Why are executives paid so highly

Discussion in 'Business & Economics' started by Xelasnave.1947, Nov 25, 2016.

  1. Xelasnave.1947 Valued Senior Member

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    I dislike greed.
    Folk getting paid many fold that of an average worker receives should not be tolerated.
    I suppose it is considered too idealistic to complain that each human should consume a portion of resources the same as all others.
    We are intelligent but not so much to say all folk should eat before anyone has seconds.
    Or that all shall be housed before one owns more than one house.
    And so on and on.....
    We behave no different to some animals and yet we think we are so wonderful. Lions share sure but we are human presumably capable of better than a lion.
    And this system causes even those with nothing to wish they could be rich rather as all humans could wish that all are provided for on a fair equitable basis.

    And yet folk who condemn such an approach will say of anyone suggesting equity that such folk understand nothing and just want stuff for free as if that desire were worthy of condemnation many orders beyond the greed of those happy to take many fold what most others take.
    I long for a future where equity as well as the supposed right to equality is held as important.
    Alex
     
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  3. timojin Valued Senior Member

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    What do you think about voluntary homeless people ?
     
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  5. Xelasnave.1947 Valued Senior Member

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    I resist some generalisations and this would be one.
    If they want and need a home I will feel pity.
    If they brought on themselves, spent the rent or mortgage installment on bad or unwise purchases I would feel pity.
    I do think more should be done to look after people who find themselves without a home. I am not one not to care about others.
    I am sort of homeless because I need to be in the city to care for my father and have had to leave my home but it is a small price to pay so I can support my father now that he needs me.
    Alex
     
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  7. joepistole Deacon Blues Valued Senior Member

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    They can be. It doesn't mean they all are. As with everything, there are good directors and bad directors. Some directors are from other companies, but that's not necessarily because they want a cross selling relationship. You can do that without adding people to your board and that would be considered a conflict of interest. I've never seen that happen.

    It's more likely that a CEO would put his friends on his board. He would put people he can control on his board. There are a lot of academics on boards. It's a very good gig for an academic. You can become very rich serving as a board member. You are well paid for very little work. And if you can serve on a few boards, you can make as much as the CEO with little of the work and responsibility. It's a damn good gig if you can get it.
     
  8. Seattle Valued Senior Member

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    2,087
    I look at corporate governance as a separate problem regarding average worker compensation. Whether a CEO or board member is "overpaid" by some metric it really doesn't have much to do with average worker pay.

    Those who would benefit most are shareholders. I don't have an issue with CEO pay as long as the market is involved (which still would keep pay high). The misuse of compensation among cronies is an issue that should be address in an ideal world but again, it isn't going to appreciably affect average worker pay.

    Football players seem "overpaid" but they aren't really. The market does work pretty well in that regard. If they were paid less, the games would be less competitive and the owners would just make more. Ticket prices wouldn't suddenly become markedly cheaper.
     
  9. Xelasnave.1947 Valued Senior Member

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    When I was a young law clerk my master solicitor took me to all the board meetings where he was on the board.
    He said little and I never witnessed any monumental decisions by any board and I recall him saying that as I progressed I should look out to get on as many boards as I could as it as very lucrative.
    Alex
     
  10. Seattle Valued Senior Member

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    2,087
    Yes, they have a place and the board members are often "overpaid" as compared to what the market would probably pay in some cases.

    It doesn't particularly affect worker pay however so it should be more of a concern to a shareholder than to anyone else.
     
  11. Xelasnave.1947 Valued Senior Member

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    I would think if the matter were addressed such that high returns were not the norm then there would probably be no issue with cronies.
    So given the USA is a trillion dollar economy should the CEO, the boss, the potus get paid billions of dollars, using the rational of football players and companies one wonders why potus gets paid so little.
    Should he not be paid more than the CEO of any of the banks, or any company you care to name.
    Alex
     
    Last edited: Feb 12, 2017
  12. Seattle Valued Senior Member

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    Who is Lotus?
     
