Forum Post: CEO's Salary should be capped at 10 times the median wage in that organization
Posted 12 years ago on Nov. 13, 2011, 3:01 a.m. EST by George1234
(82)
This content is user submitted and not an official statement
CEO's Salary (+ Benefits + Bonus + etc etc) should be capped at 10 times the median wage in that organization. If CEO's income is increased by 20%, salary of all employees will automatically rise by 20%. What I am saying is this: If median wage in IBM is $70,000, CEO should get $700,000. If you think CEO should get more, I am willing to revise the CAP to 20 times or even 30 times. In that case, CEO will get $1,400,000 or $2,100,000. Do you think 2 million will be a fair salary for the CEO, where the MEDIAN employee is getting $70,000, i.e Half of the employees in that organization are getting below $70,000.
http://occupywallst.org/forum/the-war-with-america-was-won-before-the-first-shot/
It's none of your business what a private company pays its CEO.
There. That was simple.
no, just tax it.
Hi George, Good post. For those who think they deserve extreme income, let them go into business and prove themselves without incorporation. Produce a nice product, be fair to employees, pay business costs, and keep all the profit. Their IRS form would even be private. What could be better.
I'll start a rent a CEO company and I'll be CEO of that company.
Others can start their janitor companies and they can be chief janitor officers.
Now we can get companies with minimal income inequality.
The rent a CEO company gets collective bargaining power too. Fantastic.
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Oh god, how long must this stupid idea keep on? I mean really you think you can find someone to lead a big corporation for less than $100/hr? So then you've just given the CEO a great reason to fire everyone making less than $10 an hour. Stop it with this arrogant nonsense. If you don't want to think things through don't open your mouth.
I will rephrase it. If CEO gets $4 million, the lowest salary in that organization will be $100,000, and the median will be 200,000. Does it sound good.
No it doesn't sound good. Please explain why a CEO who runs a firm that hires skilled people is deserves more money? Please tell me why someone should be paid on someone else's market value rather than his own.
Thats stupid, but I will say this-- there is no correlation between an overpaid CEO and performance. That is a big con, that we must pay for talent. There is more talent sitting unemployed at Starbucks everyday than in some of these board rooms.
If companies were kept small these salaries wouldn't make economic sense. Also the companies wouldn't be so powerful as to threaten our democracy or laugh at out laws. Also smaller companies compete and innovate more. Also smaller companies hire more people. It's a win, win, win, win.
Yeah there's a reason that companies get large. It's called economics of scale. The idea that putting an artificial and arbitrary limit on CEO salary and therefore company size is productive is ridiculous. Smaller companies hire more people because there's more of them and they tend to be in low-labor-productivity industries. You want more investment in high labor productivity activies, that's how economies grow.
If you want big companies to stop "threatening democracy" then stop making it pay to bribe legislators. In other words, stop subsidising. It's really amazing to me how many ideas for more government power you leftists come up with when the really big things you can do to battle corporations are easy, cost less than nothing and actually work.
Economics of scale is not physics. It wasn't brought down from the mountain by Moses. There's nothing inevitable about letting dog eat dog capitalism run wild until only the maddogs are left standing.
Cartel or monopoly capitalism isn't really capitalism anymore, but a degenerate capitalism that has turned on itself. Perhaps you like the idea of living in a Rio or Mexico City, with an oasis of great wealth surrounded by the teeming millions fighting for crumbs.
Laws cannot constrain power. Look at illegal immigration. It was used as an attack on the minimum wage. Power can only be constrained by greater power. Businesses that are allowed to grow to the point of canceling out democracy cannot be allowed.
Perhaps you might ask what power would that be. You are looking at it. We are OWS. We are the 99%. If you corpoRATS thought the American middle class would just quietly die, you need to rethink.
No economics of scale isn't physics, but it's still fact. It is considerably more likely to be true than something brought down by Moses because it's been empirically observed. What do you mean by "business that are 'allowed' to grow to the point of cancelling out democracy cannot be allowed"? Allowed by who? Because we allow a company to grow by purchasing it's products. The other way is by allowing government the power to steal from us on their behalf. There are damn few cartels and monopolies that aren't government created, yet you're not mentioning that. You somehow concluded that I want to live in a Rio. I'm not sure why. Calling me a "corpoRAT" just shows you don't have the maturity to deal with challenges to your ideas. THINK THINGS THROUGH!
Seven times, I think. But the rest is good.
There's an old adage, "Though you don't always get what you pay for, you always pay for what you get." Good leadership, in its ability to define a vision and motivate people toward that vision, is priceless. Consider Steve Jobs, for example. What baffles me is why so many corporate boards hold onto losers.
