (2)

Frobnicator (565869) | about 10 months ago | (#46296461)

Compensation is whatever you negotiate.

Fairness is an interesting concept. "Fair" and "Equitable" are different. "Fair" and "Equal" are different. Is it fair that you can have two similarly-skilled, similarly-trained, similarly-experienced programmers working side by side but they have a difference in pay?

If you think it is unfair, then push for labor unions and publicly shared compensation details at every level. Most (all?) state already do this, publishing the salary tables for every job from governor and legislator to university coach to public school teacher to public park janitor. You can look up exactly how much anybody earns, and you can petition the government to change their rates.

If someone is hired when the team is in dire need and the other is hired when the team is flush with workers, then at negotiation time one will be in a better position that the other for compensation. Some people don't like that, and want everyone to be paid based on a standardized table of years of work experience and years of education; look up where they cross, that is your salary.

Personally I prefer a market wage of whatever I can negotiate. Of course, I can negotiate a fairly strong package based on projects I have worked on, roles I have lead, and other measurable results in my history.

Re:tl;dr (2, Insightful)

Dishevel (1105119) | about 10 months ago | (#46296519)

Just because you hate bankers (Most people do for good reason) is no reason to abandon reasoned thought.

If I own a company and I hire someone I can pay them as much as I want. If I pay them too much my company suffers. That is my problem. In the case of bankers, their salary comes from the profits of the banks and therefore is paid for by the people on the board. It is their choice. If you do not like the fact that taxpayers are bailing them out then take that up with your idiot, beholden senators and representatives. Tell those bastards you do not want to pay to bail out financial institutions. That you think automatic federal deposit insurance entourages people to not care where their money is.

But people are stupid so ... Fuck those bankers. They make too much money!

They are all paid too much (3, Insightful)

cfulton (543949) | about 10 months ago | (#46295905)

But, the kitty that they are paid from is soooo large that from the corporate perspective they are not all that expensive. And free enterprise etc. So, paid too much yes. Anything we can really do about it no.

Re:They are all paid too much (5, Insightful)

SQLGuru (980662) | about 10 months ago | (#46295963)

At the top tier (VP, Pres, CxO), pay should be capped as some (documented) multiplier of the lowest level salary. Bonuses should be tied to company performance. That's it. If the CIO wants to get paid more, he either needs to raise the rates of those below him or improve the performance of the company in some meaningful way. When a company making billions pays its executives $50M but lays off thousands making $40K, it feels really crappy. Sure, I understand that sometimes those layoffs boost performance and what not, but there really is a point where having MORE money doesn't really do much for you.......whereas losing your job is VERY disruptive.

Re:They are all paid too much (2, Insightful)

Billly Gates (198444) | about 10 months ago | (#46296091)

*devils advocate*

Why should they be capped?

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

Doing so would make great talent do something else or not try as hard and everyone looses out.

If someone is paid too much the market takes care of that with something called a firing. Losing your job does suck and is very disruptive but the shareholders need a return and who is the shareholder? Your elderly mom, YOU, etc. If you have a savings plan you own shares. Also investment money is needed to expand or go into more markets. They only way to do that is to have great accounting books.

Yes it does suck to be laid off at a human level, but ask yourself what are you providing? The reason you are let go is because you fix some computers. The CEO on the otherhand changes the lives of milllions of people.

You want that cash and job security then you ought to be a better worker and provide greater value. The sky is the limit and the CEO didn't start out like this overnight. It was not luck. Even company founders are poor. It took Zuckerberg 10 years before he became very wealthy.

The free market takes care of everything if you just bud out and not interfere.

Re: They are all paid too much (5, Insightful)

Anonymous Coward | about 10 months ago | (#46296209)

Too bad that free markets are a theoretical ideal that doesn't really happen in real life. Sure, market forces shape outcomes. But market failure is a real thing that happens. You can't rely on the market to correct it's own failure.

Re: They are all paid too much (3, Insightful)

Anonymous Coward | about 10 months ago | (#46296301)

Too bad that free markets are a theoretical ideal that doesn't really happen in real life. Sure, market forces shape outcomes. But market failure is a real thing that happens. You can't rely on the market to correct it's own failure.

Too bad that fairness is a theoretical ideal that doesn't really happen in real life. Sure, government force shape outcomes. But government failure is a real thing that happens. You can't rely on the government to correct it's own failure.

Re: They are all paid too much (1)

Anonymous Coward | about 10 months ago | (#46296441)

Too bad that you're a victim of your own culture. You expect millions born and raised into a capitalistic system to grasp something NOT consumerist hogwash? Government is a tool (at least, it should be), and so is the market. The market is a tool of segregation and disparity, and isn't connected to the real world whatsoever. My rock is ten dollars, I sell it to you for 20, remember?

Re:They are all paid too much (1)

Anonymous Coward | about 10 months ago | (#46296283)

I think I agree with you in that it would be a bad idea to cap anyone's pay. In the end, that would probably kill our economy. I do think executive pay is a ludicrous problem. As a skilled employee who provides a lot of value for my company, I find it appalling that executives make order(s) of magnitude more than me. I wholeheartedly believe they ARE NOT that much more productive.

I do take exception to your comments about "better work." If things were a bit more free market in that regard--if you could actually legitimately work your way up and auction your skills out, etc--I'd be on the same page as you. But most of the time the corporate world looks at good work with a presumptuous attitude. They approach it as if you're damn lucky to have your job, and you'd better do good work or you're going to be out on your ass. For worker productivity, this is good, I think it keeps the world turning. But for actual advancement potential, it ranks really low on the list of what actually helps you succeed. You need to be connected. You have to golf or drink with the right guys. You need to be a good workplace politician, a good self-salesperson. If you have the "right" combination of skills (that have nothing to do with company success), you could be a completely unproductive loser and still attain high ranks. Those of us who work hard see that system and feel contempt.

One thing you're right about, a lot of what gets a CEO to his position isn't luck. But it also isn't the right kind of skill, the kind of skill that makes his salary worth 1000 times that of a brilliant engineer.

