How does CEO pay go Through the Roof without price increases in products?

[Rshermr]

There's an incredible amount of factors we would need to discuss, but at the end of the day the US is home to a great deal more of the 500 largest companies in the world than any other country and therefore it's not surprising that the overall CEO pay (on average) is much higher.

So, we have your opinion. Which is that because there are fewer companies in france with over some value of revenue than in the US, then the french ceo should earn less if his company is of similar size. I am sure that makes sense to you. But not to a rational person.

Maybe this will help you understand the exact issue:
View attachment 28306

Here is the thing, me boy, it is not that US CEO pay is just greater than any other nation as compared to the average worker within his company, but that it is MUCH, MUCH, MUCH greater.
And, unlike what you may believe, the stockholders of a company generally have no say in executive compensation. That is between the CEO and the Board of Directors.

Where did those numbers come from? How were they derived? Is that avg ceo to avg worker or wtf are they?

Really, me boy. It is not my job to educate you. It is simple math, for christ sake. You can find the subject all over the net. The numbers are not uniform from survey to survey, but the simple truth is that all show the US CEO on average has a higher earnings to average worker earnings by a factor of at least 10 to the next closest country.

How do they do the calculation??? You must be kidding, right???? It says ceo to average worker earnings. Did you need to know what was the denominator and what was the numerator??? Or what ceo earnings are????? Or what worker earnings are???? Or what average is????

 

[Rshermr]

"Me boy", lol? I thought this was two adults having a conversation. If you want to take this down to a child's level let me know and I'll duck out.

I understand globalization is occurring everywhere (I never disputed that), my claim was that the US is currently home to more of the largest 500 companies in the world than any other country. And, the larger the company, the greater disparity between CEO and worker.

You already ducked out. Your argument is spacious. Go back to the comment I made about numerators and denominators. Makes no difference how many are larger than whatever. If you cared to look, you would find that other countries are all well represented in the fortune 500 international list. Sorry you have such a problem with this. The US has 132 companies in the global 500. That leaves 368 in other nations. Try Japan on for size, and explain why the ceo pay there is only 11 times higher than average worker compensation, while the us ceo makes over 400 times more. And why the pay in Venezuela is 50 times workers, ranking number two, while japan is at 11 times workers pay. Get the problem with your argument???

The US has 132 companies in the global 500 - 26%. There's maybe 190 countries in the world and ONE is home to nearly a quarter of all of the world's largest companies.

You're damn right that's going to skew things.

Let's start by figuring out the % of country #2 and go from there. Do you know it?

It is china. And it is a poor example. Go find out yourself. CEO's there are paid WAY less as a percentage of their workers pay. And that is even though the workers there earn very little compared to most nations.
You are making nothing but a fool of yourself. But nice try.

 

[oldfart]

... CEO's egregious pay increases...

Wait a sec, other people running their own businesses have agreed to pay their employees an agreed compensation, and out of nowhere you've suddenly taken it upon yourself to proclaim that the amounts are outrageously bad and offensive. So who asked you? I mean, why is it any business of yours what others are happy with and since when did you get to be in charge of the pay reduction police?

Because inadequate corporate governance is a major problem in America. And corporate governance is an issue for every American because financial intermediaries like pension funds, insurance companies, and RICs own the majority of common stock in America, but rarely perform their fiduciary duty and let management run companies for management's benefit as long as management hits the numbers to make the intermediaries ROI acceptable .

I understand why you don't want to talk about it, but I don't remember you being appointed monitor to determine what can be discussed.

 

[Toro]

...My institution owns a piece of almost every publicly traded company in the US...

--and you have personally purchased on behalf of your institution shares in companies that are being run in a manner you consider outrageously bad and offensive, and now you are participating willingly and intentionally in this deplorable activity. OK, if your institution is aware of and is happy with what you're doing, then I'll assume that they've made their choice and it's none of my business; but at least we're all clear on what we're doing.