Steve Jobs is an EXCEPTION that proves the rule....Can you recall ...Hank - AKA Maurice - AIG had a vast business in credit default swaps and therefore a huge exposure to a residential mortgage crisis. When AIG's own credit-rating was cut, it faced a liquidity crisis and needed an $85bn (£47bn then) bail out from the US government to avoid collapse and avert the crisis its collapse would have caused. It later needed many more billions from the US treasury and the Fed, but that did not stop senior AIG executives taking themselves off for a few lavish trips, including a $444,000 golf and spa retreat in California and an $86,000 hunting expedition to England. "Have you heard of anything more outrageous?" said Elijah Cummings, a Democratic congressman from Maryland. "They were getting their manicures, their facials, pedicures, massages while the American people were footing the bill."
Right. So because AIG's CEO was poor, Steve Jobs should pay. How about Warren Buffet, do you think he should pay as well ? How about Bill Gates who runs the largest charitable foundation the world has ever known? Who's going to pick? You ?
How about Enron, Bear Sterns, Countrywide Financials, etc etc
Do you have any idea how many CEOs there are and what small percentage of them has failed to do a good job ? How many innocent are you willing to hurt to punish the small number of offenders ?
What will happen If 100 or even 1000 top overpaid CEO's retire in next few months. Sky is not going to fall.
When the government caps wages you get all sorts of unintended consequences. There will be some perk offered to attract CEOs if companies can't do it with wages. Let them make whatever they can get, just fix the tax code so that there are no deductions.
Just have the tax rates increase as incomes increase in brackets. That would save from having to monitor each individual corporation (though if that monitoring was made internal it could create some real job growth).
That could work of OWS could agree on that method and elect congress people to carry it out. There has to be more then talk about a solution.
I agree. We need much more than talk. We need to find a solution to create a true voting system representative of the people (one person, one vote). We need congress people that can't be bought (and regulations to make such bribery extremely difficult and punishable by the full extent of the law). It will take a lot of action. I hope anyone that can't find a job will still put in a hard week's work. Work for change if you can't work for peanuts.
i'll just stop investing then, if i can't ensure that the companies i want to invest in are allowed to pay for the absolute best ceo on the market.
the stock market was the cradle of innovation and economic growth over the past 50 years - microsoft, ibm, google, apple, all got their funding through the stock market.
if that goes...
I will rephrase it. If CEO gets $4 million, the lowest salary in that organization will be $100,000, and the median will be 200,000. Does it sound good.
You might be more likely to get your money's worth. There's not an experience or intelligence gap that can be justified by the salary gap.
A Rod is only marginally better than Vernon Wells, why is he paid so much more?
That's cool because a ton of people below him will take that job and not abuse the corporate accounts their responsible for and they'll probably do a better job because they know they could lose it. Being a dictator means having nothing to worry about. In a democracy you can be voted out. Th replacement will do it for less too. Isn't that the capitalist way too? Make it cheaper make it better?
Then don't invest, you big pussy! Most of the people who do their jobs well have motivations that are greater than money. Didn't the banker testify in front of congress that they would do nothing different if their bonuses were smaller?
no people where, money just gave power to the ideas just as it starve power from other ideas.
People make great innovations, the market just chances on them.
You don't believe other businesses would have met the needs these corporations filled in the market?
You are assuming excellence will just automatically emerge from mediocrity. It doesn't work that way. There is no guarantee that, had we thrown 1,000 men together and called them the "Third Army," a man like George Patton would have emerged.
You're right, there's is no guarantee but what does a salary cap have to do with technical competence?
Many great innovations are suppressed or discarded simply because the install base for that product is small and complementary goods supporting competing products help them become the dominant design (defacto standard). The same likely applies to forms of strategic management. It's not what you know as much as who you know.
Also, emergent properties exist in nature as shown through natural selection. When a need arises, a demand is created and filled. The only exception I see to this is if something prevents the need from being met.
The only reason a salary cap would be bad is if it didn't apply across the board. e.g. globalization may hinder this And other asset bonuses might get around this. (such as offering land) but a land tax could address that.
Your cynicism is showing. It's not "who you know," but "who knows what YOU know" that matters. People at the top aren't stupid, they identify and advance people who add value. It sure helps if someone in power notices you, but the value comes first.
Your argument about natural selection is specious. You assume a normal distribution of what is inherently an abnormal trait; leadership. Leaders do not fit under the bell curve, they are by definition several sigma removed from the mean. It's as though you think great violin players just emerge from the masses when needed. They don't. They're rare. Great business leaders are equally rare AND they can make or break a billion dollar organization employing thousands of people.
