
CEOs beware: Your astronomical salaries may soon cost you customers - brianclements
http://www.washingtonpost.com/news/wonkblog/wp/2015/10/15/ceos-beware-your-astronomical-salaries-may-soon-cost-you-customers/
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glenra
Much of this can be accounted for by the simple fact that the companies have
gotten bigger. Top CEOs are in charge of _more people_ than ever before.
Walmart has 1.4 million employees; if their CEO makes $35 million that's $25
per employee per year - a penny or so per hour per employee.

If a good CEO's decisions can make the average employee _more productive_ (or
less _unproductive_ ) by even few cents per hour of employment, he's worth
that magnitude of salary when working for a company that big.

If we highlight the CEO-to-employee multiple, companies could game the metric
by splitting into smaller companies that are _slightly less efficient_. For
instance, there could be separate regional chains called "Walmart West" and
"Walmart East", each with their own CEO who gets paid half as much for doing
half as much work. They could even both hire the same guy and have him work
both jobs at once, thereby reducing to a previously-solved problem! Or they
could actually hire two distinct CEOS, which benefits the employees not at all
- in fact, the employee situation might be made _worse_ in various ways by the
change - but at least the multiple would officially look smaller so: yay?

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Spooky23
Headcount isn't really relevant. My dad was a director (mid level manager) of
a government org with something like 1,500 direct reports. He probably made
the equivalent of $120k today. I think the salary differential between that
gig and a line manager was 30-40%. I manage a big IT organization, manage a
huge budget, 50 engineers. I make less than 5x the lowest paid employee. My
boss's boss maybe 40% more than me.

The corruption of governance and a sense of entitlement fuels CEO salaries.
End of the day, the CEO of WalMart doesn't deliver $35M of value. His
decisions have big impact, but there are dozens of people who can make those
decisions, and many could do so for far less.

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brianclements
Curious what you think about why boards aren't incentivized to reign in CEO
salaries. Is it because they all sit on each other boards?

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Spooky23
It's a small club, so there isn't an incentive to make waves.

Marissa Mayer is on the Walmart board. H. Lee Scott, former Walmart CEO is on
the Yahoo board. Why would Mayer want to make a stink about the Walmart guy's
salary, an awkward conversation that would probably lead to a similar awkward
conversation when she wants a raise at Yahoo.

The boards that I've seen (at a smaller scale) that work are ones where there
is a diversity of interests. The minority political party member making a
stink about the majority in a town board. Or the company board where a
representative of labor controls a key committee.

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PhantomGremlin
Last year, Tim Cook's salary plus bonus was $9 million. But his total
compensation was $65 million.[1] So what? Why should I care? That's up to the
Apple board to work out with him.

I'm still buying Macbooks and iPhones and iWhatevers for as long as I think
they're superior to the competition.

[1] [http://www.bloomberg.com/news/articles/2015-04-17/tim-
cook-s...](http://www.bloomberg.com/news/articles/2015-04-17/tim-
cook-s-65-million-pay-is-best-deal-among-top-paid-u-s-ceos)

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jensen123
Yet another clickbait headline.

Further down in the article, it says: "Of course, people tend to show more
moral gumption in surveys than they do in real life. In part this is because
we are dealing with hypotheticals (who isn’t against child labor, in
principle?). But also, people don't usually ponder issues of inequality while
they’re buying their milk and groceries."

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TeMPOraL
RE value of polls, there's this quote I love:

"[A]s of 2010, only 34% of people polled strongly supported letting
homosexuals serve in the military, but half again as many — a full 51% —
expressed that level of support for letting ‘gays and lesbians’ serve in the
military. Ever since reading that I’ve worried about how many important
decisions are being made by the 17% of people who support gays and lesbians
but not homosexuals."

[http://slatestarcodex.com/2015/04/15/trouble-walking-down-
th...](http://slatestarcodex.com/2015/04/15/trouble-walking-down-the-hallway/)

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crdoconnor
There's a similar gulf between people who support "more government assistance
for people on low incomes" (popular) and people who support "more welfare"
(unpopular).

I think certain words are given negative/positive associations by the media
and those overtones have a lot more impact if you're only spending 4 seconds
per question than if you're really thinking about it.

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tsotha
>There's a similar gulf between people who support "more government assistance
for people on low incomes" (popular) and people who support "more welfare"
(unpopular).

Those are not the same thing, though. Someone with a low income has a job,
presumably.

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crdoconnor
Actually it was "government assistance for the poor" \- _not_ low incomes -
that rated highly on polls, which presumably includes people without jobs. My
mistake.

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x5n1
I always take $1 as a CEO to show my commitment to taking out all my money
with stock options and dividends.

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tluyben2
Not sure if that's sarcasm or not and I know that usually appears only in the
news about CEO's who get millions that way anyway, but the CEO's of (usually
smaller) companies that have the same compensation plan often just get nothing
($1) when they didn't perform because there simply was no profit (so no
dividends) and no-one would buy (parts of) shares because they are down (if
the company is publicly trading that is quite a bit more complex). So that
seems a far more fair way of compensating and paying out millions for the
risk.

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0x49
Im really curious why this matters to so many people. It only matters if you
own part of the company and if this is the case, you most likely took part in
the decision making process that gave the ceo this dalary.

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pm24601
Because humans are values-driven, and humans make decisions based on their
values.

Buying from a company that does not reflect their values is contradictory. The
way to reconcile the conflict is with saving money ( and justifying that saved
money as a future donation ) OR not shopping at the store that does not match
their values.

I for one will never shop at Walmart - no matter how cheap it is.

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Qantourisc
Won't they just be creating a new company to siphon the money trough ?

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v4n4d1s
What if every employee has a decent salary (70k+) and the ratio is still very
high?