Re:They are all paid too much (0)

Anonymous Coward | about 10 months ago | (#46296523)

The only way you're going to have your cake and eat it too is to stop buying the subjective theory of value. Period. Link dollars to atomic mass, labor rewards resource allocation....it's at least a step in the right direction. The tripe about "connections" is great, since, ironically, it goes against the entire spirit of a meritocracy. But everyone seems to be a-ok with this, and I have no clue why.

Re:They are all paid too much (3, Insightful)

AchilleTalon (540925) | about 10 months ago | (#46296505)

You are right since the devil is right as well.

There is absolutely no reason to cap the CEO or anyone else salary based on whatever equation anyone can come with thinking he is clever than the next door guy.

CEO salary is determined by investors, those who are taking risks in the company and hired him to take care of their investment in that company.

If the investors believe this guy to earn that salary, it is up to them to reduce the salary and compensations or to fire him to hire someone else capable to take care of the investors' money.

It is not a matter of how much money someone needs to be comfortable, it is a matter of how much money this guy will bring to the investors and shareholders.

No investor wants the CEO to spend more money than needed in employees wage and salary. No investor wants the CEO to not spend enough money that the company will be put at risk or go to bankrupcy lacking the talented people it needs to make money. You can disagree with what the investors think and their strategy for the company, that's fair. However, it is not to someone which have no money in the company and who risks nothing in the enterprise to decide.

Re:They are all paid too much (4, Informative)

nine-times (778537) | about 10 months ago | (#46296515)

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

Huh? People do work very hard for 70 hours a week without making 20 million dollars for it. It happens all the time. Sometimes because they have to, and sometimes because they enjoy their jobs. And getting MBAs? Do people actually need to get MBAs?

If someone is paid too much the market takes care of that with something called a firing.

Are you sure about that?

the shareholders need a return and who is the shareholder? Your elderly mom, YOU, etc.

Except often they're not, at least not to a meaningful degree. Your elderly mom probably has a 401k that gives her a 0.001% share in the company without knowing it. Mostly "the shareholders" are rich people.

The sky is the limit and the CEO didn't start out like this overnight. It was not luck. Even company founders are poor. It took Zuckerberg 10 years before he became very wealthy.

You're conflating some different issues here. The sky is the theoretical limit, in abstract, but not really so much for everyone. Zuckerberg did not start off poor. He started out upper-middle class. And he was lucky. He found himself with a good idea at the right place and at the right time and with the right help. Any number of things could have gone against him, resulting in Facebook never becoming the company that it is today.

So while it wouldn't be fair to claim that Zuckerberg sat around doing nothing and just happened across success, like finding the winning lottery ticket, it's also not fair to everyone else to paint the picture as though Zuckerberg created his own success through pure brilliance and hard work. He made smart decisions and worked hard, but others made equally smart decisions and worked equally hard without ever making a million dollars.

Re:They are all paid too much (5, Insightful)

mrchaotica (681592) | about 10 months ago | (#46296127)

At the top tier (VP, Pres, CxO), pay should be capped as some (documented) multiplier of the lowest level salary. Bonuses should be tied to company performance. That's it. If the CIO wants to get paid more, he either needs to raise the rates of those below him or improve the performance of the company in some meaningful way. When a company making billions pays its executives $50M but lays off thousands making $40K, it feels really crappy.

The fact that executive pay being so disproportionate to employee pay "feels really crappy" is not a problem. The fact that executive pay being so disproportionate to employee pay destabilizes society by destroying the middle class is a problem!

Re:They are all paid too much (2, Insightful)

CastrTroy (595695) | about 10 months ago | (#46296225)

I've heard about this idea, but I think there are some major flaws. Basing the CEOs pay on the pay of their lowest paid employees doesn't work out. Microsoft probably has very few low paid employees by virtue of business sector they are in. They design software, so the majority of their employees are going to be paid quite well. Starbucks on the other hand sells coffee. Even though they pay pretty well, I would have to say that the average Starbucks employee makes nowhere close to the same amount as the average Microsoft employee, and they shouldn't because that job simply doesn't require the same expertise. Should the Apple CEO get a large salary because their employees are well paid, or should he get a small salary because Apple's devices are made by low paid workers in China. Sure they are directly employees of Apple, but if it wasn't for the low paid factory workers, Apple wouldn't have so much money to spread around to their official employees.

Re:They are all paid too much (1)

geekoid (135745) | about 10 months ago | (#46296359)

Performance based on what? over what time frame? how to you deal with companies that are at or near the peak level?

Re:They are all paid too much (0)

CastrTroy (595695) | about 10 months ago | (#46296081)

Not to mention, if we're going to start talking about the relatively few bankers/CEOs that are getting paid too much, we should also talk about all the other people doing jobs where they get paid too much, especially when they are paid by tax payers. There are bus drivers in my city that make over $100,000 a year. There's people who are employed at various government agencies who do nothing but play minesweeper all day, while collecting good paychecks and getting pensions that don't no sane company would offer in the private sector.

Gee.. (3, Insightful)

3.5 stripes (578410) | about 10 months ago | (#46295915)

I'm guessing people are focusing on the bankers because google didn't fuck the world's economy.

I still think it's bullshit.

Because (5, Insightful)

boristdog (133725) | about 10 months ago | (#46295931)

Because the tech sector hasn't crashed the world economy...yet?

Re:Because (3, Insightful)

swillden (191260) | about 10 months ago | (#46296379)

Because the tech sector hasn't crashed the world economy...yet?

In addition to that, I think there's a perception that bankers make their money by exploiting the people, by charging them more for mortgages, paying them less in interest, etc. Basically, by sucking money out of these common transactions that everyone has to make. The money paid to bankers could, the argument goes, have been left in the pockets of the average person.