Finally, you propose a global trap to force leaders to do their job for what you feel is fair in a way that prevents them from seeking compensation commensurate with their value added. I wonder how YOU would feel in this trap. I also wonder what leads you to believe they will cooperate in your plebeian game. They will shrug.
People at the top advance people they believe won't threaten their position. The value then is determined by people that already possess power. Inheritance ftw?
Leadership believe it or not can be learned. Some have a genetic predisposition that makes it more natural for them to perform certain activities. e.g. (violin playing) http://www.youtube.com/watch?v=tLn_SxocCcY&feature=related
Yes I can see business leaders complaining about making salaries several tiers higher than their workers. Afterall they only care about the money, right? Because if they actually enjoyed the work they performed, money wouldn't be their only motivation would it? Nor would their quality of life be reflected by the amount of money they possess.
Money is a means, not an ends. And I don't think supporting unhealthy addictions to monetary acquisition will help anyone.
Besides money itself actually limits creativity in intellectual activities http://www.youtube.com/watch?v=u6XAPnuFjJc
More cynicism from someone who has no clue what happens at the top.
Also, don't try and lecture me on creativity and innovation. I hold patents.
haha, you hold patents. irony.
Patents exist solely to generate profits. They help monopolies form on truly creative and innovative ideas.
Yes, patents are intended to allow a monopoly for a limited time so the inventor can reap the benefits of his invention before it goes non-proprietary.
It sounds like you oppose patents as well, so basically, you oppose anything that results in anyone doing better than you in the marketplace. That's a pretty low standard.
Patents last between 14 to 20 years (design patents)
That's not a 'limited time'. That's a whole generation+.
The irony is you say I oppose anyone doing better than me when you are defending patents that prevent competition. I guess you aren't aware of gmo patents farmers had to deal with. If any cross breeding occurred between neighboring fields (due to birds, wind, etc) the farmers would be forced to pay the owner of the patent, Monsanto, for every crop they sold. They ended up losing a profit every time they sold crop and were subsidized as a result. And these GMO's weren't designed to be healthier. They were designed to survive extensive herbicide exposure.
If you wanted to keep things 'fair' keep your idea a trade secret, create your own install base, and market the product yourself. If a group reverse engineers your idea, or other groups come up with the same idea then how innovative was it really?
You defending the CEO salaries and patents makes it seem like you want to make something for nothing. If people should be rewarded maybe it should be the military men, like Patton, you used so patriotically, or medical personnel, firefighters, teachers, cancer researchers, and others actually contributing great value to society.
That's unless you believe people gambling with pensions, or making toys deserves more than these professionals. That's a pretty low standard.
Your understanding of intellectual property is as sophomoric as your understanding of leadership. There's no use discussing anything with you, you've already made up your mind. Bye.
CEO = Cheat EveryOne
What do you believe that that will solve? How exactly will it solve it?
It will curb Corporate greed
It will also reduce the supply of talented CEOs to run these companies.
Talented CEO (e.g. able to have legislature bent to his will and that of his organization, or able to circumvent the law and reason)
Then perhaps politicians and the government should reduce their involvement in business.
In many respects I agree with you. There should be a simplified tax code that is easy for everyone to understand and as long as business isn't doing anyone damage, let it thrive.
No.........nice try. You forget shareholders......my lord, I can't even bother.....good luck with this...
I feel your pain.
seems so arbitrary a solution
I believe the post is refering to CEO's, not private buisness leaders and entrepreneurs.
When an entrepreneur wants to deliver a fancy new bit of technology to the marketplace, he needs a lot of capital. He can get that capital by borrowing from the banks or he can get it by exciting a bunch of "common folk" in his idea and selling them a stake in the company's success. This later option is much cheaper because his company is unproven and the banks don't like lending into risk.
The overwhelming majority of stock is held by "average joes" in the form of mutual funds within their 401Ks, IRAs, etc. Corporations provide a means for an entrepreneur to raise affordable capital provided by the "average joes" of the world pooling their funds and reaping the rewards of capital investment.
I agree, but it's going to be very hard to sell that idea to the people who are making all the money.
They (the 1%) will oppose any change in the System. The system is allowing them to fleece 99%. They will fight with all their power and resources. We need a revolutionary idea to beat them at their own game.
When you borrow from banks, you make them rich. When you buy foreign goods, you lose jobs. America borrowed at record levels to buy foreign goods. What would be revolutionary would be a new sense of personal responsibility in the American consumer.
It will also be hard to sell the idea to entrepreneurs that want to make a better living for themselves :(
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And how will poor people benefit from that? Capping a CEO's salary just means more money is available to pay dividends (which only stock-holders get).
You can get capped in the hood too
The solution to what?
You cannot regulate people's private companies like that pal. That is a very scary concept you are throwing around there.
