C.E.O.'s Salaries
Discussion
A500leroy said:
Yes genuine question. With me being at the bottom of the ladder, just wondered how much harder the ceo is grafting to be worth the massive salary as I have no idea what he does!
I used to play sunday league football, and the team fees were £3 a week. I used to graft just as hard as a player that's now earning £500k a week.It's not about graft, but skill.
I worked at a large company 15 years ago, it was making about £150m a year profit. A new CEO started and four years later that had increased to £500m a year. It's now at about £1.5bn a year. That level of performance is worth a lot of money.
New CEO arrives. No pay rises for years for the workers, puts up profits, CEO takes huge bonus. Workforce totally demoralised and less productive. Now time for redundancies, profits up, CEO takes huge bonus. Rinse and repeat, with outsourcing, sell offs etc. Till there's not much left. Jump ship to next company, start all over. True entrepreneurs are few and far between, most CEOs are just managing the company for their benefit.
speedyman said:
New CEO arrives. No pay rises for years for the workers, puts up profits, CEO takes huge bonus. Workforce totally demoralised and less productive. Now time for redundancies, profits up, CEO takes huge bonus. Rinse and repeat, with outsourcing, sell offs etc. Till there's not much left. Jump ship to next company, start all over. True entrepreneurs are few and far between, most CEOs are just managing the company for their benefit.
Entrepreneurs are owners. CEOs are mangers who report to owners.speedyman said:
New CEO arrives. No pay rises for years for the workers, puts up profits, CEO takes huge bonus. Workforce totally demoralised and less productive. Now time for redundancies, profits up, CEO takes huge bonus. Rinse and repeat, with outsourcing, sell offs etc. Till there's not much left. Jump ship to next company, start all over. True entrepreneurs are few and far between, most CEOs are just managing the company for their benefit.
That's not the CEO's fault then, that's the board for putting in place a pay structure that incentivises that sort of behaviour. The CEO can't write their own contract.I’ve known quite a few. It can be a very tough job - but then I knew the CEO (for Europe) of a large car manufacturer who’d spent his career getting to the point of top dog to then realise he spent a lot of the day wondering if he had the best parking spot or not as there wasn’t loads to do. The main job of a CEO beyond being paid a lot of money and offering an overall direction is to be able to quickly find a scapegoat when the s
t hits the fan.
t hits the fan.A500leroy said:
Yes genuine question. With me being at the bottom of the ladder, just wondered how much harder the ceo is grafting to be worth the massive salary as i have no idea what he does!
I don't think it is about 'graft' as such, it's about pressure, responsibility and accountability. I have friends (a couple) who are both finance directors at large companies and they are rarely not at work, regardless of weekends and holidays. They went on holiday recently and both spent the whole flight to Canada working and one was up two hours before the rest of the family every morning to work before they went out skiing for the day. One was also going through a refinancing at work a couple of years ago. We were hosting them and other friends for New Year's Eve and he eventually closed his laptop and joined us for the celebrations about three hours after arriving at my house.
Don't get me wrong, they have a fantastic standard of living, but I wouldn't want the stress and pressure of a job where they are basically on call, and expected to drop everything for work, 24/7.
Having said that, the continuing widening of the gap between the lowest and highest paid in many organisations is troubling. I don't think senior executives work harder than they did 10-15 years ago and I don't think they generate greater returns for shareholders. There does seem to be a culture where executive remuneration is out of control. I know some shareholders are getting more active in this area and voting down excessive pay packages but as the majority of people face ever greater pressures as inflation takes off (and in many cases have relatively little fat to trim in their budgets to deal with this), it starts to look more and more unpalatable.
A500leroy said:
Yes genuine question. With me being at the bottom of the ladder, just wondered how much harder the ceo is grafting to be worth the massive salary as i have no idea what he does!
It’s not about working hard, it’s about responsibility. When people say “the buck stops here”, in the case of CEOs it literally does. My brother in law is a plumber. He works a hell of a lot harder than I do. However I have more responsibility than him. Both financially to my company and to the people I’m responsible for. I get paid more than he does because my actions and decisions don’t just affect the work I do, but the work of hundreds of other people and my company’s clients and their employees. (I’m nowhere near a CEO, there are five levels of my organisation between me and our CEO, and eleven levels below me in a global corporate employing 300,000 people)
CEOs of the big corporations are like this, just with many, many times more responsibility and effect on their business and people than me. In some cases they’re not just affecting their business, but entire industries (see Tim Cook example above).
Edited by CheesecakeRunner on Thursday 26th May 15:30
Yep it's responsibility. You are responsible for the business the shareholders and your employees. Take a recession etc a good CEO MD will not be worrying about their job but ALL of their employees jobs, families and the business as a whole because without that they don't have a job.
It can be extremely stressed which you have to be able to deal with calmly while looking at the big picture which may involve doing things for the better of the whole that you may not like..
Very broad reaching responsibilities and the buck does stop with you.
It can be extremely stressed which you have to be able to deal with calmly while looking at the big picture which may involve doing things for the better of the whole that you may not like..
Very broad reaching responsibilities and the buck does stop with you.
Ouroboros said:
Life is a pyramid. CEO at at the peak.
Are they better maybe, some lucky, some not very talented, but they earn the big bucks to make the big decisions.
