Even CEO think CEOs are overpaid?
Are CEO making way too much money? This is an article I would expect to read from Eric, but I ran across this one reading the new this morning. In general, I feel that as a culture, we tend to favor paying the higher ups more in regards to their work than the people in lower levels jobs. Is this because they work harder, are more difficult to replace, or bring more to the table. Perhaps, but I doubt much of that could be proven. It probably represents the way we, as a culture, look at organizations. The captain of the ship is always given the largest of the shares, right. Fewer people can run a business, or a large corporation than can mop the floors, right? And even more to the point, as a society, we have decided to pay those positions more as well. It's like people who complain about the large contracts of sport stars. They get that money because somebody is willing to give them it because they believe they are worth that amount of money.
For another viewpoint, I sought guidance among the cutting edge business man of his day, Andrew Ryan. I believe this should give us guidance on this issue.
I am Andrew Ryan and I am here to ask you a question:
Is a man not entitled to the sweat of his own brow?
No, says the man in Washington. It belongs to the poor.
No, says the man in the Vatican. It belongs to God.
No, says the man in Moscow. It belongs to everyone.
I rejected those answers. Instead, I chose something
different. I chose the impossible. I chose…
Rapture. —Andrew Ryan
3 comments:
Warren Buffet believes that CEOs should only get paid at most 20x what the least paid person makes in a company. Obviously, no one else follows that philosophy.
The problem we have today is with corporate governance. CEOs are often also board members. And when they are board members, they often nominate their friends to also be board members. Shareholders, who don't know any better, just vote them in.
What needs to change, is that there needs to be more shareholder involvement. At least now we are seeing this with organization of hedge funds and capital groups, who do keep more oversight than the average shareholder.
I also think that if the SEC creates a rule saying that board members of a company cannot be CEOs of that company, then I think you'll also start seeing companies run more efficiently.
So in summary, remove the conflict of interest, and get more shareholder involvement, and I believe you'll see less of this problem.
Well, the unsaid conclusion you are drawing is that overpaid CEOs are due to CEO being members of the board? Do you think the overpaid CEO stems from the fact that it is a buddies electing buddies to be CEO. I assume you believe that CEO are "overpaid" and that in turn works against the company efficiently.
In principle, I agree that the current described systems seems to have an inbuilt conflict of interest. It seems that would directly work against the company working as streamlined as possible.
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