*sniffling* ONLY mid six figures...boo hoo!

[{aspiring_to_clarity}]

http://http://thinkprogress.org/2009/02/04/wall-street-insiders-whine/

If you had done your job right in the first place you wouldn't need bailout money and therefore be subject to these regulations! WTHH!?!?!

[Gabo]

Yes, $500,000 is a lot of money to make in a year.
But, the comments made by those people are accurate.

The people who do their job the best are paid the most. All that Obama's policy is going to do is cause any good executives in these TARP companies to leave for greener pastures. These companies that are in the dumps are going to be stuck with executives that are only worth $500,000, while other companies will be willing to pay more for good executives.

I predict that companies receiving TARP money will continue doing worse than average.

[seeker5]

Originally Posted by {aspiring_to_clarity}

http://http://thinkprogress.org/2009/02/04/wall-street-insiders-whine/

If you had done your job right in the first place you wouldn't need bailout money and therefore be subject to these regulations! WTHH!?!?!

If you're used to making $10 Million a year, then $500K is nothing. When you're that good, and other companies are willing to hire you because you're worth that much, then you're not going to stick around a company where you're restricted at $500K, that is regulated by the government and that is sinking. At least the best of them wouldn't.

Yet, what is the Chief Executive officer? His decisions have the largest impact on the company. If you put in someone who is unqualified as the CEO, he can lose so much more money for the company, especially companies worth billions of dollars. It's like putting a driver not as qualified to drive a porch around the racetrack. Who do you want driving you very expensive porch at the racetrack? You want the best qualified person and you'll pay top dollars for that.

Just because the company did badly, doesn't mean the CEO aren't worth that money. The company for example, could have lost a lot more money. And sometimes, the CEO is doing his best with a sinking ship. However, if the CEO is bad for the job, that is, he isn't worth more then $500K, then they should fire the CEO and replace him with someone who is worthy. If you blame the CEO for driving the company to the ground, then paying him less, and giving his company billion of dollars make absolutely no sense. Fire the CEO, and pay top dollars to buy someone who is good to bring the company around.

Frankly, I don't like the idea of these billion of dollars going to help companies, that will be headed by guys who weren't good enough or qualified enough to get the real top paying jobs, and thus they had to stick to the just $500K jobs.

But really, I don't like giving them any money anyhow, if the firms go bankrup, I say just let it go bankrupt - I don't see why my money should be spent on bailing out companies. If we weren't spending money on rescuing these companies, then you wouldn't have politicians talking getting all huffy about ceo pay.

[dice]

Darlings darlings, we must learn to live sans-mercedes.

Drive mo-peds!

Good News: McDonalds has been boycotted. I never thought it would happen. The local restaurants have no lineups and close at 9PM.

boom chackalacka

[funchy]

Originally Posted by Gabo

The people who do their job the best are paid the most.

If their did their job the best, their company wouldn't NEED the bail-out in the first place!

All that Obama's policy is going to do is cause any good executives in these TARP companies to leave for greener pastures. These companies that are in the dumps are going to be stuck with executives that are only worth $500,000, while other companies will be willing to pay more for good executives.

Is the US really so short on managers we can't find anyone to work for only $500,000 a year?

You know that the President of the US doesn't even make $500,000/year, and he's running one of the most powerful countries on the planet.

Boo hoo on the execs. Tell them I'll do their job for the $500,000. Right now I don't have a job, thanks to layoffs. LOL

[Dan.Linehan]

Originally Posted by seeker5

Just because the company did badly, doesn't mean the CEO aren't worth that money.

Banking CEOs aren't worth the money because they don't produce anything. No real products.

[Gabo]

Originally Posted by funchy

Is the US really so short on managers we can't find anyone to work for only $500,000 a year?

Of course you can find people to work for only $500,000 a year.
But that is because they are only worth $500,000 a year.

Take professional athletic teams, for instance. Do you think the Lakers or Steelers could find players who would play for only $500,000 a year? Absolutely they could. But those players would not have nearly the same skills that someone who is worth millions has.