The reason I asked is because just I own a few hundred of the 10K companies listed on U.S. exchanges, but since I'm dealing with my own money I can only afford to buy up those companies with a competent management team.

By sheer size, legal considerations and our charter, we must own stocks. So it's not that simple to say everyone has a choice.

We are doing something about it. That's why I can tell you it's poor. Laws and rules that govern articles of incorporation and corporate oversight don't just magically happen out of nothing.

 

[flacaltenn]

So, we have your opinion. Which is that because there are fewer companies in france with over some value of revenue than in the US, then the french ceo should earn less if his company is of similar size. I am sure that makes sense to you. But not to a rational person.

Maybe this will help you understand the exact issue:
View attachment 28306

Here is the thing, me boy, it is not that US CEO pay is just greater than any other nation as compared to the average worker within his company, but that it is MUCH, MUCH, MUCH greater.
And, unlike what you may believe, the stockholders of a company generally have no say in executive compensation. That is between the CEO and the Board of Directors.

Where did those numbers come from? How were they derived? Is that avg ceo to avg worker or wtf are they?

Really, me boy. It is not my job to educate you. It is simple math, for christ sake. You can find the subject all over the net. The numbers are not uniform from survey to survey, but the simple truth is that all show the US CEO on average has a higher earnings to average worker earnings by a factor of at least 10 to the next closest country.

How do they do the calculation??? You must be kidding, right???? It says ceo to average worker earnings. Did you need to know what was the denominator and what was the numerator??? Or what ceo earnings are????? Or what worker earnings are???? Or what average is????

Really me boy........ Not my job wasting time talking like a pirate to folks that post crap numbers they cant or wont defend.. Aye matey, that be a swabs task...

 

[Toro]

... CEO's egregious pay increases...

Wait a sec, other people running their own businesses have agreed to pay their employees an agreed compensation, and out of nowhere you've suddenly taken it upon yourself to proclaim that the amounts are outrageously bad and offensive. So who asked you? I mean, why is it any business of yours what others are happy with and since when did you get to be in charge of the pay reduction police?

Because inadequate corporate governance is a major problem in America. And corporate governance is an issue for every American because financial intermediaries like pension funds, insurance companies, and RICs own the majority of common stock in America, but rarely perform their fiduciary duty and let management run companies for management's benefit as long as management hits the numbers to make the intermediaries ROI acceptable .

I understand why you don't want to talk about it, but I don't remember you being appointed monitor to determine what can be discussed.

Conservatives believe strongly in property rights and that government is generally incompetent. Yet, they reflexively defend the agents of property owners who lobby for laws written by the (supposedly incompetent) government with the money of property owners to deny more control by the owners over their property. It's perverse. But that's because the agents of property owners have convinced conservatives that everything they do is in the interests of property owners when in fact its not always true.

Conservatives confuse agents with owners, and assume that the incentives are always aligned and the laws always and everywhere protect owners from the abuses of agents. Thus, conservatives instinctively jump to the defense of anyone making a lot of money regardless of whether the mechanisms that create compensation packages are aligned with ownership. I have no problem with people making a ton of money, particularly entrepreneurs. Bill Gates made $50 billion? Good for him. But executive compensation has risen far in disproportion to the value executives have created, and it has happened in large part because of the weak linkages in corporate governance in America.

In truth, American companies are, generally, pretty well run. However, the weaknesses in American governance laws, the laxity of passive institutional ownership (who are also generally agents), and the asymmetry of incentives and resources between agents and owners has skewed compensation of agents to excesses that generally occurs nowhere else in the world.

 

[Kimura]

Wait a sec, other people running their own businesses have agreed to pay their employees an agreed compensation, and out of nowhere you've suddenly taken it upon yourself to proclaim that the amounts are outrageously bad and offensive. So who asked you? I mean, why is it any business of yours what others are happy with and since when did you get to be in charge of the pay reduction police?