In contrast, doing business with tech companies is more voluntary. No one has to buy an iPhone or an iPad, while buying a house or condo is more mandatory (even renters get hit, since their landlords have mortgages and pass the costs along). Using Google is perhaps harder to avoid, but the average person's perspective is that they don't pay Google anything, so the money paid to Eric Schmidt doesn't come out of their pocket. In fact, the advertisers who pay Google get their income from the people, so the average person actually does contribute to Schmidt's income, very indirectly (though there's a good argument that the advertisers would have needed to advertise regardless and since Google has made advertising more efficient the net effect of Google's work has been to reduce the amount consumers pay).

Anyway, without getting into the degree to which these perceptions are accurate (not very), banks are seen as parasites, while tech companies are seen as adding value, and that has a strong impact on whether people feel the companies have the right to pay their people exorbitant amounts of money.

Re:Because (2, Insightful)

Anonymous Coward | about 10 months ago | (#46296415)

1999-2000 Tech bubble?...

Pay Out of Whack (2)

techmage (72232) | about 10 months ago | (#46295935)

As with all things, once you know you have access to the cookie jar, you can get what you want. The CEOs all get these great payouts because the board of directors agrees to it. Why? Because then the CEO can give them nice big Director fee checks. So the CEO gets the cookies and shares them with his friends. As long as the stock goes up, the stockholders will look the other way too. "It is all the cost of doing business," they will say. Everyone but the workers and customers win.

Re:Pay Out of Whack (3, Insightful)

mrchaotica (681592) | about 10 months ago | (#46296227)

As long as the stock goes up, the stockholders will look the other way too. "It is all the cost of doing business," they will say.

The other problem is that the stockholders mostly aren't people. Instead, they're large mutual funds managed by a single person who is in the CEO/director good ol' boys club too.

Mod parent up (0)

Anonymous Coward | about 10 months ago | (#46296411)

Cronyism

Is that a rhetorical question? (1, Informative)

Zooperman (1182761) | about 10 months ago | (#46295951)

In before the flame war.

Yes (0)

Anonymous Coward | about 10 months ago | (#46295953)

Yes ..... regarding financial industry people.
CEOs .... YES but it gets extremely stupid with high market cap companies.

FWIW: I think brain surgeons and the like should have the highest salaries. Anyone that makes more than a brain surgeon should get taxed severely.

ELOP (2)

Billly Gates (198444) | about 10 months ago | (#46295955)

One word ELOP.

See what happens when one bad CEO comes into a great innovating company like Nokia?

Another word JOBS.

Even if you hate Apple look what happened to Apple since 1997 when Steve Jobs came back who is considered one of the best CEOs? CEO's get paid a lot because they have a HUGE impact on stock price and company performance. You can argue how unfair it is until you are blue in the face. Fact of tthe matter they are worth every penny and have a huge pull that the average slashdot reader and I can only dream of in terms of benefits and compensation from our jobs.

Bankers on the otherhand is tricky. Bankers get paid like they were before deregulation. That is they were once paid only on interest grown. Not principal plus interest accured like today saying yeah I earned that 6 million today and need 10% of that NOW! ... in reality the customer put down 5.99 million and you made $10,000 but claim it was really 6 million in assets. This was because of the way paperwork used to handled prio to the mid 1980s.

So yes many are worth every penny but something should be done but wont because that is evil socialism that we can't allow etc. Politicians need that money to fool stupid voters with fancy commercials every 2 years.

Re:ELOP (4, Insightful)

mbone (558574) | about 10 months ago | (#46296149)

Another word JOBS.

Even if you hate Apple look what happened to Apple since 1997 when Steve Jobs came back who is considered one of the best CEOs? CEO's get paid a lot because they have a HUGE impact on stock price and company performance.

Steve Jobs had a salary of $ 1 per year. He shared in the success of the company because he owned a good chunk of it.

That, I have no problem with.

Re:ELOP (1)

tomhath (637240) | about 10 months ago | (#46296261)

The point is that the CEO (Jobs) made Apple what it is. Doesn't matter how he was compensated.

Re:ELOP (0)

camperdave (969942) | about 10 months ago | (#46296295)

Elop* isn't a word. Perhaps you left off the trailing E on Elope?

*Elop is sometimes used as a short form of the genus name Elopidae (Pacific ladyfish), like pachy might be used as a diminutive of pachyderm.

Re:ELOP (1)

gl4ss (559668) | about 10 months ago | (#46296317)

it is a word now, so fucked was his performance.

and by the way, the words you cited were also made up.

Pay is exactly where it should be (0)

Anonymous Coward | about 10 months ago | (#46295969)

The pay in these industries is exactly where it should be, and that is the amount driven by the market. If you want to look at professions in which pay is artificially higher than it should be, look no further than the 6 figure windshield installers in Detroit, or pretty much any public school district.

Re:Pay is exactly where it should be (1)

Anonymous Coward | about 10 months ago | (#46295995)

obvious troll is obvious.

Re:Pay is exactly where it should be (0)

barakn (641218) | about 10 months ago | (#46296085)

I'm trying to figure out why you think paying a teacher $28,000 a year to work 10-hour days is "artificially higher than it should be," and I can only conclude that you are a dimwitted, sheep-shanking idiot.

Re:Pay is exactly where it should be (3, Interesting)

qwijibo (101731) | about 10 months ago | (#46296185)

I don't think the school comment was about teachers - it was more likely referring to the increasing sizes of school district administration staff making 6 figures and contributing basically nothing to the education process.

Re:Pay is exactly where it should be (1)

Billly Gates (198444) | about 10 months ago | (#46296459)

I don't think the school comment was about teachers - it was more likely referring to the increasing sizes of school district administration staff making 6 figures and contributing basically nothing to the education process.

As someone who used to work for school districts I am here to tell you they are directors. In Russia and other countries they are called just that in Russian.

A bad admin can run good teachers out and have A HUGE IMPACT in student attendance, discipline, and test scores. It is up to the principal to expel students or follow good paperwork and keep the bad students in so they can claim less suspensions etc. This is one example where fights go up but the paperwork looks best, or you kick out the students and risk your job but your schools grade goes up.

