C.E.O.'s Salaries
Discussion
crankedup5 said:
Yes it is certainly hard hitting, but don’t worry because the only changes will be brought about by shareholders and whilst they being served well the merry-go-round will happily spin for a while yet.
…and who are the shareholders?We seem to be focusing on large public companies - who are the primary/institutional shareholders?
stongle said:
Newc said:
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.
It's about risk, personal risk and ownership. There are 10s of 1000's of CEOs few get rewarded by failure. They have reached the top of the tree by taking personal risk and responsibility. Waaaaaaayy beyond what a normal worker would be prepared to take. Sure some appear to bounce around and get rewarded for failure, but in general the pay is consumate to the risks at that level. In finance, the CEO is legally responsible for everything under him - that's 1000s of employees who could go rogue (and they do). 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.
Are they ALL worth it? Absolutely not, are some - absolutely.
High stakes pays big bucks.
My general view is that the quality of CEOs has generally improved over time. Most i meet nowadays are bloody bright people with a terrifying level of focus on key points of the business that less talented people would not necessarily spot, and with the dynamism to focus them and their businesses on it, with the usual result that results = profit for business and CEO. Plus usually a mindbendingly agile mind that can get heads around a problem in minutes not hours or days.
I still hear though of ones that are utter pisstakes but generally their businesses are on their knees, not long for this world. Cause and effect. A good CEO is worth more than weight in gold.
smifffymoto said:
Part of the problem and therefore bad image is when a CEO fails,he/she is very rarely punished.They still sail into the sunset with a golden good bye,thanks for nothing pay off,into the next highly paid position.
They don’t though.One fk up as a CEO and you’re toast. You may get another job but it’s not the same.
I actually think the delta between executive compensation and the workforce is out of kilter but there is nonsense on this thread. The CEO role - in a real, scaled business - is a serious, stressful, all encompassing thing that controls your life. It’s wonderful when you get it right and horrific when you get it wrong.
You have responsibility for people’s lives and livelihoods, your share price affects other peoples pensions and investments. You are constantly scrutinised, permanently performing and thoroughly on show.
ettore said:
crankedup5 said:
Found it in the report that I mentioned and linked to earlier, it could be a few percentage points either way but it is about correct. I am as surprised as anybody reading the report.
It’s not true though.A500leroy said:
Genuine question educated me.
Why do they get paid 100's of 1000s in salary compaired to normal workers/management.
Are they on 24/7 call out? Not allowed holidays or sickness? Are the jobs so difficult that an ordinary person couldnt do them? Not allowed a family life as work has to be number 1?
Whay is they get paid a lot of money and get large bonuses (even in some cases they fail?)
Depends !!some came up with a brilliant idea and or were lucky and now run a growing company,Why do they get paid 100's of 1000s in salary compaired to normal workers/management.
Are they on 24/7 call out? Not allowed holidays or sickness? Are the jobs so difficult that an ordinary person couldnt do them? Not allowed a family life as work has to be number 1?
Whay is they get paid a lot of money and get large bonuses (even in some cases they fail?)
Others are arse licking accountants / management types that are put in to do the dirty work for venture capitalists, carpetbaggers , things like asset stripping ,outsourcing, getting the maximum out as quickly as possible . Without any care about the future for that company ,it’s workers or the country’s economy..
Plenty of work for these people!!!
67Dino said:
The CEO role is a tremendous privilege and hugely satisfying aswell as financially rewarding. However, it is far from a piece of cake, and quite a shock to the system the first time you do it.
Here’s a few things no one tells you before you become a CEO:
- Firms rarely hire a new CEO when things are going well. The day you land you are likely to be standing on a ship that is sinking faster than you thought, with everyone looking at you to stop it going under.
- Your senior team are smart, capable, driven people who have battled to the point of being Directors. Not all of them are thrilled you’ve arrived and not all are going to be helpful. Your first job is going to be fire the ones that aren’t, and find the people who will be.
- All the most difficult issues in the firm will land on your desk. That’s because anything remotely solvable would have been handled lower down the organisation, so all you get are the worst problems to solve. There is no easy work on your To Do list.
- You will have to cover a wide range of specialities and be expected to be good at all of them. In one morning you may have meetings with Finance, Tech, Marketing, HR and Operations, and they expect you to be up to date and able to add value on all of them.
- You will have an almost infinite amount of work to do, since literally every issue in the company is your responsibility. Since you cannot do it all you constantly have to choose which fires can be left burning whilst you sort out the biggest ones. This does not make you popular.
- You are not just always under pressure (since the whole firm depends on your decisions) but also always under scrutiny: the whole firm is watching you. So you cannot show stress, doubts, worries, nothing. You are permanently on show. If a CEO looks like it’s easy doing this they are just doing a good job of hiding the stress.
- If you’re blessed with a good Board it can be a help. A lot of them simply add another burden to the CEO, and another group of people to keep happy.
- Finally, you will be completely, utterly, on your own. You cannot fully confide in anyone, so every major threat, grim decision, and choice of direction is ultimately down to you and you alone.
