Monday, May 18, 2009
Why are CEO salaries so high?
This article, from before the crash, has some ... interesting ... quotes from some big shot CEOs, e.g.,
Other very wealthy men in the new Gilded Age talk of themselves as having a flair for business not unlike Derek Jeter’s “unique talent” for baseball, as Leo J. Hindery Jr. put it. “I think there are people, including myself at certain times in my career,” Mr. Hindery said, “who because of their uniqueness warrant whatever the market will bear.”
He counts himself as a talented entrepreneur, having assembled from scratch a cable television sports network, the YES Network. “Jeter makes an unbelievable amount of money,” said Mr. Hindery, who now manages a private equity fund, “but you look at him and you say, ‘Wow, I cannot find another ballplayer with that same set of skills.’ ”
This article further summarizes the debate and provides a summary of new research into the topic:
The popular (and populist) perception is that of America's CEOs greedily rubbing their hands together as they approve their own paychecks, and there certainly has been some of that. Others argue that in most cases CEOs are richly compensated because they're so good at what they do.
Several recent studies stake out a middle ground, assuming that CEOs are neither villains nor business masterminds. These studies argue that the seemingly innocuous practice of benchmarking pay against other companies' CEOs may be to blame, because the list of comparable executives is often formed selectively to include highly paid peers and to omit lower-paid ones. Though this opportunistic selection of peers may result in only a small bump to CEO pay in any particular year, over time, the rising tide of peer pay may well account for much of the increase in corner-office salaries that we've seen in recent decades.
If you think athletes earn too much money while others deserve it more, what is your solution? Here is a suggestion, gather tens of thousands of people, 17, 82, or 162 times a year, to pay 40 bucks and go to the local elementary school and watch the single-mother of 2 teach the alphabet all day. Athletes earn so much because so many people pay so much money to see them. Also, get the teacher sponsored by Nike.
Subscribe to Post Comments [Atom]
Subscribe to Posts [Atom]