Because inadequate corporate governance is a major problem in America. And corporate governance is an issue for every American because financial intermediaries like pension funds, insurance companies, and RICs own the majority of common stock in America, but rarely perform their fiduciary duty and let management run companies for management's benefit as long as management hits the numbers to make the intermediaries ROI acceptable .

I understand why you don't want to talk about it, but I don't remember you being appointed monitor to determine what can be discussed.

Conservatives believe strongly in property rights and that government is generally incompetent. Yet, they reflexively defend the agents of property owners who lobby for laws written by the (supposedly incompetent) government with the money of property owners to deny more control by the owners over their property. It's perverse. But that's because the agents of property owners have convinced conservatives that everything they do is in the interests of property owners when in fact its not always true.

Conservatives confuse agents with owners, and assume that the incentives are always aligned and the laws always and everywhere protect owners from the abuses of agents. Thus, conservatives instinctively jump to the defense of anyone making a lot of money regardless of whether the mechanisms that create compensation packages are aligned with ownership. I have no problem with people making a ton of money, particularly entrepreneurs. Bill Gates made $50 billion? Good for him. But executive compensation has risen far in disproportion to the value executives have created, and it has happened in large part because of the weak linkages in corporate governance in America.

In truth, American companies are, generally, pretty well run. However, the weaknesses in American governance laws, the laxity of passive institutional ownership (who are also generally agents), and the asymmetry of incentives and resources between agents and owners has skewed compensation of agents to excesses that generally occurs nowhere else in the world.

 

[expat_panama]

...compensation has risen far in disproportion to the value executives have created...

--and this is where we part company.

To me, owning possessions is basic to human existence and if I create and store wealth then only I can decide whether I should trade it for some manager's time or not. This conflicts with proponents of state ownership of wealth who feel that only the collective can decide what true value is --that the State decides whether I"m allowed to spend how much of my money on which manager.

 

[Rshermr]

...compensation has risen far in disproportion to the value executives have created...

--and this is where we part company.

To me, owning possessions is basic to human existence and if I create and store wealth then only I can decide whether I should trade it for some manager's time or not. This conflicts with proponents of state ownership of wealth who feel that only the collective can decide what true value is --that the State decides whether I"m allowed to spend how much of my money on which manager.

So, you dislike communism. Did you think that had some relation to this thread. I have seen no one who believes in state ownership of wealth, or collectives. Perhaps you had not noticed that communism has failed. Never really had any chance of succeeding. because it ignored human conditions.
Does paranoia exist in your family???

 

[ClosedCaption]

Let me just say...Toro really brought it in this thread. Good info from life experience not theoretical bs

 

[originalthought]

The only way to solve the issues with corporations is to implement free market principles. Corporations are not free market, capitalist institutions. Corporations are licensed and sponsored by the state (socialist and fascist and communist really). They are government backed institutions, not market backed institutions. So when you see corporate CEO pay, you must look to the government and blame them, since they are government backed institutions.
A corporation is as defined: [an association of individuals, created by law or under authority of law.]

 

[Rshermr]

The only way to solve the issues with corporations is to implement free market principles. Corporations are not free market, capitalist institutions. Corporations are licensed and sponsored by the state (socialist and fascist and communist really). They are government backed institutions, not market backed institutions. So when you see corporate CEO pay, you must look to the government and blame them, since they are government backed institutions.
A corporation is as defined: [an association of individuals, created by law or under authority of law.]

Interesting. But stupid. Are they socialist??? Communist. Or Fascist. Do you know what the difference is between those economic/political systems?? Do you know how ceo pay is determined??? Perhaps some links to back up your opinions, though I think that would be problematic
Or, are you simply posting for comic relief???.

 

[originalthought]

The only way to solve the issues with corporations is to implement free market principles. Corporations are not free market, capitalist institutions. Corporations are licensed and sponsored by the state (socialist and fascist and communist really). They are government backed institutions, not market backed institutions. So when you see corporate CEO pay, you must look to the government and blame them, since they are government backed institutions.
A corporation is as defined: [an association of individuals, created by law or under authority of law.]