Plus it's the inner circle of Management- and Supervisory Board members who approve these compensation packages. If you'll sratch my back, I'll scratch yours so to speak. Are they better maybe, some lucky, some not very talented, but they earn the big bucks to make the big decisions.
Top management become Management Board members, board members become Supervisory Board members. The system contains perverse incentives.
Although there are cultural differences as well. The gap between CEO rewards and those of the average worker is the biggest in US companies.
A500leroy said:
Yes genuine question. With me being at the bottom of the ladder, just wondered how much harder the ceo is grafting to be worth the massive salary as i have no idea what he does!
It's not about 'graft' How hard you work is a common misconception.
A CEO works as hard as a nurse, as a plumber, as a road sweeper, as you.
The difference in remuneration comes from responsibility level, skill and vision.
As admirable and worthwhile job as it is, relatively speaking, lots of people could train to be a nurse in a relatively short time.
Being a good CEO is not a job that lots of people can do and it takes a long time to build up the experience to do it. Being as the talent pool is smaller, the pay is higher.
CheesecakeRunner said:
It’s not about working hard, it’s about responsibility. When people say “the buck stops here”, in the case of CEOs it literally does.
My brother in law is a plumber. He works a hell of a lot harder than I do. However I have more responsibility than him. Both financially to my company and to the people I’m responsible for. I get paid more than he does because my actions and decisions don’t just affect the work I do, but the work of hundreds of other people and my company’s clients and their employees. (I’m nowhere near a CEO, there are five levels of my organisation between me and our CEO, and eleven levels below me in a global corporate employing 300,000 people)
CEOs of the big corporations are like this, just with many, many times more responsibility and effect on their business and people than me. In some cases they’re not just affecting their business, but entire industries (see Tim Cook example above).
It isn't always about responsibility. Junior lawyers and investment bankers do not have huge amounts of responsibility, but they have (relatively) huge salaries - at the very top paying US law firms in London, 25 year olds can be pulling in 185k+ and 30-35 year olds between 400 and 500k. That's at associate level - the partners (with the responsibility) are on many multiples of that. In that case, it really is about graft (and being bright, well educated and polished, but there are lots of bright, well educated and polished people on salaries much smaller than that).My brother in law is a plumber. He works a hell of a lot harder than I do. However I have more responsibility than him. Both financially to my company and to the people I’m responsible for. I get paid more than he does because my actions and decisions don’t just affect the work I do, but the work of hundreds of other people and my company’s clients and their employees. (I’m nowhere near a CEO, there are five levels of my organisation between me and our CEO, and eleven levels below me in a global corporate employing 300,000 people)
CEOs of the big corporations are like this, just with many, many times more responsibility and effect on their business and people than me. In some cases they’re not just affecting their business, but entire industries (see Tim Cook example above).
Edited by CheesecakeRunner on Thursday 26th May 15:30
Cascade360 said:
It isn't always about responsibility. Junior lawyers and investment bankers do not have huge amounts of responsibility, but they have (relatively) huge salaries - at the very top paying US law firms in London, 25 year olds can be pulling in 185k+ and 30-35 year olds between 400 and 500k. That's at associate level - the partners (with the responsibility) are on many multiples of that. In that case, it really is about graft (and being bright, well educated and polished, but there are lots of bright, well educated and polished people on salaries much smaller than that).
Yeah, but we’re not talking about high paying jobs in general, we’re talking about CEOs. Lawyers in that world get paid a lot because they earn a lot for their firms. The fees they charge their clients comfortably cover their salaries. And again, the types of lawyers you cite are the 1% of the 1%. Most are earning very normal salaries.
And they do have a lot of responsibility. If a lawyer gets something wrong, and ends up being professionally liable, the costs can be astronomical.
a CEO of a FTSE 100 company is essentially a world champion of business. You need that level of skill, cunning, luck and desire as a world champion would need to reach the top of their sport.
You've also go to be tough, take a lot of flack, and spend your time reading about your industry, and learning about trends etc. To be really good, you've got to be really motivated to understand your business. And then whatever you earn is not enough, but it gets to the point where the money is not important, its the results that lead to the satisfaction. Oh and you have to like or indeed thrive on conflict. Putting one over on your C suite to show who is in charge. I thinks that's one of the reasons that some companies want to stop home working. These CEO's like to see the whites of your eyes.
You've also go to be tough, take a lot of flack, and spend your time reading about your industry, and learning about trends etc. To be really good, you've got to be really motivated to understand your business. And then whatever you earn is not enough, but it gets to the point where the money is not important, its the results that lead to the satisfaction. Oh and you have to like or indeed thrive on conflict. Putting one over on your C suite to show who is in charge. I thinks that's one of the reasons that some companies want to stop home working. These CEO's like to see the whites of your eyes.
You're also extrapolating and comparing your salary to CEO levels. Senior management is not paid like that, as per the Apple comment above. There's a base salary - not underplaying that, it's usually a good chunk - but the big money comes from options and other variable pay that is directly linked to the company's performance.
CEO only gets paid out when the owners make money, and the owners are happy to give up a proportion of their returns to the CEO.
CEO only gets paid out when the owners make money, and the owners are happy to give up a proportion of their returns to the CEO.
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