Tuesday, March 5, 2013

Outrageous Pay

Overall I think that if someone pays you something, you’re worth it. However that’s gotten out of control, IMHO, with some of the CEO pay in the US. There are plenty of business owners and CEOs in other countries that see our pay as excessive, and it’s gotten worse. Once we mandated disclosure after the roaring ‘80s, it seems executive pay rose. It became a competitive item among CEOs and boards.

I noticed the Switzerland recently passed some legislation to limit pay, which I thought was an interesting idea. Executive titles shouldn’t be a lottery, at least not without the executive working for years. It’s a job, especially for managers brought in that didn’t found a company.

Then I saw this piece on lavish CEO perks, and I re-thought things again. I’m all for paying people what they earn, but some of these perks are silly. I know many of them are ways to increase compensation in a tax-lowering manner, but honestly I think I’d prefer we level out some compensation and then let these CEOs pay for what they really want.

It’s silly for Boeing’s CEO to not pay for his own car and plane when he’s making $22mm a year. Just like it’s crazy for Comcast’s CEO to get extra pension payments. If he’s making $20mm a year, buy his own pension. To me, these are examples of taking money from shareholders inappropriately when they have no say. The shareholders should see more of that money come back to them in terms of increased value or dividends, not tens of millions of dollars for executives who arguably don’t do a lot more than the VPs who may make a fraction of what the boss does.

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