This is was just one example and school teachers much prefer THE SECOND option so they can teach. A good teacher with 3 years experience and go elsewhere otherwise.

So yes 6 figures for a school admin is appropriate compensation as they can make or great hundreds to thousands of student lives!

Re:Pay is exactly where it should be (0)

Anonymous Coward | about 10 months ago | (#46296153)

The market forces don't exist for the financial sector. You can't just up and decide to start a bank, thanks to an incredible gauntlet of regulations that literally takes hundreds of man hours a month sent merely to comply. These CEOs form a cabal literally skimming from the top of these pre-existing money making machines, confident that there is no way a new competitor without the overhead of overpaid executives can ever form.

At least tech CEOs have built something from the ground up.

The problem is... (0)

Anonymous Coward | about 10 months ago | (#46295979)

... historical.

Societies of the past did not have billions of people. No one accounted for the population size (hence customer base) massive effect on concentrating wealth. A sane society would recognize the scalability flaw and have a maximum pay to stop the inefficient accumulation of money at the top.

The larger question is... (2, Insightful)

fahrbot-bot (874524) | about 10 months ago | (#46295993)

... how much money does someone really need? I'm not against Capitalism, but seriously, does one person really need $100 million, or even $20 million as an (semi?) annual salary or bonus? Does a CEO need 500 times (recent figures) the average salary of his/her own employees - you know, the people doing the actual work?

The answer is greed (0)

Anonymous Coward | about 10 months ago | (#46296181)

No one needs $50,000,000+ a year as a salary.
No one needs 1 TB of porn on his computer either.

Yet here we are.

And the largest question is... (0)

Anonymous Coward | about 10 months ago | (#46296339)

How are you going to reduce the amount of money another person has without employing coercion (meaning theft, fraud, or physical force) against that person? If you resort to coercion, that makes you the aggressor, and the CEO the victim -- the exact opposite of the picture you're trying to paint.

Disclaimer: I make about $32,000 a year, which is well below the national average salary, so my opinion on this must be driven by something other than personal gain (unlike you).

Re:The larger question is... (2, Interesting)

Anonymous Coward | about 10 months ago | (#46296409)

When you run a society based on what people want and are willing to work for themselves, you end up with South Korea. When you run a society based on what people need, you get North Korea. Take your pick.

Re:The larger question is... (0)

Anonymous Coward | about 10 months ago | (#46296421)

At that level it's not about needing it or wanting it, it's about keeping score.

"Too much" is an opinion (1)

jbmartin6 (1232050) | about 10 months ago | (#46296003)

From what I have observed, pay rates generally are in line with how hard the company believes it is to replace the person. They feel it is pretty hard to find a suitable new CEO, so the pay rates go way up since the prospect has a lot of leverage. There's no inherent reason why this number should be linked to company performance any more than what the company will pay for water is. Now, bear in mind I am not saying this is how it should be, just observing that this is what happens.

You get, what you negotiate (3, Insightful)

mi (197448) | about 10 months ago | (#46296007)

"Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

The even bigger question is, why is this any of our business? As long as it is not the taxpayers footing the bill, count your own money...

Re:You get, what you negotiate (-1)

Anonymous Coward | about 10 months ago | (#46296193)

"Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

The even bigger question is, why is this any of our business? As long as it is not the taxpayers footing the bill, count your own money...

Because we are (or at least, most of us are) investing in these companies? Maybe, it IS our money? You fucking idiot troll.

Re:You get, what you negotiate (1)

mi (197448) | about 10 months ago | (#46296383)

Because we are (or at least, most of us are) investing in these companies?

Then raise your concerns in a shareholders' meeting -- not in newspapers.

Re:You get, what you negotiate (0)

Anonymous Coward | about 10 months ago | (#46296477)

Investing is voluntary, it's not the same as taxing.

Don't like it pull your money out.

Basic Logic Fail (0)

Anonymous Coward | about 10 months ago | (#46296009)

So, in summary, bankers are not grossly overpaid because other people in unrelated industries also have ludicrously high salaries. Nope, nothing wrong with that argument.

In other news, theft is okay because other people steal too.

Perhaps... (4, Insightful)

Anonymous Coward | about 10 months ago | (#46296025)

Perhaps if Google and Apple had done the same damage to the economy as bankers did a few years ago and had to be rescued with 700 billion dollars (from a government that argues that a few billion in homeless shelters is wasteful expending) people would be pissed at them too.

Of course they are. (2, Insightful)

Max Threshold (540114) | about 10 months ago | (#46296027)

Some jobs are harder than others, and deserve to be rewarded more than others. But absolutely nobody "earns" more than a small multiple of minimum wage, and this should be enforced with a progressive tax structure based on an algorithm in which the only variable is the minimum wage. At today's minimum wage, astronauts, brain surgeons, and the President of the United States should be making about $60K a year, and it should only go down from there.

Re:Of course they are. (1)

SuricouRaven (1897204) | about 10 months ago | (#46296165)

There is a set of jobs where the laws and supply of demand don't apply. For a simpler example, take professional footballers - there's been a lot of fuss about the huge pay some of those earn too.

The top clups want to employ, oh, about 500 footballers (Just a quick guess). They want the best. The very best. The top five hundred in the world, and they will compete with each other to pay the most to get them.

In most industries, supply and demand would kick in at that point: Pay would rise, which would motivate more people to go into football as a career, which would bring the pay down again. It'd still be high (It's a skilled job) but not obscenly so. But that doesn't happen - because it doesn't matter if a million or ten million or half the world population all go into football as a career: The top 500 is still just 500 players. The top club recruitment pool hasn't grown, it's just gotten harder to get into. So the obscene pay continues.

Re:Of course they are. (1)

Capt.DrumkenBum (1173011) | about 10 months ago | (#46296191)

Some jobs are harder than others, and deserve to be rewarded more than others.

