General Question

cockswain's avatar

Is there anything substantive that can be done about CEO pay?

Asked by cockswain (15271points) July 7th, 2011

I don’t want to invite a debate about whether or not executive pay should be what it is or not. I’m just wondering if there is actually anything the U.S. citizens can actually do about it even if the vast majority of us wanted to.

Inspired by this article.

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53 Answers

Blackberry's avatar

Maybe I’m a pessimist, but there’s nothing we can do to stop those guys. I’ve seen too many anti-corporation documentaries, and I’m convinced we can’t do shit lol.

ragingloli's avatar

A highly progressive tax on CEO salaries and especially boni perhaps?

cockswain's avatar

@ragingloli Like they can’t hire lawyers and accountants for fractions of a percent of their income to circumvent such taxes.

Cruiser's avatar

Your key to manipulating CEO pay is do not patronize any company that you don’t want the boss to make a buck at. But then don’t whine when there are no jobs or everything is now done overseas.

sinscriven's avatar

The company will always pay the CEO what they think they are worth, so that really can’t be changed. And even directly going after their salaries won’t help much. There are people like Steve Jobs who only take $1 annual salary for their jobs, but they’re obviously making ends meet some other way.

The problem isn’t with overpaid CEOs, it’s with underpaid employees. And that’s not going to change as long as the current attitude of Short term profits>Long term stability in boards remains prevalent.

Nullo's avatar

@sinscriven Jobs has a few zillion dollars in Apple stock.
Boycotts can be quite effective at manipulating corporations, so long as there are enough of you and that you’re dedicated, and that someone can tell the company that they’re being boycotted, and why.

I personally don’t see what business it is of ours what a company pays its CEOs.

robmandu's avatar

We could stop being envious of other people’s achievements and instead of seeking to tear them down, work hard ourselves to bring something excellent to fruition.

Linda_Owl's avatar

As long as greed is totally acceptable & corporations have the power to give vast amounts of money to candidates who will (willingly) stay tied to the corporation’s apron strings – there is not very much that can be done. After all, there is no ‘honor’ among thieves & the 21st century has seen the re-birth of the “Robber Barons” whose only interest is in making money & the power that riches bring. Each of us works as hard as we can, but the situation is stacked against us & the wealth in the US is controlled by the top 1% of the population – but the myths still get passed around that all one has to do is work hard & that one could even get to be president of the US. Realistically, it is not going to happen, & the disparity between what the ordinary worker makes & what the CEO’s make is only going to increase.

Blackberry's avatar

@robmandu @Nullo So, you didn’t see anything wrong with CEOs making money off the subprime housing bubble? Default credit swaps? Or is that just business as usual?

cockswain's avatar

@Cruiser But then don’t whine when there are no jobs or everything is now done overseas.

How’s that different than what’s currently happening? Isn’t that one way they got such huge profits in the first place? Is sending jobs overseas for cheaper labor such a great thing for the US? Granted, they are better educated at this point.

@sinscriven The problem isn’t with overpaid CEOs, it’s with underpaid employees.

Doesn’t overpaid CEOs reduce the amount available to pay the employees?

@robmandu Envious? A tiny chunk of the populace has about half the nation’s wealth. Is that really a worthy goal to aspire to? Or does it just pinch the rest of the world? There is a point at which having more money doesn’t make one any happier. Seems unethical to me. Plus, implying that bringing something wonderful to fruition and amount of pay do not seem like two necessarily comparable things. I would argue, like @blackberry, that the financial sector adds little to no productive value to society. At least relative to their salaries.

@Linda_Owl @Blackberry My sentiments also.

Nullo's avatar

@Blackberry That’s less than entirely relevant to my post, I’m afraid.
Money is ethically neutral. Provided that they weren’t deliberately misleading people, I have no problem with people earning lots of money. Similarly, I am not unduly angered by actors and athletes pulling down millions of dollars per year.

plethora's avatar

Stop using the products and services they make. Stop buying $400 NFL tickets. Stop going to Uni of Alabama football games where the head coach makes $4M/year….if all that sticks in your craw. Stop going to Disneyworld if it pisses you off that the CEO makes a jillion bucks.