Interesting. But stupid. Are they socialist??? Communist. Or Fascist. Do you know what the difference is between those economic/political systems?? Do you know how ceo pay is determined??? Perhaps some links to back up your opinions, though I think that would be problematic
Or, are you simply posting for comic relief???.

Communist, Socialist, and Fascist are all the same- there is no individual freedom in each system. They are all about a group of people that control the individual and destroy free markets.

 

[oldfart]

The only way to solve the issues with corporations is to implement free market principles. Corporations are not free market, capitalist institutions. Corporations are licensed and sponsored by the state (socialist and fascist and communist really). They are government backed institutions, not market backed institutions. So when you see corporate CEO pay, you must look to the government and blame them, since they are government backed institutions.
A corporation is as defined: [an association of individuals, created by law or under authority of law.]

Interesting. But stupid. Are they socialist??? Communist. Or Fascist. Do you know what the difference is between those economic/political systems?? Do you know how ceo pay is determined??? Perhaps some links to back up your opinions, though I think that would be problematic
Or, are you simply posting for comic relief???.

Communist, Socialist, and Fascist are all the same- there is no individual freedom in each system. They are all about a group of people that control the individual and destroy free markets.

On some level it is reassuring to know that someone cannot discern any difference between the British Labour Party, Stalin, and Hitler. Anarchism is not dead yet!

 

[Rshermr]

Interesting. But stupid. Are they socialist??? Communist. Or Fascist. Do you know what the difference is between those economic/political systems?? Do you know how ceo pay is determined??? Perhaps some links to back up your opinions, though I think that would be problematic
Or, are you simply posting for comic relief???.

Communist, Socialist, and Fascist are all the same- there is no individual freedom in each system. They are all about a group of people that control the individual and destroy free markets.

On some level it is reassuring to know that someone cannot discern any difference between the British Labour Party, Stalin, and Hitler. Anarchism is not dead yet!

Well, it does allow someone to make up their own definitions. Which, I suppose, is comforting. That way they need not actually have to deal with facts. So simple.

 

[whitehall]

I was having a discussion in another thread where the Repubs (usually) would say you cant pay more than what the current Minimum is because product prices would increase.

According to some estimates CEO pay has increased 800% since the 70's. Where is the $34 Big Mac?

How can we increase CEO pay so much and never see an huge increase? How can CEO's get paid so much and no one worries about product price increases?

Now, why does that all change when you talk about Employees pay? Suddenly if you give employees more money explosions, death and famine will ensue?

Umm, greater sales, better products? Every pension system in the Country is heavily invested in the leadership of private sector CEO's and pensions survived despite the downturn in the economy . How is social security doing?

 

[smileandmobile]

layoff workers thats how

 

[Widdekind]

Considering increasing everyone's wages to $15 an hour who currently makes below that would cost Mcdonalds alone $8 billion

Link?

Here's one: The Real Change In The Cost Of A Big Mac If McDonald's Workers Were Paid $15 An Hour: Nothing <Forbes

your site "spins" the truth. The following words are true:

What limits McDonald’s ability to entirely empty our wallets every time we want a hamburger is that there are other people who will also sell us one. Wendy’s, Jack in the Box, In and Out, there’s a multiplicity of places where we can go to fur our arteries. Which leads to our conclusion on pricing in a capitalist and free market economy. The capitalists charge the absolute maximum they can get away with, that ability being limited by the competition that comes from alternative suppliers.

Thus the price is not determined by the cost of production of an item.

Profits are affected by costs (Profits = Revenues - Costs); Prices are (often) set by the market.

Quibble -- what if the market isn't competitive ?