So, shit shovelers and IT professionals should make the most money? Works for me. :)

Re:Of course they are. (1)

ElementOfDestruction (2024308) | about 10 months ago | (#46296213)

Get the fuck out of here with that. $60k for brain surgeon vs. $15k for the most replaceable of employees? The type of stress, the training, the degree of skill that it requires to become those positions? Settle down. I would venture to say that at today's minimum wage, astronauts, brain surgeons, and the President of the United States are all getting paid a reasonable amount. This article is about the uber-elite; not sure why you're trying to make an enemy out of upper-middle-class careers.

Re:Of course they are. (1)

Billly Gates (198444) | about 10 months ago | (#46296221)

$10 - $15 an hour is more from what I read historically.

Still doesn't get you much except in very rural areas.

But 60k a year is ludicrous. Some people who are valuable to society and have to work hard and invest to get to where they are need that extra cash otherwise no risk taking or hard work would be done. Soviet Union is a classic example. People worked because they were forced and hated it. Not because they had bigger dreams in mind.

Re:Of course they are. (0)

Anonymous Coward | about 10 months ago | (#46296355)

That is some sad cognitive dissonance you've got going on there. "People worked because they were forced and hated it" is EXACTLY the paradigm we live in now, sans a "higher tier" of society that we all supposedly collectively reward for doing what essentially amounts to nothing, productively. Think of others, not just yourself. But that's what capitalism is all about isn't it?

Re:Of course they are. (0)

Anonymous Coward | about 10 months ago | (#46296309)

You, sir, have my vote!

Re:Of course they are. (1)

swillden (191260) | about 10 months ago | (#46296427)

At today's minimum wage, astronauts, brain surgeons, and the President of the United States should be making about $60K a year, and it should only go down from there.

Heh. Make that the law and you'll see all highly skilled labor leaving the country. There's a LOT more than 4X difference between what a neurosurgeon and a fry cook contribute to society.

Bailout (1)

andy1307 (656570) | about 10 months ago | (#46296041)

Remember when the economy went south and google got bailed out by the government for purchasing bad assets?

Ownership, leadership, management (1)

mbone (558574) | about 10 months ago | (#46296049)

DavidHumus notes "Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

Because ownership has been replaced by control, and leadership has been replaced by management.

probably so... (1)

emagery (914122) | about 10 months ago | (#46296057)

Pay should reflect the good a person has done... a tech CEO could potentially have invented something that has changed the face of the world for the better, and I am happy for them to have benefitted from that (this applies less or potentially not at all to later CEOs who simply take the position as given them by money-only boards of directors and/or shareholders.) Bankers, though... it's a real stretch of the imagination to see them has having done anything other than a modest good at their broadest, and thus should incur only modest pay to match that.

Re:probably so... (1)

SuricouRaven (1897204) | about 10 months ago | (#46296187)

The financial industry doesn't achieve anything good directly. Their utility comes from what they allow other industries and individuals to do.

Re:probably so... (1)

krups gusto (2203848) | about 10 months ago | (#46296265)

but what about "financial innovation?"

Yes they are... (0)

Anonymous Coward | about 10 months ago | (#46296071)

..but the real (more important) question is can anything be done about it? the answer is NO, at least NOT without complete global agreement, which is something that all nations have never really done.

The problem is if you try to artificially curb their salaries/bonuses they will just get up and move to some other nation where they don't.
Also for politicians it is political suicide to propose such salary/bonus caps because "Who is your daddy?"

There was an vote in Switzerland a while back to do this, (1:12 - CEO cannot be paid more than 12 times the lowest salary) it didn't get voted in because of the fear that the multinationals would leave the country.

Yes, but with a caveat (3, Insightful)

brunes69 (86786) | about 10 months ago | (#46296083)

CEO pay in general is too high I agree.

But I find it easier to stomach Silicon Valley CEO pay for a reason - they are producing an actual product whereas investment banks do not - they actually harm the economy, they don't help it.

http://en.wikipedia.org/wiki/F... [wikipedia.org]
http://www.huffingtonpost.com/... [huffingtonpost.com]

Furthermore, most Silicon Valley CEOs are either founders of the companies or were involved from an early phase. They put a lot of blood and sweat into these companies over the years. They are not just MBAs flown in for a couple of years to later on bail with golden parachutes when things get rough.

http://en.wikipedia.org/wiki/F... [wikipedia.org]

because ceos arent paid for their work. (2)

nimbius (983462) | about 10 months ago | (#46296095)

a CEO arguably isnt an employee anymore. the position of CEO is no different than the badge on an expensive luxury sedan or the star on your christmas tree. A CEO's competitive salary is directly proportional to the level of success you wish to project to the markets at large. the CEO, much like the badge, exists to be stroked and admired for its performance and implied success. And once you come to invest in it, rarely do you accept negative criticism. Heres an example: Ed Lampert, the CEO of Sears and KMart, nearly bankrupted both companies on numerous occasions. he was arguably the worst CEO on the face of the planet, with the exception of maybe Albert J. Dunlap who was nicknamed "the chainsaw." (or hell, lex luthor) Both CEO's were paid in excess of 2 million dollars per year. Now you might say, "but lampert insists his new salary is only a dollar a year!" and while this might be true, Sears fully insists he is available to earn up to 4.5 million dollars in bonuses a year (cited in a 2013 AP Article.)

so yes, if you consider the CEO a real employee (let alone a real person) just like you and me, then she/he is stratospherically overpaid.

Stock is not money. (1)

eggstasy (458692) | about 10 months ago | (#46296099)

You have no guarantee of deriving any value from a payment made in stock. As per TFA Schmidt's stock vests in 4 years. In 4 years, he might not even be alive. Google's stock value could drop 1000% (dot com bust, anyone?). And you can certainly not sell immense amounts of stock in one go, or you'll drive the price down.

Profits should go to stock holders (1)

cyberspittle (519754) | about 10 months ago | (#46296141)

When we have wolves guarding the sheep, what do you expect. The stockholders should get priority to all profits.