  13. Xelasnave.1947 Valued Senior Member

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    I don't care how small the pass on effect.
    That is not an issue.
    It is greed and should not be tolerated.
    It is morally wrong that one human can stand in the trough gorging particularly when we are told world resources are finite and we should recycle etc.
    Get all pigs to get out of the trough why is that unthinkable?
    Well because we accept it there is no other reason.
    Alex
     
  14. Xelasnave.1947 Valued Senior Member

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    Potus..
    President of USA.
    I thought I corrected.
    Alex
     
  15. Xelasnave.1947 Valued Senior Member

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    In other words the president heads a trillion dollar operation why is he not paid billions.
    Alex
     
  16. Seattle Valued Senior Member

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    He is a government employee. The market doesn't set his pay. It would be better if he did make more probably as their would be less need to become a paid speech whore in the years after leaving office.

    The Clintons are rich due to the millions they receive for giving "speeches" after leaving office.
     
  17. Xelasnave.1947 Valued Senior Member

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    That should make no difference.
    But you give me an idea.
    Make all CEOs government employees and give them a public servants wage.
    Their job, follow the law, maximise company efficiency, in by 9 am leave at 5 pm, trim all wages not just the workers, fire dead wood seek long term goals for the company they manage.
    Alex
     
  18. Xelasnave.1947 Valued Senior Member

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    So talk is not so cheap.
    A fella wanted me to start on a speaking circuit promised good money, I just had to tell stories and make the audience happy, which would have been easy cause these things are over dinner and drinks.
    But fortunately I could not take myself that seriously.
    My Son did it for a while but gave it in cause he said he felt phoney.
    Anyways when I become ruler of the universe I will change things...maybe.
    Alex
     
  19. Seattle Valued Senior Member

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    You can do that if you socialize (nationalize) the economy. If you don't do that...you can't.

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  20. Xelasnave.1947 Valued Senior Member

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    Agreed.
    But being realistic just because I put forward ideas here there is no certainly that the world will take them on..
    I know they should be accepted and acted upon because they are wonderful ideas.
    But folk hate change so nothing will be done ...well not until I am swept to power... And sometimes I wonder if that will ever happen.
    Alex
     
  21. Seattle Valued Senior Member

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    I feel sure it will happen sometime. You might have to move however to Venezuela or Cuba but with airline tickets as cheap as they are (due to deregulation)

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    I feel that you will be in power shortly.

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  22. iceaura Valued Senior Member

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    Last I heard, when Bill left office they had legal bills of 12 million dollars outstanding, from the impeachment. So, yeah, they hustled. And that hurt the country.

    The attempt to destroy the Clinton Presidency was personal as well as political. And no, it wasn't good for the country - in its aftermath either.
    They are currently overpaid, as a class, from an abstract economic pov (what a free and functioning market would set as their pay as a class), at least 5X and probably closer to 12X.

    Obviously market forces are not doing that.

    In Austin, MN, the union at the meatpacking plant (Hormel) was broken some years ago -the money saved in reduced wages was distributed as executive compensation of various kinds. Straight transfer.
     
  23. wellwisher

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    5,103
    What many people fail to realize is when you hire employees, there is a formula used, in terms of the salary and benefits, being a percent of what the employee earns the company in terms of added value. This puts a limit on how many people you can hire and still turn a profit. Not all positions earn the company the same amount of money, therefore the wage and benefits will not be uniform for all positions. Executives get paid high salaries, not because of a good ole boy network, but because those positions add the most value, with their compensation connected to the same basic formula.

    As an example, say you own a factory, with people working along a car assembly line. Each person, on the line, gets paid based on the value added. This is calculated based on what you can sell each car for, and the number of hands that touch the car on the line, and the level of skill at each step, where each adds different value. Next, you have a foreman, whose job is to make sure a portion of line, maintains production and quality. This adds even more value. Since he is in charge of a dozen people, his value is compounded based on the margins he adds to all twelve people. As you go to the top, which may be five or more layers, the CEO, may be responsible for 10,000 people. His ideas will add tiny margins to value of 10,000 people. The value added multiples very fast allowing higher compensation.

    Selling also works this way. Those in the field, selling, make a salary and commission on sales. After so many years of good company service, adding value through sales, a good salesman might get promoted to regional sales director. Now that person will be in charge of a group of sales people, who will all give you a cut. This cut is all dependent on you making sure your team is meeting the business sales goals, so all the money adds up for you, your team and company profits. The prestige of your position can often help you team leverage more sales.
     

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