To be clear, I’m not moaning here, I personally think it’s the best job in the world. It brings more challenge, variety, freedom, opportunity, learning, self-expression and reward than any other role I know of (I won’t comment on whether it’s overpaid, as rather think that depends on the situation). Is it easy though? Absolutely not.
The above needs perspective. It may have some relevance to publicly quoted companies, although I think the idea that the majority of CEOs are White Knights coming over the hill to save the business somewhat risible (plenty are appointed through the usual succession planning processes). However, it is certainly not the case in many private limited companies, particularly when a small business has expanded beyond the capabilities of the founder(s) and the shareholder(s) are reluctant to hand over any control whether the business is running ok (but could be better) or poorly.Here’s a few things no one tells you before you become a CEO:
- Firms rarely hire a new CEO when things are going well. The day you land you are likely to be standing on a ship that is sinking faster than you thought, with everyone looking at you to stop it going under.
- Your senior team are smart, capable, driven people who have battled to the point of being Directors. Not all of them are thrilled you’ve arrived and not all are going to be helpful. Your first job is going to be fire the ones that aren’t, and find the people who will be.
- All the most difficult issues in the firm will land on your desk. That’s because anything remotely solvable would have been handled lower down the organisation, so all you get are the worst problems to solve. There is no easy work on your To Do list.
- You will have to cover a wide range of specialities and be expected to be good at all of them. In one morning you may have meetings with Finance, Tech, Marketing, HR and Operations, and they expect you to be up to date and able to add value on all of them.
- You will have an almost infinite amount of work to do, since literally every issue in the company is your responsibility. Since you cannot do it all you constantly have to choose which fires can be left burning whilst you sort out the biggest ones. This does not make you popular.
- You are not just always under pressure (since the whole firm depends on your decisions) but also always under scrutiny: the whole firm is watching you. So you cannot show stress, doubts, worries, nothing. You are permanently on show. If a CEO looks like it’s easy doing this they are just doing a good job of hiding the stress.
- If you’re blessed with a good Board it can be a help. A lot of them simply add another burden to the CEO, and another group of people to keep happy.
- Finally, you will be completely, utterly, on your own. You cannot fully confide in anyone, so every major threat, grim decision, and choice of direction is ultimately down to you and you alone.
To be clear, I’m not moaning here, I personally think it’s the best job in the world. It brings more challenge, variety, freedom, opportunity, learning, self-expression and reward than any other role I know of (I won’t comment on whether it’s overpaid, as rather think that depends on the situation). Is it easy though? Absolutely not.
Edited by 67Dino on Thursday 26th May 20:03
A500leroy said:
Genuine question educated me.
Why do they get paid 100's of 1000s in salary compaired to normal workers/management.
Are they on 24/7 call out? Not allowed holidays or sickness? Are the jobs so difficult that an ordinary person couldnt do them? Not allowed a family life as work has to be number 1?
Whay is they get paid a lot of money and get large bonuses (even in some cases they fail?)
Never thought of it like this, but on this point - yes. Why do they get paid 100's of 1000s in salary compaired to normal workers/management.
Are they on 24/7 call out? Not allowed holidays or sickness? Are the jobs so difficult that an ordinary person couldnt do them? Not allowed a family life as work has to be number 1?
Whay is they get paid a lot of money and get large bonuses (even in some cases they fail?)
If the company has a serious problem, you are responsible whether you’re asleep/on holiday/having Xmas lunch. I’ve never thought of it as ‘call out’ though since in the CEO role it is ‘your company’. So you aren’t being asked to work, you’re asking your team to call you if there’s a big problem as you don’t want unnecessary damage to the company you’re working so hard to grow.
Seems to me there’s a clear split in perception on this thread. I’d guess (and I’m sure there will be one or two who don’t fit with this!) that those who think CEOs are overpaid haven’t reached the higher levels of management within a company, and so don’t quite understand the level of work required.
I’m not a CEO, but the ones I’ve met have all been extremely sharp, focussed and driven. I don’t think I could do what they do - I’m not interested enough in my industry, and I’m probably not bright enough. I’m certain I don’t want the stress or working hours that come with the role.
Even at my current “head of” level, I’m available pretty much whenever I’m awake, and will be responding to emails, etc. I’ve got next week off - this means I’ll try and avoid logging on to the laptop, but email and instant messaging will both be on my phone, and will be used. I will have to log on properly to attend a customer call on Tuesday.
As a CEO, you live and breathe the company. Yes, you’re extremely well paid for it - that’s compensation for giving up your entire life to run a company.
Do you have job security? Possibly - if there’s a round of redundancies the CEO is unlikely to go. However, if the redundancies are due to poor company performance then it may well be time to find another CEO. Will that person walk into another equivalent role? Depends, but probably not, and almost certainly they won’t be “walking into” the job - who wants to hire a failure?