But, if McDonalds paid $15/hr.; then McDonalds profits ----> negative... McDonalds would go out of business... no more $15/hr...

then, without one competitor, the market becomes less competitive, and sellers can more-easily hike prices (at least a little)

Ultimately, what costs more to make, must cost more to buy

 

[Widdekind]

mathematics supplies your answer

McDonalds sells "75 burgers per second" (Business Insider)

that's several billion burgers per year...

So, the CEO can skim (say) a penny a piece, and make tens of millions of dollars...

"exorbitant" executive salaries, to a few, only increase costs (to make), by pennies per. And, as per my PP, that's costs to the seller (to make), not prices to the buyer...

if CEOs are skimming several cents per burger, then their own corporations are bearing the burden, not customers... they're making McDonalds (say) less healthy and economically competitive, without (directly) affecting customers at all. I.e. they're skimming "from the cash register" behind the counter, not from "people's pockets" in front of the counter.

Quibble -- hypothetically, those corporations could theoretically afford, to reduce prices (to customers) further, w/o having to pay such "exorbitant" salaries. Supposedly, consumers would then begin buying the now-cheaper brand, rewarding the more economically competitive company, with more market share.

Prima facie, their is a popular perception, that corporate economic competition, is not so "cut throat", that pennies, nickels & dimes matter much -- people perceive, that they can pinch pennies, without any real effects. In some circumstances, cp. HBO's Barbarians at the Gate, "exorbitant" executive salaries become causes of consideration, and even contention.

edit -- apparently, "exorbitant" salaries are non-existent, most of the "money" is made in the stock-market "on the other side of town" (wanting worthier words), not in the product market; their incomes come from entirely different sources (see below)

I was having a discussion in another thread where the Repubs (usually) would say you cant pay more than what the current Minimum is because product prices would increase.

According to some estimates CEO pay has increased 800% since the 70's. Where is the $34 Big Mac?

How can we increase CEO pay so much and never see an huge increase? How can CEO's get paid so much and no one worries about product price increases?

Now, why does that all change when you talk about Employees pay? Suddenly if you give employees more money explosions, death and famine will ensue?

 

[Widdekind]

the increase in CEO benefits is LARGELY company EQUITY, not salary that comes from cash flow. A CEO who joins a company should be treated as "an owner" of that company. And to make him a substantial owner, equity is transferred.. No skin off of either the hamburger customers or the other employees salaries.

that's an important point; uncritically accepting your alleged facts (mostly due to equity), then your conclusions are totally true

quibble -- i'm confused; if CEO incomes do derive from dividends... and if dividends skim from corporate profits... then de facto dividends are a "cost" to the company, paid like a "wage / salary to owners"... and, hypothetically, reducing their "wages / salaries / dividends" would cut corporate costs. Then, with lower costs "behind the counter", they could theoretically lower prices "in the store in front of the counter"...

wait wait wait -- stock options, "after the gold dust settles", are expensive costs, paid by corporations, to executives, i.e. the money comes from corporate coffers, and is basically a "bonus". Stock sales would come from the stock-market, "elsewhere in the economy"; stock-options cost the companies (what happens ?? the company must "buy high from the open market, sell low to the CEO, who re-sells them high back to the open market" ?? so, after money is shuffled around, the company has paid the CEO ?)

Stock options
Executive stock option pay rose dramatically in the United States after... 1990 [AD]...

Supporters of stock options say they align the interests of CEOs to those of shareholders, since options are valuable only if the stock price remains above the option's strike price. Stock options are now counted as a corporate expense (non-cash), which impacts a company's income statement and makes the distribution of options more transparent to shareholders...

executives use corporate resources to inflate stock prices before they exercise their options.

Stock options also incentivize executives to engage in risk-seeking behavior. This is because the value of a call option increases with increased volatility (see options pricing). Stock options also present a potential up-side gain (if the stock price goes up) for the executive, but no downside risk (if the stock price goes down, the option simply isn't exercised). Stock options therefore can incentivize excessive risk seeking behavior that can lead to catastrophic corporate failure.