Forum Post: Job Satisfaction as Compensation
Posted 12 years ago on Oct. 22, 2011, 3:18 p.m. EST by jamesgaston
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I’m struck by the argument that top executives must pull extraordinary salaries, else they will leave. Really? A big part of executive compensation is the ego-gratifying satisfactions of the job, yet this doesn’t show up on anyone’s pay stub. Instead, I propose that job satisfaction be added to pay scales (ranging from a large positive to a large negative) and then recalculate all salaries.
If these companies would at least make upper management salaries actually performance based, we wouldn't see the exorbitant payouts we're seeing now.
They way I see it is that if an executive hates his job so much that he must demand a huge compensation or he'll just quit, then he is not a real passionate guy. The company would be better served by hiring an executive willing to accept less pay in return for the love of his job and his accomplishments that benefit the company.
The fact of the matter is, most executives are passionate and would be perfectly willing to work for much less. The reason they take such huge pay is because by paying out profits as dividends, the company pays a tremendously lower amount of tax. Think about it, the tax on dividend income is around 15% and the tax on corporate profits is around 35%.
Certainly, paying dividends benefits shareholders but the executives are typically the largest shareholders. So they get a huge amount from this practice.
The simple truth is that our tax system is designed so that enormous compensation serves as a corporate tax shelter.
To fix this we must lower corporate tax on profits and raise the top income bracket tax rates. This would make it much more profitable for a company to grow its operations and hire more workers while paying salaries more equitably with that of the CEO.