Are they well paid to go? Again, possibly (depending on what’s in their contract), but this generally reflects how easy / hard it is to get another similar role. A regular worker might get one month’s notice. More senior will probably be 3-6, and a CEO is probably longer than that.
I’m not a CEO, but the ones I’ve met have all been extremely sharp, focussed and driven. I don’t think I could do what they do - I’m not interested enough in my industry, and I’m probably not bright enough. I’m certain I don’t want the stress or working hours that come with the role.
Even at my current “head of” level, I’m available pretty much whenever I’m awake, and will be responding to emails, etc. I’ve got next week off - this means I’ll try and avoid logging on to the laptop, but email and instant messaging will both be on my phone, and will be used. I will have to log on properly to attend a customer call on Tuesday.
As a CEO, you live and breathe the company. Yes, you’re extremely well paid for it - that’s compensation for giving up your entire life to run a company.
Do you have job security? Possibly - if there’s a round of redundancies the CEO is unlikely to go. However, if the redundancies are due to poor company performance then it may well be time to find another CEO. Will that person walk into another equivalent role? Depends, but probably not, and almost certainly they won’t be “walking into” the job - who wants to hire a failure?
Are they well paid to go? Again, possibly (depending on what’s in their contract), but this generally reflects how easy / hard it is to get another similar role. A regular worker might get one month’s notice. More senior will probably be 3-6, and a CEO is probably longer than that.
Roman Rhodes said:
The above needs perspective. It may have some relevance to publicly quoted companies, although I think the idea that the majority of CEOs are White Knights coming over the hill to save the business somewhat risible (plenty are appointed through the usual succession planning processes). However, it is certainly not the case in many private limited companies, particularly when a small business has expanded beyond the capabilities of the founder(s) and the shareholder(s) are reluctant to hand over any control whether the business is running ok (but could be better) or poorly.
Small to medium sized businesses are unlikely to be paying their CEOs millions of pounds though… Roman Rhodes said:
The above needs perspective.
Definitely agree with this. I can’t think of another job outside entertainment or sport with quite so much undeserved mystique I don’t think. Whilst it has many unique characteristics, CEO is just another job, and there’s the same range of skill and decency in the people doing it as any other job. What I would say is that, as with many jobs that require skills and experience, not everyone can do it well. That’s one of the reasons it’s well paid at the top, because people who can make a lot of money for shareholders are rare and in demand. And just as with footballers and pop singers, the pay has gone up as the potential returns from hiring a good one have gone up.
As to the question of social value, I don’t think CEOs are somehow better than nurses, doctors, teachers, scientists, soldiers or any of the other myriad people we all depend on daily and especially in an hour of need. But I do think they are important. All of those jobs depend on a thriving economy to pay for them, and CEOs are a significant contributor to that. If we didn’t have good CEOs in the economy, we’d quickly notice it.
ettore said:
crankedup5 said:
Yes it is certainly hard hitting, but don’t worry because the only changes will be brought about by shareholders and whilst they being served well the merry-go-round will happily spin for a while yet.
…and who are the shareholders?We seem to be focusing on large public companies - who are the primary/institutional shareholders?
Then we have FTSE CEO who for the most part take on a fully fledged public Company owned of course by the shareholders. Are you asking me who holds the majority of shares in a FTSE because you don’t know?
ettore said:
smifffymoto said:
Part of the problem and therefore bad image is when a CEO fails,he/she is very rarely punished.They still sail into the sunset with a golden good bye,thanks for nothing pay off,into the next highly paid position.
They don’t though.One fk up as a CEO and you’re toast. You may get another job but it’s not the same.
I actually think the delta between executive compensation and the workforce is out of kilter but there is nonsense on this thread. The CEO role - in a real, scaled business - is a serious, stressful, all encompassing thing that controls your life. It’s wonderful when you get it right and horrific when you get it wrong.
You have responsibility for people’s lives and livelihoods, your share price affects other peoples pensions and investments. You are constantly scrutinised, permanently performing and thoroughly on show.
smifffymoto said:
Part of the problem and therefore bad image is when a CEO fails,he/she is very rarely punished.They still sail into the sunset with a golden good bye,thanks for nothing pay off,into the next highly paid position.
Absolutely does happen - I was at HP during this guy's short (10 month) tenure as CEO:https://en.wikipedia.org/wiki/L%C3%A9o_Apotheker
Company lost 30 billion dollars in value during his ten months there due to decisions he made. For those ten months' employment, he got:
$13 million in pay
shares worth $3.56 million
performance(!) bonus of $2.4 million
and severance payment of $7.2 million
not bad for ten months and fking up a company.
Cascade360 said:
A500leroy said:
Cheers chaps a bit clearer now, they kind of deserve what they get, but the difference between the bottom and them seems to be getting wider which does appear to be wrong.
Capitalism at work, exacerbated by a refusal to tax wealth over income. Are you confusing CEO with shareholders?
Biggy Stardust said:
A500leroy said:
Cheers chaps a bit clearer now, they kind of deserve what they get, but the difference between the bottom and them seems to be getting wider which does appear to be wrong.
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