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06.22.06, 05:53 PM #1
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CEOs earn 262 times pay of average worker
CEO's earn 262 times pay of average worker
NEW YORK (Reuters) - Chief executive officers in the United States earned 262 times the pay of an average worker in 2005, the second-highest level in the 40 years for which there is data, a nonprofit think-tank said on Wednesday.
In fact, a CEO earned more in one workday than an average worker earned in 52 weeks, said the Economic Policy Institute in Washington, D.C.
The typical worker's compensation averaged just under $42,000 for the year, while the average CEO brought home almost $11 million, EPI said.
In recent years, compensation has been a hot issue with shareholders who have been bombarded with news stories about chief executives who are given multimillion dollar bonus and pay packages even if shares have declined.
For example, the chief executives of 11 of the largest companies were awarded a total of $865 million in pay in the last two years, even as they presided over a total loss of $640 billion in shareholder value, a recent study from governance firm the Corporate Library, found.
In 1965, U.S. CEOs at major companies earned 24 times a worker's pay. That ratio surged in the 1990s and hit 300 at the end of the recovery in 2000, according to EPI.
CEO pay is defined by the sum of salary, bonus, value of restricted stock at grant and other long-term incentives. Worker pay is hourly wage of production and nonsupervisory works, EPI said."Viking - last to sleep, first to rise, last to leave, that's how the Nords of old rocked the house." ~ timmac in the 'Texas Linkers' thread talking about yours truly. :-)
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06.22.06, 06:11 PM #2
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whoa.
They also work 80+ hours a week.
The biggest risk in the company is on their shoulders.
...If a company is floundering (say Chrysler Corp of the late 1970's) and a new CEO comes in and turns the company around saving a multitude of jobs/pensions, and increases profit and equity in a handfull of years...then I have no problem with them getting this type of compensation....which by the way according to Federal Law no salary can exceed $1 Mill/year...most of their money comes in stock options...which if the company doesn't turn around ...the stock either goes down in price, or doesn't move...and BTW stock options is something they pay for....say the are offered stock at $30/share, and it is currently trading at $20/share on the market...well the company has to improve to increase it's market value....that is 100% on the back of the CEO."Always hopeful, yet discontent,
He knows changes aren't permanent
But change is!"
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06.22.06, 08:05 PM #3
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03.02.20 @ 01:26 PM - Likes (Given)
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Originally Posted by wombattt
-TVH-
There seems to be some perverse human characteristic that likes to make easy things difficult. -Warren Buffett
If there must be trouble, let it be in my day, that my child may have peace. -Thomas Paine
What is government itself but the greatest of all reflections on human nature? - James Madison
Any man who thinks he can be happy and prosperous by letting the Government take care of him better take a closer look at the American Indian. - Henry Ford
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06.22.06, 08:22 PM #4
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I'll concur with wombattt's post. Ted, the people to blame in your situation (with the limited knowledge I obviously have with your situation) are the owners/board of directors for hiring the guy in the first place. In hindsight, yeah he may not be worth a hill of beans, but that's always 20/20 so goes the cliche'.
The article here is directed towards the appeal of the average american workforce.
I think if you want to make CEO money then you need to target that as your career path. If you don't then be happy with what you make or move. The only way to get ahead in this world financially through work is to be an executive, an owner, or a salesman. Any other position out there will pay only what the market will bear. Period. That's america. The prices for labor are set and if you don't want it, somebody else will take it for the same price or less and still get the job done for the folk that make the REAL money. That's just the way it is, and if you want more then you need to take more risk, and put your future and your earning potential in to your own hands and not somebody elses. Those three listed above are the only way to do that in my eyes (in most cases).sheepa latta peepah dabba looka foh a moopy
Gunter glieben glauchen globen
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06.23.06, 06:03 AM #5
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It's all who you know, and how much ass you can kiss. THAT's the American way. No one earns earns their executive titles anymore.
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06.23.06, 06:10 AM #6
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He who knows how will always work for he who knows why.
Know Roth
Know Van Halen
No Roth
No Van Halen
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06.23.06, 06:50 AM #7
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Originally Posted by seenbad
I can have more understanding for a person like Bill Gates making billions because he actually created a product and his company. The CEO's in place for most companies did not. And the CEO's from 20-30 years ago were doing the same things that is expected of them today, keeping a company viable/profitable but with a more realistic compensation as compared with the people doing the work. Why can't everyone profit from a profitable company? Greed at the executive level is why and it's a buddy system that scratches each others back so the same piece of crap CEO is hired over and over because the people doing the hiring get a perk from it too. Even with stock holders you have a board of directors making the big decisions.
Free trade and capitalism, I'm all for it but there is nothing that says things have to stay the same. Adjustments constantly need to be made and right now, it's reining in CEO compensation. The market is tired of bearing this burden.
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06.23.06, 07:24 AM #8
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These guys are under a lot of pressure to perform which is why you see things like the bank executive that went looney and killed his kids. The same pressure that drove him nuts is the same pressure that made him the big bucks.
The discrepancy between the average worker and the CEO's still bugs me though. In 1965, the average CEO made 26 times what the workers made and now it is 262 times? You want to know why they are shipping work overseas for mere pennies an hour? It's greed, pure and simple.