[{aspiring_to_clarity}]

Originally Posted by Gabo

Of course you can find people to work for only $500,000 a year.
But that is because they are only worth $500,000 a year.

Take professional athletic teams, for instance. Do you think the Lakers or Steelers could find players who would play for only $500,000 a year? Absolutely they could. But those players would not have nearly the same skills that someone who is worth millions has.

It seems to me that the value of an job or performance is arbitrary. Sports stars and actors and hedge fund managers are worth millions because we say they are. There's no intrinsic dollar-amount value to any job in the world.

Steve makes lots of money because he provides value. Similarly, entertainers and sports stars provide something that we find valuable as evidenced by the fact that the industry is able to support their salaries. In my opinion, if you run your company into the ground, you are not providing value and if there is to be a bailout at all it should not be to pay you a 6 figure plus bonus. If these executives are as good as is being claimed (oh noes, they'll go to another company who will pay them what they're worth) then the company would not be in the dire financial straits that it is.

[SomeRandomGuy]

Originally Posted by Gabo

Of course you can find people to work for only $500,000 a year.
But that is because they are only worth $500,000 a year.

Take professional athletic teams, for instance. Do you think the Lakers or Steelers could find players who would play for only $500,000 a year? Absolutely they could. But those players would not have nearly the same skills that someone who is worth millions has.

Most athletes would be happy to play for $500,000 if that was near the top of the pay scale in their field. $500,000 is a lot of money, and there are few (if any) jobs that are really worth more than that.

[{aspiring_to_clarity}]

To, expand on what SRG said, if anything the jobs that are worth high dollar figures are not the ones currently seeing such paychecks. Teacher would be one occupation that provides more value to society as a whole than many other professions but is paid stunningly less.

[seeker5]

Originally Posted by Dan.Linehan

Banking CEOs aren't worth the money because they don't produce anything. No real products.

They provide a very important service. Banks are crucial for corporations to exist, and without banks, corporations and businesses could not exist as they do now. They would have to do all of the cash money management inhouse, they would not be able to borrow money to finance their growth which in turn provides a place for other corporation to store their cash and grow it, they wouldn't provide a way to save money. Banks, when managed properly (at the government as well as at the bank level) are vital to having a modern economy.

Maybe you can make an argument that corporations shouldn't exist as they do today, but that's a different argument.

Originally Posted by {aspiring_to_clarity}

To, expand on what SRG said, if anything the jobs that are worth high dollar figures are not the ones currently seeing such paychecks. Teacher would be one occupation that provides more value to society as a whole than many other professions but is paid stunningly less.

I don't feel teachers in current school provide much value. Yes I know it's the culturally popular right now (and as been for a long time) to say teachers provide a tremendous amount of value. I disagree. I didn't learn much from my schools, and so very much of what I learned in school was completely useless to me. Furthermore, to truly become happy and productive in society, you have to un-learn so much of what you learned in school, so teachers, as part of school, even provide a fair amount of negative value. So the fact that they are paid "stunningly less" doesn't surprise me and is probably warranted when we look at the value they provide socially compared to the value other professions provide.

[{aspiring_to_clarity}]

Originally Posted by seeker5

I don't feel teachers in current school provide much value. Yes I know it's the culturally popular right now (and as been for a long time) to say teachers provide a tremendous amount of value. I disagree. I didn't learn much from my schools, and so very much of what I learned in school was completely useless to me. Furthermore, to truly become happy and productive in society, you have to un-learn so much of what you learned in school, so teachers, as part of school, even provide a fair amount of negative value. So the fact that they are paid "stunningly less" doesn't surprise me and is probably warranted when we look at the value they provide socially compared to the value other professions provide.

I guess I should have qualified that statement to "good teachers."

I am rather curious what professions feel provide value deserving of million(s) dollar incomes? I guess it's really subjective?