NOT CEO (1)

Outtascope (972222) | about 10 months ago | (#46296151)

Executive chairman. And the idiot can't even do simple math to divide his is unvested equity allocation over 4 years before compairing it to the lowly yearly income of the average CEO. That article is a load of horseshit. Sure, one could argue that he makes too much. But Schmidt didn't bankrupt my dad. So there's that.

Perspective:Inside Cisco's eavesdropping apparatus (0)

Anonymous Coward | about 10 months ago | (#46296183)

Perspective: Inside Cisco's eavesdropping apparatus

April 21, 2003 4:00 AM PDT

http://news.cnet.com/2010-1071... [cnet.com]

By Declan McCullagh

        "Cisco Systems has created a more efficient and targeted way for police and intelligence agencies to eavesdrop on people whose Internet service provider uses their company's routers.

        The company recently published a proposal that describes how it plans to embed "lawful interception" capability into its products. Among the highlights: Eavesdropping "must be undetectable," and multiple police agencies conducting simultaneous wiretaps must not learn of one another. If an Internet provider uses encryption to preserve its customers' privacy and has access to the encryption keys, it must turn over the intercepted communications to police in a descrambled form.

        Cisco's decision to begin offering "lawful interception" capability as an option to its customers could turn out to be either good or bad news for privacy.

        Because Cisco's routers currently aren't designed to target an individual, it's easy for an Internet service provider (ISP) to comply with a police request today by turning over all the traffic that flows through a router or switch. Cisco's "lawful interception" capability thus might help limit the amount of data that gets scooped up in the process.

        On the other hand, the argument that it hinders privacy goes like this: By making wiretapping more efficient, Cisco will permit governments in other countries--where court oversight of police eavesdropping is even more limited than in the United States--snoop on far more communications than they could have otherwise.

        Marc Rotenberg, head of the Electronic Privacy Information Center, says: "I don't see why the technical community should hardwire surveillance standards and not also hardwire accountability standards like audit logs and public reporting. The laws that permit 'lawful interception' typically incorporate both components--the (interception) authority and the means of oversight--but the (Cisco) implementation seems to have only the surveillance component. That is no guarantee that the authority will be used in a 'lawful' manner."

        U.S. history provides many examples of government and police agencies conducting illegal wiretaps. The FBI unlawfully spied on Eleanor Roosevelt, Martin Luther King Jr., feminists, gay rights leaders and Catholic priests. During its dark days, the bureau used secret files and hidden microphones to blackmail the Kennedy brothers, sway the Supreme Court and influence presidential elections. Cisco's Internet draft may be titled "lawful interception," but there's no guarantee that the capability will always be used legally.

        Still, if you don't like Cisco's decision, remember that they're not the ones doing the snooping. Cisco is responding to its customers' requests, and if they don't, other hardware vendors will.

        Cisco's Internet draft may be titled "lawful interception," but there's no guarantee that the capability will always be used legally.

        If you're looking for someone to blame, consider Attorney General John Ashcroft, who asked for and received sweeping surveillance powers in the USA Patriot Act, along with your elected representatives in Congress, who gave those powers to him with virtually no debate.

        I talked with Fred Baker, a Cisco fellow and former chairman of the Internet Engineering Task Force (IETF), about his work on the "lawful interception" draft.

        Q: Why did Cisco decide to build "lawful interception" into its products? What prompted this?
        A: Cisco's customers, not just in United States but in many countries, are finding themselves served with subpoenas to mandate lawful intercept functionality. Cisco received requests from its customers for this capability.

        When I found out about the project, I asked to be involved because I wanted to ensure that it was done in a manner that was as close to balanced as I could get. From an engineering perspective, the easiest thing is to give everything to law enforcement and let them sort it out. But I wanted to do better than that.

        When was that?
        The actual development of this document started probably seven to eight months ago.

        What was the reaction of the Internet community and the IETF after you released the draft?
        I've seen very little reaction so far. We have been contacted by Verisign, with which we had an NDA relationship. They said, "We'd like to work with you on this." That's about all we've had. John Gilmore (of the Electronic Frontier Foundation) posted comments to an IETF mailing list. He wanted to ensure that the capability would be as difficult to use as possible.

        When will Cisco's customers be able to buy "lawful interception" products or an upgrade?
        We haven't yet announced anything. Any product that a service provider is likely to purchase will have an option to provide lawful interception. That's not for all of our products but for a fairly broad subset.

        We're in the process of doing early field trials on that capability. In most cases it's a software upgrade. What we're doing is putting the capability in a separate image so you know what you're getting when you get it. Under U.S. law, if you have that ability, you could be required to use it. Our service provider customers have asked us not to put it in the standard image, so that they can't be forced to use it.

        How much will it cost?
        We haven't announced that. There was some discussion at some point about putting in a nuisance fee.

        What percentage of your customers who have asked for "lawful interception" capability are within the United States?
        We have service provider customers in a number of countries that have asked us for it. Some have been more insistent than others.

        Do you have any moral problems with helping to make surveillance technology more efficient?
        I have some moral and ethical issues, but I think quite frankly that the place to argue this is in Congress and in the courtroom, not a service provider's machine room when he's staring down the barrel of a subpoena.

        There are two sides. One is that Cisco as a company needs to let its customers abide by the law. The other is the moral and ethical issues. There are two very separate questions.

        The current draft does not include an audit trail. Could you do that by having your equipment digitally sign a file that says who's been intercepted and for how long? That could be turned over to a judge. It could indicate whether the cops were or weren't staying within the bounds of the law.
        I'm not entirely sure that the machine we're looking at could make that assurance... In fact, the way lawful interception works, a warrant comes out saying, "We want to look at a person." That's the way it works in Europe, the United States, Australia and in other western countries. The quest then becomes figuring out which equipment a person is reasonably likely to use, and it becomes law enforcement's responsibility to discard any information that's irrelevant to the warrant. That kind of a thing would probably be maintained on the mediation device.

        Who controls the mediation device?
        The Internet provider. The mediation device picks out the subset that relates to a particular warrant.