Response moderated (Personal Attack)
plethora's avatar

@cockswain Actually, I just edited myself. I knew you’d be pleased.

cockswain's avatar

Then I truly am impressed.

plethora's avatar

@cockswain Just checked the article you referenced. I won’t comment, since you did not ask for justifications of high compensation. But as for what can be done, there is really only one equitable answer….stop using the services. I would love to see Disneyworld, yea, the Disney empire go totally broke and close down. But I would hate to see all the talented underlings lose their jobs and income. If ya gonna regulate the CEO, ya gotta regulate everyone in the organization.

If you set a cap on CEO pay, that’ll just drive all the talent somewhere else where they can do just as well or better…..and more power to them.

See how reasonable I am now?

Cruiser's avatar

@cockswain Not entirely sure but my arm chair evaluation is the taxes, health care costs and in some cases regulations have made many US companies unable to compete so this is forcing them to find more hospitable and profitable climes. CEO salaries AFAICT reflects the health, vitality and profitability of a company due to the CEO’s leadership ability inside the company to again generate profits. Why should that not occur?? And again if it is not something you approve of don’t patronize that company and quite possibly watch more jobs disappear. Slippery slope IMO.

Lightlyseared's avatar

Become a CEO and give yourself a massive pay cut.

cockswain's avatar

Jesus I get the micro and macroeconomic principles behind the free market. I got A+ in both those classes. I understand the incentives that pull CEOs to companies that will pay them “what they’re worth” for their talents. And I’m not in the least arguing that most of them are hardworking and have earned a comfortable living.

I said in the details I didn’t want this to be a debate about if it’s right or wrong. But do you guys (none of whom I’m guessing are members of this top 1% of earners) really think the wealth distribution in the US is reasonable right now? How easy is it for guys with millions to make millions more the way the current system is set up? And how fucked up were the circumstances and decisions that led to the recession? Further, how much of a company’s success eventually just occurs under it’s own inertia rather than always the vision of the CEO?

If the wealth is so concentrated, it’s more difficult for the remaining billions of people to easily access and improve their lives. While I like the principles of a sensibly regulated free market and incentives, I think the top CEO pay is ridiculous. What the hell does someone need that much money for? You can’t even spend it all. You can argue “it’s their freedom and right to have it”, but come on. Why does a guy even want that much? How could he not feel like a greedy prick when so many others are struggling?

I suppose I’m looking at this more philosophically than practically though. I know the jobs will go overseas if we boycott the product and reduce their profits. They won’t take a significant pay cut, just everyone else in the company. Maybe I should have asked something more like “for those that are incensed by the wealth distribution in the US etc…”

I’m also aware that in my haste I’ve left plenty of opportunities in this post to retaliate with the usual rhetoric. Hopefully you get the gist of what I’m saying.

Cruiser's avatar

@cockswain The reality is second best does not cut it anymore. We are no longer a bucolic little US free market we are beholden to the larger world economic rules of conduct and if we don’t pay to play we will wither and die. CEO’s get paid the bucks they do because they produce profits and that HAS to be rewarded or they go elsewhere…that simple. But the reality is NOT CEO pay it is our growing overhead which includes health care, taxes, legacy and benefits costs. Other countries don’t demand this and can do what we can do far cheaper! The net result is an ever shrinking revenue stream for our country and when we turn to the very people who are still slugging it out in the trenches fighting to keep their companies running and profitable we are only exacerbating the problem.

IMO Raising taxes on the top wage earners makes a lot of sense to me even with the fact that I will be in that top 1% this year…but in return I would very much expect to have a Government that knew what the hell they were doing and to do something about controlling costs the same way I have had to adjust over the last 3 years thanks to failed fiscal policies we now have had to endure.

amujinx's avatar

Start voting for politicians that don’t focus on the meaningless non-issues they always harp on about and wants to stop supply side economics that has been the economic system of the U.S. since Reagan.

Message me when you find one.