[Brutha]

I guess I should have qualified that statement to "good teachers."

Then how do you find out which teachers are the "good teachers"?
At the moment that happens through standardised test which seems to be a bad idea.

[{aspiring_to_clarity}]

Originally Posted by Brutha

Then how do you find out which teachers are the "good teachers"?
At the moment that happens through standardised test which seems to be a bad idea.

Well, I didn't really mean pay good teachers one thing and bad teachers another. Standardized testing is crap. If teaching as a profession paid better, we could draw the best into the profession. It's a similar argument to the one the CEOs are using in fact, so I'm being quite hypocritical! Why would the best and brightest want to be teachers when they can make millions being CEOs of failing Wall St companies?

I don't really have the answers, I'm just thinking out loud about how I definitely feel there is a better way.

[seeker5]

Originally Posted by {aspiring_to_clarity}

I guess I should have qualified that statement to "good teachers."

What is your definition of a good teacher? Someone who successfully gets the pupil to learn the material they are supposed to learn? But what if the material is flawed in the first place? What if the whole emphasis on what we learn in school is the wrong stuff to learn in the first place in terms of becoming happy, well-adjusted individuals able to be productive in a modern society?

I am rather curious what professions feel provide value deserving of million(s) dollar incomes? I guess it's really subjective?

The profession that provide over $1million of social value to people. It's not subjective, it's objective (when the government has no involvement with the company - either through funding them or through putting restrictive caps) in the sense that people will pay what people are worth in general. I can see that a company in which the CEO, in other words, the driver of the corporation so to speak provides $1 Billion of revenue (that is $1 Billion of value to people), then paying the CEO 1/10th of 1% of that is good policy. If and when you have a bad CEO, that negatively makes the company just 10% worst then it would be under a good CEO, would drive the company to lose $100Million. So, paying a CEO $1Million to ensure you get the best CEO to avoid losing $100Million in yearly income (or even way more) seems good policy in my view. Even paying the CEO 10% - $10 Million would be good policy. Not saying some are not worth. Sometimes you hire the wrong person, or you hire the right person and he screws up. Happens in every single job. However, I can see how someone can be paid what seems to me and you to be a huge amount, but in reality is quite reasonable.

[schola]

Those banks would be out of business and the so-called "top talent" would be out of jobs if the government hadn't interferred with the market and given billions of taxpayer dollars to banks that the "top talent" ran into the ground. I don't have a problem with them deciding how these crooks should get paid; they're lucky they still have jobs. The government is one step away from nationalizing the banking system anyway.

[Brutha]

It's not subjective, it's objective (when the government has no involvement with the company - either through funding them or through putting restrictive caps) in the sense that people will pay what people are worth in general.

If the pay would really be an objective measurement of the worth of having a better CEO, why has the CEO pay changed so much over the last years? Why does CEO pay vary from country to country so much?

How do you determine the difference between an executive that's worth 500k and one that's worth 1,000k when it comes to hiring people?

Do you give both some standardized test? I think that a lot of those hiring decisions are made through connections.
Some boardmember says: "Hey, I know Joe and trust him, he's the perfect person for the company".
Now Joe happens to haven't made a big mistake in the past but has a neat resume and gets hired. However everyone that's skilled enough to earn 500K also has a neat resume.

If you go higher up in the ladder it's more difficult to judge performance, because your results depends on what all those people below you are doing.

Take Alan Greenspan. Everyone liked him in the 90s because he "got the economy going". The other explanation would be that he was simply at the right place at the right time and therefore was successful even through his decisions were bad.
It's often the case for people with a lot of power that it's very hard to determine whether they actually are skilled or are simply lucky.

Additionally people in those positions can look good by taking huge amounts of hidden risk and making other decisions with bad long term consequences for their company while increasing short term profits at the same time.

[wachusettgirl]

Originally Posted by Dan.Linehan

Banking CEOs aren't worth the money because they don't produce anything. No real products.