Consider these facts...(1). Hundreds are laid off, and CEO gets a raise in millions. (2). The CEO of Walmart earns more in an hour than his employees will earn in a year.
I'm assuming you do not shop at Walmart. I'm also assuming the little tags on all the clothes you're wearing right now say "Made in the USA." Right ?
Try to find clothes made in the USA. My foreign friends want me to bring them USA clothing, but I disappoint them when I show them the labels of popular clothing and it's made somewhere else. We're way past that point down the hill.
No were not. I've half a mind to create a website called MadeInAmerica to do nothing but identify American products and where folks can buy them.
That's not a bad idea. Small businesses trying to compete with major retailers could use the help. If you do create the website, good luck to you. Maybe you can help turn things around.
Yeah, so are you going to limit it to large corporations like Wal Mart, or the common medium to small business owner. Our family owns a business. We are not where near the size of a major chain corporation. Where is the cut off? Your theory needs a lot of work.
I agree. The theory needs a lot of work. But you agree that it will reduce disparity, and curb the corporate greed.
Right. Because we all know that General George S. Patton didn't really add anything to the equation. We could have just thrown a couple of thousand guys together, called them the "Third Army," and obtained the same result. You are one of the "little guys" looking up and resenting those at the top, but you have no concept of the value of leadership in human affairs.
Right now we can see what our government leadership is worth. Not a dime of our tax money.
God bless you. I love Patton. Few here could ever comprehend his significance, let alone, know who he is.......
While I don't agree with the OP, your comparison is apples to oranges. No one ever joined the Army to get rich, it is about service to the nation. You cannot truly compare the military to a corporation as the motivations to achieve excellence are vastly different.
Leadership is leadership my friend. I know, because I am a leader. Rather than elaborate on the work I put into setting our strategic and product roadmaps, all the personal risks I take on behalf of the team, the responsibility I feel toward my team, the time I spend settling petty squabbles, the effort I put into trying to make my team work together, to fit every member's personality to the task, etc, I will just ask a simple question:
Do you really think Apple would have simply emerged from a random mass of workers without Steve Jobs there to lead them, inspire them, and make them into a team ?
I see it causing a whole new list of problems, to be honest.
Could you list a few of them.
Flight of all our talented leaders to other corporations in the world that do not have silly policies. The rise of the mediocre manager as replacements for talented leaders. Reduction in the competitiveness and innovation of American businesses. Loss of business resulting from lack of leadership. Loss of jobs resulting from loss of business. People with zero understanding of business gathering in the streets offering up all sorts of crazy ideas of how to fix the economy again.
I understand. I revised my post to incorporate some of the comments.....CEO's Salary should be capped at 10 times the MEDIAN (instead of minimum) wage in that organization. If CEO's income is increased by 20%, salary of all employees will automatically rise by 20%. What I am saying is this: If median wage in IBM is $70,000, CEO should get $700,000. If you think CEO should get more, I am willing to revise the CAP to 20 times or even 30 times. In that case, CEO will get $1,400,000 or $2,100,000. Do you think 2 million will be a fair salary for the CEO, where the MEDIAN employee is getting $70,000, i.e Half of the employees in that organization are getting below $70,000.
I don't have the "right" answer, and I don't think anyone does. It varies.
For starters, what we already talked about. The issue of when does that begin would be a major factor. Most importantly, It's unconstitutional. Any attempt would create and ongoing legal battle with companies all over the spectrum.
Why dont we cap how great a surgeon can be? You want the worst surgeon for you and your kids or the best? I want the best surgeon and the best CEO. No caps.
Thank you God George. You know everything,,, not.
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That will mean a salary cut for everyone in between, unless you think it is OK to pay the CEO less than the VP, so on and so forth.
A salary cut for everyone will be acceptable, if it will avoid laying off, and save someone's job. ( In fact a cut of 10% in CEO's salary may save hundreds of employees)
Every single day, you make decisions about where you do business. You decide whether corporations that pay a fair wage will survive. You decide whether to buy foreign made goods or not. Just how much do you know about the places you do business with ? Just how often are you willing to pay 10% for a product made in the USA by American workers rather than the cheaper product made overseas?
We the People shape the economy we live in by our choices. Most consider one thing and one thing alone in making those choices: Sticker price. As long as people elevate sticker price above social cost, corporations will continue to do whatever is required to give you what you want. That includes paying slave wages, cutting benefits, shipping jobs overseas, etc. If they don't, then they will close because the "sticker price" crowd won't buy their products.
See my post at http://occupywallst.org/forum/the-power-of-the-people/ then ask yourself whether YOU have been a good citizen.
There has to be a high demand for products made in the USA for small business owners to compete. Make it happen people. Be conscious of every purchase you make.