Linda_Owl's avatar

As to the statements made by Cruiser & plethora….. the US has the most expensive health care in the world & the least adequate health care in the world – but it is not because of medicare & medicaid – it is because of the big insurance companies (& their lobbyists) & the big pharmaceutical companies (& their lobbyists) – these businesses can afford huge donations, but the ordinary person certainly cannot. We try to vote for the “best” candidate, the candidate that seems to have some commonsense – but once they get into office, all bets are off when their big corporation employers tell them just exactly how they are going to vote on the bills that come up before them. So the ordinary people keep paying & the CEOs & the Wall Street financiers keep getting richer thru their manipulations of the market with the able assistance of the “Federal” Reserve using the disabled regulations for which we can thank Reagan.

Qingu's avatar

Vote for the political party of our two viable ones that doesn’t walk out of budget negotiations on the mere possibility that wealthy people might have to pay more taxes.

wilma's avatar

@Linda__Owl the US has the most expensive health care in the world & the least adequate health care in the world_
Really? the least adequate? You would rather have your health taken care of in someplace like Rwanda or Zambia, than some where in the US?

@cockswain how would you determine the ” distribution of wealth”? Who gets to decide who gets the other persons money? How much wealth is too much?

Qingu's avatar

@wilma, clearly the market, which is largely controlled by wealthy people, should determine how much wealth is distributed to whom.

I’m sorry, did I say “the market which is largely controlled by wealthy people”? I meant the mystical force of market wisdom guided by the all-seeing yet invisible hand. We must not only let it decide solely how much people pay but subjugate ourselves to it in all things, as it is a wise and mighty deity.

dannyc's avatar

Once computerization and pooling of funds took place in the 80’s, most people have given their ability to influence away to pension fund managers, mutual funds, etc.. Way back, many workers had active interest in their own stocks (many worked for said company) and held the CEO and managements feet to the fire or attended the meetings. Mathematics and professional traders rule the financial world, so the answer is no. Become your own CEO via entrepreneurship as I believe that is the key to America’s future to take back the power from too many suits playing computer games.

wilma's avatar

But @Qingu how would you change it?
I don’t have the answer, do you? Who gets to decide what is too much wealth and how to distribute it? How much of your money would you be willing to give up to someone else, because for whatever reason, they don’t have (or earn) as much as you do?

Qingu's avatar

I would progressively tax the hell out of people making more than a million dollars.

Like 90% taxation at the upmost brackets. I’m fine with hard-working people making more money. But if you are making several orders of magnitude more money than me, you clearly do not deserve that money in any reasonable or moral sense. You have simply found a windfall in our flawed (but workable) capitalist system.

Barring that, I would throw all billionaires into a volcano.

plethora's avatar

Is no one sickened by the compensation of rock stars, actors, football players, baseball players, singers, TV personalities (Oprah), etc, etc, etc? Or is it only CEOs. Or do performers “earn” their money and CEOs do not? Or is wealth distribution ok for the performers (“deserved”) and not ok for the CEOs (“undeserved”). Why is it that only the CEOs are subject to the uneven distribution of wealth and professional performers are not?

I think I am hearing a huge bias toward business.

@Qingu I apologize. I thought you were a socialist. More likely you are a communist. A million bucks is the magic number now? Why don’t we try that 90% taxation thing and see how many performers give up their US citizenship to move somewhere else and earn their billions? And the CEOs of course will do the same.

@cockswain No, there is nothing at all you can do about CEO pay or rock stars pay, and thank God we live under a system that affords them that compensation if they are talented enough to command it.

Qingu's avatar

@plethora, why don’t we. I don’t recall any multimillionaires moving off to Somalia during the 50’s and 60’s which had marginal tax rates upwards of 70%.

And my views on CEO pay apply equally to all the other folks you mentioned.

I can’t find the exact quote I’m thinking of, and I forgot who said it, but it summarizes my views pefectly and it went something like this:

“It is not uncommon to find a person who works twice as hard, or even ten times as hard, as another person. Yet there are people who make a thousand times as much money, or even a million times, as the poorest among us. In what sense is their wealth proportional to the value of their labor?

robmandu's avatar

@Blackberry asked earlier, “So, you didn’t see anything wrong with CEOs making money off the subprime housing bubble? Default credit swaps? Or is that just business as usual?”

The question, as originally posted, is not about that at all.