        A few years ago (in RFC 2804) the IETF rejected the idea of building eavesdropping capability into Internet protocols. The FBI supported the idea, but the IETF said, no way. You were chair of the IETF at the time. How do you reconcile your proposal with the decision made then?
        I thought that what the IETF decided to do was actually the right thing to decide. What it said is that the IETF would not modify protocols that were designed for some other purpose in order to support lawful interception.

        Will you discuss this at the next IETF meeting in Austria in July?
        We're hoping for community review. If people see any problems with what we're doing on a technical level, we're all ears. We want to produce the best possible capability in terms of security and the capability required.

        Have you had requests for this capability, directly or indirectly, from government agencies?
        Yes and no. We got the request from our customers. The laws relate to the ISPs, which are our customers. Certainly, if we get a request from our customers that we can't support, there are penalties that accrue.

        We've had direct contact with the FBI and other agencies. When I was in Holland I (spoke at a conference with the head of the equivalent of the country's Central Intelligence Agency). The fact that he came out and said something made the 8 o'clock news. I had a meeting with him and some of his people a few days later to figure out what he wanted and what he intended to do with this. As an engineer I wanted to understand a customer's problem.

        We've had discussions with government agencies, but (they're generally not) asking us to build a product. They do that with ISPs, who then come to us.

        What other companies are going a similar route?
        We're a little bit more open than everyone else. It really wouldn't be appropriate for me to talk about other companies. It's not like we're coming out and saying, "Hey, this is the reason you should buy a Cisco router." This is something we're doing because our customers want it.

        What do you think of governments with scant respect for privacy rights using "lawful interception" technology to become more efficient eavesdroppers? Do you ever stay up late at night worrying about what they might do with it?
        Of course I do. But that problem is the reason I got involved. We have some capabilities in some of our equipment that will allow you to take all the traffic that goes across an interface and send it to another interface. Right now that is used in some cases as a lawful interception technology.

        When we first started talking, some engineers said, "Let's turn this on and use that." I said, "Heavens no, if we can narrow the range of information, let's do it." Let's let our customers meet their requirements in as privacy-protecting a way as possible. So yes, there's a conflict, but the conflict is why I got involved.

        Biography
        Declan McCullagh is CNET News.com's chief political correspondent. He spent more than a decade in Washington, D.C., chronicling the busy intersection between technology and politics. Previously, he was the Washington bureau chief for Wired News, and a reporter for Time.com, Time magazine and HotWired. McCullagh has taught journalism at American University and been an adjunct professor at Case Western University."

        declan.mccullagh@cnet.com
        http://news.cnet.com/2016-1071... [cnet.com]
        http://news.cnet.com/Perspecti... [cnet.com]
        http://www.epic.org/ [epic.org]
        http://newsroom.cisco.com/dlls... [cisco.com]
        http://www.ietf.org/ [ietf.org]
        http://www.faqs.org/rfcs/rfc28... [faqs.org]
        http://www.mccullagh.org/ [mccullagh.org]

= Archived Fair Use / Important Articles Shouldn't Disappear!
= OLD ARTICLE but it still RINGS TRUE today!

Control of information (2)

EmperorOfCanada (1332175) | about 10 months ago | (#46296201)

Quite simply the CEO controls the bulk of the information flowing to and from any groups such as the board of directors, the shareholders, the "executive compensation committee". etc.

Basically you have two factoids at play: One is that the CEO and those immediately surrounding them often even control such things as the candidates for board of directors election and those on the executive compensation committee. So there you have quite a bit of bias. Then after that you have literally nobody above the CEO. In theory board of directors answer to the shareholders and the CEO answers to the board but if the shareholders don't pick who is nominated for the board and the board is owned by the CEO then the CEO pay is limited to just how greedy he thinks he can be; not limited by other factors such as actually deserving his pay.

So when you are being so foolish as to try and find a correlation between CEO pay and their performance then you are wasting your time. The only correlation should be between their pay and a combination of their level of narcissism and their level of psychopathy.

What this quite simply calls for is that shareholders need to have vastly more influence on who is nominated to a corporate board. Another thing that this screams for is a relationship between the typical pay within a company and the top executive pay. Quite simply the higher this ratio then the higher the taxes should be on the top executives. This way you can exploit the greed of the top executives in that they will rationalize paying the typical employee much more so as to lower their personal tax burden.

No... (0)

Anonymous Coward | about 10 months ago | (#46296203)

Else they would make less money.

If you don't agree, buy some stock in a particular company and use your voting rights to express your concerns.

Sizable chunk of change (0)

Anonymous Coward | about 10 months ago | (#46296205)

I know one thing for sure: Mr. Schmidt wouldn't care to play the Powerball.

They deliver different things (1)

Xordin (66857) | about 10 months ago | (#46296245)

Google has had a huge positive influence on people's lives the last decade. Search, Android, Maps... wow. They took a lot of real risk and made the right choices.

Banks are basically part of government. I'm not quite sure what JP Morgan does, but I don't think they made many people's lives better. They also don't take any real risk (they're government backed, after all) and ... they did not make quite the right choices.

The numbers are too large, but I do not doubt that Google's number should be larger.

Corruption (1)

Flammon (4726) | about 10 months ago | (#46296247)

Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?

Corruption. It's really that simple and when it comes to big banks, the fascistic kind comes to mind.

Insanely (1)

whitroth (9367) | about 10 months ago | (#46296273)

Not quite 20 years ago, I heard Robert Reich on the radio ask one simple queswtion: what does a CEO do, or bring to the table, that the guy under him - the president, or whatever - does not? Education? Experience? (If you say "vision", I'm going to shove your idiot smartphone down your throat.)

In that case, why is he worth 10 times what the other guy makes?

Don't give me "but the company make so much..." Consider Jamie Dimon, of BoA, who spent bilions and billions of dollars to settle lawsuits from the DoJ (without, of course, ever admitting culpability), and he got a *massive* raise.

Either he knew what was going on with the subprime crap, in which case he should be not just fired, but defenestrated, or he didn't, in which case he should be fired, and sued for all his pay back.