I don't quite follow... do you think that the CEOs of widget-making companies actually develop and make the widgets themselves?
Banks loan capital and manage wealth for families, small start-ups, corporations, research facilities, academic institutions, charitable trusts, non-profits, farmers... they provide a service which allows most of what we have to be brought to us through technology, transportation etc. They have in the past and will in the future allow the greatest advances and innovations in science, environmentalism, medicine to take place.

[lifetimelearner]

Originally Posted by dice

good News: McDonalds has been boycotted. I never thought it would happen. The local restaurants have no lineups and close at 9PM.

where is this ?

[seeker5]

Originally Posted by Brutha

If the pay would really be an objective measurement of the worth of having a better CEO, why has the CEO pay changed so much over the last years?

The business world is constantly changing. There are also plenty of other jobs out there where the pay has gone up a lot, as well as other jobs where the pay has decrease.

Why does CEO pay vary from country to country so much?

For the same reason that a lot of other jobs pay vary substantially in different countries.

How do you determine the difference between an executive that's worth 500k and one that's worth 1,000k when it comes to hiring people?

The way you figure out what you pay is through supply and demand, just like most other jobs. You identify what kind of person you want, and then you pay that person enough to stay there and not go to the competitor. If a competitor wants to hire that person away and is willing to pay more then you, then they will get that person if the person is willing to move to the new company. You simply pay them to stay to work at your company instead of working at a competitor. That's why I say it tends to be objective, because it's through supply and demand.

Do you give both some standardized test? I think that a lot of those hiring decisions are made through connections.
Some boardmember says: "Hey, I know Joe and trust him, he's the perfect person for the company".

Yes, it's well known in business that a lot of times, the best hiring decisions are made when someone has known the person individually, and thus knows what kind of person they are, instead of someone who may score well on a test, but is dishonest, sloppy, hard-to-work with, etc. That is, they don't hire someone someone knows because of trying to build "an empire of people who know each other", but because that's a great way to know the quality of that person to be good instead of someone they know nothing about except for their resume and references (whom they don't know either). Although, really for CEO positions at major corporation, they tend to know the person by reputation first, if it's an external hire.

Now Joe happens to haven't made a big mistake in the past but has a neat resume and gets hired. However everyone that's skilled enough to earn 500K also has a neat resume.

I'm not sure the point here?

If you go higher up in the ladder it's more difficult to judge performance, because your results depends on what all those people below you are doing.

True. However, at the same time, it means you have to be skilled at managing and leading the people under you. Leadership is a skill, and if you don't do it right, you can make the people under you want to work against you, instead of for you. Furthermore, you have to be skilled in successfully managing all of those resources.

So yes, it's harder to judge in a way, but in another way, no it's easier. You see how the unit as a whole is performing? Is it performing badly? Replace the top guy and put another guy in. See how it does. If the new guy does much better then the old guy, then that tells you something about the quality of the new guy if other things stay relatively constant.

Take Alan Greenspan. Everyone liked him in the 90s because he "got the economy going". The other explanation would be that he was simply at the right place at the right time and therefore was successful even through his decisions were bad.

Greenspan isn't a good example, in that he was a government worker fullfiling truly a one-of-a-kind position that is not reproducable elsewhere, nor can his performance be benchmarked with other countries in the similiar fashion. If Greenspan does badly or good, you can't objectively judge it because there is only one United States-like country.

However with regular companies that are not monopolies, then you can judge the performance of the company by looking at how other companies in the same field is doing. So if you have 4-5 competitors and they are all doing well except for one company, then that says something about the CEO. If the whole industry is going down and all of the companies are suffering, it may not be the CEO's fault. However, if all of the companies are going down, and one company is doing well, it may very well be that one CEO who saw what was going on and changed the company around to make sure it didn't go down as well. So, yeah, there's a lot of factors involved to look at.

It's often the case for people with a lot of power that it's very hard to determine whether they actually are skilled or are simply lucky.