Blackberry's avatar

Yeah, sorry for derailing.

mowens's avatar

Buy enough stocks of the company, and vote to change the salary.

mattbrowne's avatar

Everything companies are paying CEOs (and everybody else) above €500,000 is no longer treated as a company expense and therefore not tax deductible. A lot of Germans support this approach. We will see this within the next 5–10 years. This lunacy must stop.

GracieT's avatar

@mattbrowne, I agree with you, this lunacy must stop. Just because it’s always been done doesn’t make it right. Unfortunately this is getting worse. It seems that more and more people are looking at people that use underhanded methods to get ahead and because that makes jealous what used to be wrong is becoming more and more ordinary and accepted. My college degree is in environmental studies. I look at the planet with alarm. What we are doing to the planet is unsustainable. I also took a class that studied myths that just won’t die, and one of them is that technology is our protector and savior. We need to look to the future and prepare for not being able to keep up the status quo. It will get worse before it gets better.

dabbler's avatar

Fix corporate structures.

In Germany, by laws that we set up after WWII, at least half of the board of directors are employee representatives. The get a far smaller income multiple from bottom to top. They will also approach hard times differently, such as everyone taking shorter work week instead of laying some folks off.

Employee-owned enterprises can also work well in more fairly distributing the fruits of labor.

There is something relatively new going around called a “B” corp, benefit corporation, that has in their charter that they have as goals employee well-being and community well-being along with some profit. ...

plethora's avatar

@Qingu How proportional is the compensation of the founders of Google to the janitor of their office suite, who works very very hard to meet the standards his or her bosses may have set.

Here’s one standard that might be applied to assess relative value.
Would the product even be here if it weren’t for these two guys?
There are plenty of others and talent, risk assumed and value of the product created are certainly at the top of the list.

plethora's avatar

@mattbrowne We will welcome your most talented executives to the USA. They will go where they can get paid.

bkcunningham's avatar

“It is not uncommon to find a person who works twice as hard, or even ten times as hard, as another person. Yet there are people who make a thousand times as much money, or even a million times, as the poorest among us. In what sense is their wealth proportional to the value of their labor?” @Qingu, you may be thinking of a Adam Smith: “Among civilized and thriving nations, on the contrary, though a great number of people do no labor at all, many of whom consume the produce of ten times, frequently of a hundred times more labour than the greater part of those who work; yet the produce of the whole labour of the society is so great,that all are often abundantly supplied, and a workman, even of the lowest and poorest order, if he is frugal and industrious, may enjoy a greater share of the necessaries and conveniencies of life than it is possible for any savage to acquire.”

Qingu's avatar


“Would the product even be here if it weren’t for these two guys?”

I’d love to hear you answer this question and give your reasoning. Would successful search engines exist without these two particular guys, Sergey Brin and Larry Page? If you know anything about the history of invention, the answer is probably “yes.” Inventions do not spring out of people’s foreheads fully-formed. Many inventions are “invented” by several people around the same time, sometimes independently—for example calculus, telegraphs, telephones, light bulbs, steam engines, automobiles… the list goes on. The idea that any given invention is the product of a single inventor is a myth. Inventions coalesce out of the broader culture. If Brin and Page didn’t invent Google, someone else would have (in fact there were search engines before Google; Google’s major innovation was the PageRank algorithm which seems quite obvious in retrospect and would have doubtlessly have been figured out by someone.)

So yes, let’s hear some of your other reasons and hope they actually support the argument you’re making.

I’d also love to hear why you think so few German CEO’s have migrated to America.

Qingu's avatar

@bkcunningham, that wasn’t the quote I was thinking of, and it doesn’t have much to do with how laborers are paid, more efficiencies inherent in industrial production and trading societies.

I dug around and found the quote I’m thinking of, from this article

“It is easy to find a man in almost any line of employment who is twice as efficient as another employee, but it is very rare to find one who is ten times as efficient. It is common, however, to see one man possessing not ten times but a thousand times the wealth of his neighbor. … Is the middle class doomed to extinction and shall we soon find the handful of plutocrats, the modern barons of wealth, lined up squarely in opposition to the propertyless masses with no buffer between to lessen the chances of open battle? With the middle class gone and the laborer condemned to remain a lifelong wage-earner with no hope of attaining wealth or even a competence in his old age, all the conditions are ripe for a crowning class-conflict equaling in intensity and bitterness anything pictured by the most radical follower of Karl Marx. Is this condition soon coming to pass?”