Given that they show the average worker makes just under $42,000 a year (Not in this part of the country they don't. $10-$11 an hr. is pretty decent money around here), multiply that by 26 and you come up with $1,000,000 a year. That should be plenty of compensation for the job that they do.
That and watch and see what happens when these guys fuck up big time. Do they get canned unceremoniously and have to get by on a paltry unemployment check like the rest of us? No they don't. They get HUGE severance packages that I could probably live the rest of my life on.
So should the wage of the average worker be raised to be more fair? Let's go back to the 1965 numbers of CEO's making 26 times what the worker made, but let's use the current CEO's salary and divide by 26. Using 1965 numbers as a reference, the average worker in the U.S. should now be making over $400,000 a year. Inflation would go through the frickin' roof.
So, in reality there's no way to change it. It's a catch-22. The CEO's are making the money and probably wouldn't want to work for a paltry $1,000,000, and paying the workers more isn't a reality either, so we're just stuck with it the way it is."Viking - last to sleep, first to rise, last to leave, that's how the Nords of old rocked the house." ~ timmac in the 'Texas Linkers' thread talking about yours truly. :-)
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06.23.06, 08:15 AM #9
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The biggest flaw IMO is that the CEO no longer has any risk. They are guaranteed huge bonuses and huge severance payoffs whether the company performs or goes in the toilet. They essentially claim the rewards for their successes but have no risk for losses. That's not the "American Way", that's pretty much socialism. You want the reward? Then take a risk.
There's also something inherently wrong in the system when someone like Jim Kilts/Kitts (can't remember spelling) can come in to a company like Gillette, do a decent job turning it around, and then make an absolute killing by selling the company out and costing thousands of workers their jobs, all under the guise of "shareholder value" - and do it repeatedly. There's just something that strikes me as wrong when some schlub investor has more control of/say in/value to a company's destiny than the product or the workers.
Not saying scrap the system, or the sky is falling, but somehow the system has been skewed a bit. Things that should matter just don't. I guess CEO's should be tasked with doing what's best for the company, meaning its customers and its workers, with the shareholders a distant third. If I invest in so and so, then I invest in that concept, and really shouldn't have a right to insist that the company do whatever it takes to maximize my investment, everything else be damned. Right now shareholder value seems to be the almighty God of decision making, and IMO that's short-sighted, and something is getting lost there.Last edited by jrk5150; 06.23.06 at 08:15 AM.
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06.23.06, 08:17 AM #10
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Excellent post IED.
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06.23.06, 08:52 AM #11
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Originally Posted by IED
There is a risk- Sarbanes Oxley- they have to vouch for their earnings reports each quarter, whether they know of any wrong doings or not- they are responsible. A public company is owned by its shareholders- they have certain rights that are guaranteed. If you want workers more involved, then don't take a company public, or revert back to being a private company
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06.23.06, 09:02 AM #12
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Originally Posted by weesfreewheelin
A factory owner buys a very expensive machine and one day it breaks down. He calls in an outside expert who looks at the machine for two minutes, pulls out a hammer and hits the machine. The machine springs into life.
When presented with the expert's bill the man is horrified.
"£10,000" he screams, "How can you justify this?"
"£1 for hitting the machine, £9,999 for knowing where to hit." replies the expert.Last edited by graeme; 06.23.06 at 09:02 AM.
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06.23.06, 09:13 AM #13
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Originally Posted by ZORBA5150
This also ties in to the longevity of CEO's out there. You want evidence that it's broken? Take a look at those numbers. It's scary. CEO turnover is a huge problem right now.
I may be way off, but there is a similar feel to me as being a school superintendent - money is great, but you get stuck in the middle between two masters - the needs of the school (company) vs. the needs of the town taxpayers (shareholders), and then the fucking politicians get involved...
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06.23.06, 12:05 PM #14
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I agree CEO salaries/compensation is way off. My sister works for Albertsons grocery chain and always talked about how they have to cut here and there and everywhere but the CEO is making $28Mil+.
You know whats odd though, nobody ever bitches about what actors make. They don't create anything, very few are uneducated, yet many love to give there opinion about political matters.
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06.23.06, 12:35 PM #15
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Originally Posted by jimmy812
Now, who you know is the most important thing in business. That's why you need to work hard, attend all opportunities to network, and always have a smile on your face. Because somewhere down the line, that person may remember you and think, he seemed like a great guy and I heard great things about him, and they'll hire you and you'll move up. If you sit around like a piece of crap and whine about how underappreciated you are and how much work you have, then you'll be stuck where you are forever. Being a hard worker or ass kisser, causes you to be brought along by your boss who moves up, because you worked harder.
It always amazes me when people complain about what CEOs make. Contrary to the opinions of the masses, most CEOs have worked very hard for very long to reach their position. They work long hours, have extremely busy schedules, and have to be on top of their game all the time. Also, if anyone here who complains about what they make were a CEO themselves, you sure as hell wouldn't be saying, "Wow! I make too much money. I think I'll just give myself a pay cut."Every lowly employee wishes they were a CEO, thinking its so easy and you make so much money. And I bet a lot of CEOs wish the opposite after a while, because the weight and responsibility on their shoulders cannot be nearly rivaled by what some analyst has to do worry about.
"Rehab is for Quitters"
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