Corporate CEOs weren't always CEO, unless they are the founders of the company. Rather, they spent two-three decades moving up the company learning how to lead, how to manage, and proving themselves. So, they tend to also have to be highly skilled. Yes there is sometimes luck involved, and yes there can be some measure of cheating, but that's true for any kind of position and any kind of job performance.

Sometimes a company goes down the drain and would have no matter how good the CEO would have been. However, a bad CEO can have a huge negative effect on a company, and a good CEO can have a huge positive effect on the company, in a way nobody else in the company can. For an extreme example, look at Steve Jobs, and the huge effect he had on Apple. Apple was doing well with him, he was fired. Then Apple did badly for a decade or so. Then he comes back, and Apple does tremendously well again.

Additionally people in those positions can look good by taking huge amounts of hidden risk and making other decisions with bad long term consequences for their company while increasing short term profits at the same time.

Yes, that's true. You can have crooks in every single professions though. The difference here is that crooks at the top as CEOs can bring down the entire company like happend with Enron and other companies a few years ago. That doesn't change the fact that honest, truthful CEO who truly produce good results are extremely valuable to the company.

[dice]

I learned this in my HISTORY 114 lecture today, listen up:

CEO's salary is limited to 500k.

Keyword: salary

CEO's earning's are not limited to their salaries, and they still make millions on top of that.

[Brutha]

CEO's earning's are not limited to their salaries, and they still make millions on top of that.

Bonuses and other stuff are limited as well. Firm are only allowed to pay out stock option in a way that the CEO only gets something once all government loans are repayed.

I'm not sure the point here?

All those people with easy to identify flaws are already outside the pool of candidats for a 500k job.
There are no flaws that are easy to identify that separate a 500k person from a 1000k person.

That doesn't change the fact that honest, truthful CEO who truly produce good results are extremely valuable to the company.

The problem is that the dishonest CEO has a good chance of producing a better balance sheet than the honest CEO.

Lets say you have 200 CEOs who each have the opportunity to make a decision that has 5% chance to let the company with is worth 1 billion to go bust and 95% chance to make 10 million as profit.

Now after a year you have 100 CEO who take each choice. Afterwards you will have 5 CEO made their company go bust 100 CEOs who made +- zero and 95 CEOs who made 10 million as profit.
If you hire afterwards the people with the best balance sheets they are all people who made the bad decision to take the risk.
There also a good chance that the 5 people who crashed their company can say that there was a black swan event like 9/11 that they simply couldn't have foreseen that played part in them crashing.

That kind of risk taking gets further incentivised by paying people bonuses when the make profits but don't taking anything from them away when they crash a company.

For an extreme example, look at Steve Jobs, and the huge effect he had on Apple. Apple was doing well with him, he was fired.

If you look at him, he didn't left the company because he wanted a higher salary or his poor performance that the company couldn't pay but because of company politics where the board wanted to bring the company into another direction than he.

However with regular companies that are not monopolies, then you can judge the performance of the company by looking at how other companies in the same field is doing. So if you have 4-5 competitors and they are all doing well except for one company, then that says something about the CEO.

In book publishing most revenue that JK Rollings publisher makes comes from her books.
Someone down the foodchain made sometime ago the great decision to publish her book instead of rejecting it.
The CEO probably hadn't something directly to do with the decision to publish her.

In Pharma most profits are made with single blockbuster medicaments.

In highly innovative fields profits depend on power law curves. Few great ideas that someone in the organization had result in massive profits even if that person sits somewhere down in the chain.

then that tells you something about the quality of the new guy if other things stay relatively constant.

In todays businesses things don't stay relatively constant but there are a lot of innovations and outside events with big impacts.

That is, they don't hire someone someone knows because of trying to build "an empire of people who know each other"

Surely it isn't the only factor but if you have a position with a lot of freedom the position gets more likely chosen based on loyalty and the expectation that the person will do exactly what you want him to do when it comes to decision whether department A or department B should get more funds.