Written by a statistician named Willford I. King in 1915.

plethora's avatar

@Qingu Whoops. My fault. I forgot that new inventions and new uses for older products just spring from nowhere. Certainly several people may come up with the same invention. Several people still equals very very very few.

I do love the term “propertyless masses” from an article written in 1915. That would be a great battle cry should POTUS ever decide to appoint an income redistribution czar.

Let’s stick with Adam Smith.

And I believe we are way off topic.

ragingloli's avatar

yeah, let’s reject a thinker from the 20th century and instead go with one from the 18th century.

dabbler's avatar

@plethora “Why is it that only the CEOs are subject to the uneven distribution of wealth and professional performers are not?”
For one thing the question is specifically about CEOs.
There may be plenty to complain about pop figures, but they are literally our heros and we seem to willingly put them in a special category

For another top CEO salaries are an order of magnitude larger than pop stars’.
And their game is rigged by themselves for themselves. Top CEO compensation is clearly decoupled from their contributions to their corporations beyond a small fraction. They sit on each others’ boards and determine each others’ salaries/comp.
Is there any explanation for how the prior CEO of United Healty Care, for seven years work, was compensated over 1.2 Billion $ ? And current one has a contract for $700M for five years? Every dollar of which came from premiums paid and is not going to pay for anyone’s health care… Those CEOs certainly deserve something, probably a lot, but heroes they aren’t except to fellow parasites.

Qingu's avatar

@plethora, inventions don’t spring from nothing, they are products of accumulated culture. Do you honestly think something like the PageRank algorithm would not exist if a Terminator went back in time and assassinated Larry Page and Sergey Brin as children?

And have you read The Wealth of Nations? Because guess what, Adam Smith agrees with progressive income taxation. Adam Smith:

“The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.”

plethora's avatar

@Qingu I have no argument with that. Big houses = big taxes. Big incomes = big taxes. And they should be progressive, not regressive, as are all sales taxes at the state and city level. But, again, we are off topic.

plethora's avatar

There may be plenty to complain about pop figures, but they are literally our heros and we seem to willingly put them in a special category

They are our heroes? Really? So their incomes can be treated differently? Well, why don’t we just let everyone cast their vote for their top 100 heroes and we can build a taxation system based on hero preferences. PLEASE!!

dabbler's avatar

We’re talking about income levels here not taxation. You are correct that taxation is off topic but you bring it up in your response.
And people have voted with their wallets on pop stars and their income at least vaguely tracks that. That’s actually a pretty good reason to treat their incomes differently from folks who are not even accountable to their own shareholders for their grand haul. Please yourself.

Qingu's avatar

Progressive taxation is intimately related to income inequality.

mattbrowne's avatar

@plethora – Actually, that’s the very argument of German CEOs. Global free market economy. To retain top managers in Germany they must be paid absurdly high salaries. Otherwise they go elsewhere. Which is in fact true to some extend. Therefore the proposed bill does not interfere with this. If some hotshot investment banker who is busy creating new innovative bubbles must be paid 5 million to retain him fine. But 4.5 millions are not tax deductible. The critics of course will argue that this makes companies leave Germany. I’d say let them. But over time other countries will follow the example. Too many tax breaks ruin entire countries. It’s happening right now.

cockswain's avatar

I think my question is now, “What is psychologically wrong with people who pursue ridiculously large salaries?”

You can’t spend it all, and you buy silly, frivolous things in the pursuit of living in “luxury.”

A CEO (or athlete or rock star) leaves their organization to go from making $10M to $20M/year. Why? What else are they going to do? Why isn’t the power that comes with the work itself satisfying enough? Why the need for excessive sums of money too?


GracieT's avatar

@cockswain, AMEN! I’ve often wondered that aloud to friends with some of them actually responding with a blank stare, as if wondering why I asked.

dabbler's avatar

@cockswain I heard, on the radio so who knows, that there are a lot of people around who are qualified to do what needs to be done as a CEO, but that the job for top US corporate CEOs also there is a sociopathic psychotic aspect needed to fill the shoes.

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