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Big CEO salaries often not smart business, U. study says

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  • Aggie5 Kuna, ID
    June 18, 2014 7:18 a.m.

    Chris. Here's the crux. I work for a fortune 100 company. I see how they are cutting expenses, and just about anything possible to keep there stock buddies on Wall Street happy. Those cuts include my commission dollars. But the CEO pay went up. There's no way a CEO is worth 20-75 million a year. It's not sustainable. Robbing peter to pay Paul isn't working.

  • Chris B Salt Lake City, UT
    June 17, 2014 3:22 p.m.

    Aggie,

    I've been consistent and continue to be. The deficiency in your "logic" is that if CEO makes too much and can't afford to pay others what they "deserve," where are all the other companies willing to step up and after people what they "deserve." After all, if I work for company A and my CEO makes too much but company B next door knows I would add value to their company, then company B would be willing to pay me more if I would make them more profitable. But when company A, company B, company C, company D, company E, company F, company G, company H...(you get the idea) all decline to offer me more money - its because they all came to the same conclusion, that I wont add enough value to them to justify a higher wage.

    Quite simple really. Hope that helped you.

  • Say No to BO Mapleton, UT
    June 17, 2014 9:58 a.m.

    The authors of these studies need to tell us how much money THEY make and why they aren't rolling in the dough if they have all the answers.

  • Aggie5 Kuna, ID
    June 17, 2014 6:14 a.m.

    Chris you flipped your story around.
    I believe if a CEO gets to much, it can affect the company. Which in turn makes it challenging to pay certain others what they deserve. CEOs by ALL means are being over paid a lot of times.

  • mattwend IDAHO FALLS, ID
    June 17, 2014 5:36 a.m.

    Can't help a chuckle here. If a CEO refuses to pay an employee more, it is not necessarily because that employee needs to be more valuable. It is far more likely it is because the CEO doesn't have any reason to pay more. Maybe it is because the individual is willing to work for less than they are actually worth. And, the CEO wants to keep costs down. Everyone knows the people who run big companies are there because they are all powerful, all knowing, all benevolent . . .

  • Grouper Loveland, CO
    June 16, 2014 10:31 p.m.

    I agree with Chris B (well, on this. He is still wrong about BYU :).

    one issue that I was thinking is this: often companies that are in bad shape can't attract a high profile CEO without paying them a lot, because in the high likelihood that things go bad, that CEO's name will be associated with it and soiled. So these guys charge a lot to take the risk - and often the companies they are hired to fix still do poorly. So I agree somewhat with the premise - CEOs can't on their own fix a company. If it is going badly, you don't help by paying some jackwagon a bunch of money because odds are they won't have an impact. Even the best captain, if hired AFTER the Titanic hit the iceburg, would not be able to save the ship.

  • Kings Court Alpine, UT
    June 16, 2014 8:40 p.m.

    What is even more head-shaking is that when CEOs are fired for running a company into the red, they get generous golden parachutes and stock options. I agree and disagree with Chris. Large corporations do have a right to pay what they want, but it does affect the average employee therefore, the consumer. Currently, average employees have had a flat pay for three decades now (when adjusted for inflation) while CEO, upper management, and their investors have seen exorbitant profits. Again, that is their right, but in a capitalist economy where consumerism drives everything, that becomes a problem. Less money for employees means fewer people purchasing goods, meaning layoffs and low wages again leading to less money in the economy. It is a vicious spiral downwards. Even Adam Smith in his Wealth of Nations warned of such a thing and talked of corporate responsibility. Again, I agree with Chris in that the government shouldn't regulate these companies, but I do think consumers need to wise up and punish bad corporate behavior by not purchasing their goods and services and instead, rewarding those companies that do right by their employees and America as a country.

  • There You Go Again Saint George, UT
    June 16, 2014 7:39 p.m.

    Re: adding value...

    "...A University of Utah study indicates that some highly paid executives may actually decrease the value of their firms through poor operation strategies...".

    Adding value?

    "...CEOs who receive higher incentive pay often lead their companies to decreased financial performance...".

    Adding value?

    "...the highest paid CEOs earn significantly lower stock returns for up to three years. Additionally, CEOs with an average compensation of more than $20 million were associated with an average yearly loss of $1.4 billion for their firms...".

    Adding value?

    “...the highest paid CEOs do a lot of things that are bad for the firm(s)...”.

    Adding value?

    "...there is a link between increased pay and decreased financial performance...”.

    Adding value?

    "...not only does higher pay relate to a lower future stock price for the company, it also predicted lower future accounting profitability...".

    Adding value?

    "...CEOs are fundamentally altering the profitability of the firms in a negative fashion...”.

    Adding value indeed.

  • dogchow1 Salt Lake City, UT
    June 16, 2014 7:09 p.m.

    So why don't we compare government salaries.
    The president makes $400,000.00 a year, the representatives and senators make at least $174,000.00 and they are on track to lose us about 564 billion dollars this year and they lost over a trillion dollars in 2009.
    Maybe if we paid them more, they would only lose 1.4 billion dollars.
    Nah! They're playing with our money, so who cares?
    I'd rather fire them all...

  • one old man Ogden, UT
    June 16, 2014 7:04 p.m.

    Well, gee. We've been trying to tell you that for years.

  • Chris B Salt Lake City, UT
    June 16, 2014 6:46 p.m.

    Aggie,

    If no CEO in the world is willing to pay me more than I am currently making, it's because my skills don't merit a higher wage. It doesn't matter if my CEO makes $1 a year or $1 billion. If no one will pay me more its because I don't deserve more. The value I add is independent of what my CEO makes. Just because a CEO could make less doesn't mean that money saved should be divided amongst the other employees. People are paid what the owners think they are worth and the excess profits or losses then go to the owners. My value doesn't change whether my CEO makes little or a lot.

    Only a lazy person would think they deserve more than anyone is willing to pay them.

  • Aggie5 Kuna, ID
    June 16, 2014 4:24 p.m.

    Hey Chris. I think a CEO pay has something to do with your income.

  • XelaDave Salem, UT
    June 16, 2014 3:46 p.m.

    The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself- John Kenneth Galbraith.

  • Chris B Salt Lake City, UT
    June 16, 2014 3:34 p.m.

    kiddsport,

    The SEC already mandates that executive compensation be included in the filings of public companies. The info you request has been available to you for years.

    Did you really not know that?

  • kiddsport Fairview, UT
    June 16, 2014 3:02 p.m.

    In most big companies, the owners are stockholders. In light of this study, let's demand our investment advisors and prospectuses publish the compensation of the CEOs of the companies whose stocks they promote. Then we the stockholders can make more informed decisions in buying or selling those stocks.

  • Chris B Salt Lake City, UT
    June 16, 2014 2:39 p.m.

    This may be true. However, I don't have any right to tell the owners of a company what to do with their company any more than I have the right to tell my neighbor what color of Christmas light to put up.

    The owners of the company I work for can do what they want with their company and pay the CEO what they choose - its their company.

    Besides, the CEO's salary has nothing to do with my salary. If no company in the world is willing to pay me more than I'm currently making - its because I don't add the value to justify a higher wage.

    I could be lazy and demand the CEO make less and I make more. Or, I could go gain skills that would demand a higher wage.

    Its all up to me.