No. A good part of it are the tax laws, and the massive use of bonuses (which are treated differently than salary raises) and stock options. As a major US newspaper noted in the late nineties, "who's going to say that CEO's aren't downsizing until the stock market stops rewarding them for doing so", never mind what destruction it wreaks to the company (since they'll move on soon enough - look up Frank "scumbag" Lorenzo and Eastern Airlines).

And what, pray tell, do any of them do that's worth 10, 20, 50 times what the President of the United States gets paid ($400,000/yr, no stock options, no bonuses)?

                    mark

Re:Insanely (2)

geekoid (135745) | about 10 months ago | (#46296507)

Vision is a legitimate answer. A strong vision of what they want a company to be is needed.
Now, very few CEOs actually have a vision, or a plan to make their vision come to fruition, but that's a different issue.

Insurance Cost (0)

Anonymous Coward | about 10 months ago | (#46296279)

The really bad thing is that the general public has to pay if one of the banksters doesn't do his work carefully, and these are the costs I do not want to pay.

No, The bigger question is... (1)

Sigmon (323109) | about 10 months ago | (#46296289)

Why is it any of my business what corporation X pays their executives - save that I am a stock-holder of that company.

Re:No, The bigger question is... (1)

geekoid (135745) | about 10 months ago | (#46296431)

Because the motivation for bonus impacts you, even you you aren't a share holder.

When a company makes a move that is a long time loss, and will cause financial instability in an entire market, but garners a 100 million dollar bonus to a CEO based on the immediate shorter returns it's a bad thing.

How does this happen? (1)

paiute (550198) | about 10 months ago | (#46296305)

Who sets the executive compensation?
Who hires the ones who set this compensation?

Creation versus leeching (1)

linear a (584575) | about 10 months ago | (#46296321)

Because the finance system has grown into a gigantic leech that pulls resources from the rest of the economy? The capital creation and management part seems to have become rather a sideshow for Wall Street. Because tech companies create new things that people want?

Re:Creation versus leeching (1)

geekoid (135745) | about 10 months ago | (#46296387)

Like windows 8!

YES (0)

Anonymous Coward | about 10 months ago | (#46296323)

And the bastards like to outsource their IT department too! Outsourcing to the max 70%(out) 30%(in) in going to bite them in the ass. They have no clue how many times we clean up what the outsourced team breaks. We haven't complained because it's going to be our dead man code. Our ethics are too high to write dead man code, but we will not inform upper management how many times we have cleaned up the outsourced team's mistakes. This way if we are all gone shit will hit the fan, and it will be ethical. Right now the writing is on the wall. 97% SLA when we were outsourced 30%.. now we are at 70% and the SLA compliance is free falling.

Someone thinks they're worth it (1)

randomErr (172078) | about 10 months ago | (#46296337)

If the market couldn't bare it they wouldn't get paid that much. If you don;t like I would say invest in alternative technology and services or create your own.

Big,Old, Money (1)

Jim Sadler (3430529) | about 10 months ago | (#46296363)

In banking certain executives are sought out due to their position in life. For example if you are from family with great wealth and have numerous contacts with other very wealthy people and an impeccable background you will be highly paid. It is the type of thing at which a person can pick up a phone and make two or three calls and put together a multimillion dollar investment pool for a project. If such an individual sees a hot deal and is willing to put a few million of his own money in the pool it is easy to get his social contacts to do the same. Implied in that situation is that the executive must have leisure time and spend that time in the same resorts, yacht clubs, golf clubs etc.. His kids will be in the same exclusive private schools as their children. In order to be in this position he actually must live a very wealthy lifestyle so that his contacts remain frequent and firm. It is the classic case of money being drawn to money. It excludes normal people.

Bonuses should be tied (1)

geekoid (135745) | about 10 months ago | (#46296377)

to a percentage of income and applied at everyone at the company. CEO get a 500% bonus? everyone gets a 500% bonus.

Negotiation (1)

Aero77 (1242364) | about 10 months ago | (#46296399)

'Deserve' and 'Fairness' are imaginary concepts. People get paid what they negotiate. Business people understand this and this is why they get such 'unfair' compensation that they clearly don't 'deserve'. If you want to paid what you want, instead of what you 'deserve' or what is 'fair', learn to negotiate or get an agent to negotiate on your behalf.

minimum.. (1)

h8sg8s (559966) | about 10 months ago | (#46296445)

How about minimum wage for professional athletes and actors? Sound crazy? So does trying to cap CEO pay. The market works, but many who are unwilling or unable to participate in it are unhappy with it. Human condition and all that..

What is a person worth? (1)

PhilHibbs (4537) | about 10 months ago | (#46296447)

Linking pay strictly to company performance in an absolute way isn't rational. Let's approach it from the perspective of "what would happen with or without this person". If the right CEO would make the difference between a company earning $12B and $13B, then that person is worth a billion. If a CEO makes the difference between a company earning $17B and $17.1B, then they are only worth $100M. The company itself may be a bigger company, but if it's a company that is easy to run and pretty much rakes in the money by itself with no real effort, then the CEO is not really worth spending a huge amount on if there is not much scope for building up the company to be even bigger. Of course this is a simplified and exaggerated set of circumstances, but the principle is: does this person make a big difference to the company's bottom line? They are worth a portion of the difference that they make, not an absolute fraction of the company's profits.

Google has a two-tier stock scheme (1)

Animats (122034) | about 10 months ago | (#46296479)

Google has two kinds of stock, A shares and B shares. A shares get one vote. B shares get 10 votes. The founders have all the B shares. Facebook has a similar setup.

The NYSE used to prohibit multiple kinds of stock for listed stocks, back when the NYSE had more clout. (The exception was Ford, which was grandfathered in. Ford has a two-tier stock scheme that has kept the Ford family in control for a century. That's why Ford didn't go bankrupt when GM and Chrysler did. A bankrupcy would erase that deal.) But the NYSE caved a few years ago. Now it's common with tech issuers.

Load More Comments
Slashdot Login

Need an Account?

Forgot your password?