Seriously!
That’s what the head of Exxon Mobil earned: $144,573 per day, every day for 13 years, or a total of more than $686 million for his service from 1993 to 2005.
True, he performed well, increasing the company’s market value fourfold, to $375 billion. But still, such compensation seems slightly obscene and inappropriate. Is anyone’s time really worth $6,023 per hour, or $100 per minute, 24 hours a day for 13 years?
[quote=“Mother Theresa”]Seriously!
That’s what the head of Exxon Mobil earned: $144,573 per day, every day for 13 years, or a total of more than $686 million for his service from 1993 to 2005.
True, he performed well, increasing the company’s market value fourfold, to $375 billion. But still, such compensation seems slightly obscene and inappropriate. Is anyone’s time really worth $6,023 per hour, or $100 per minute, 24 hours a day for 13 years?
nytimes.com/2006/04/15/busin … ei=5087%0A[/quote]
I agree. It is obscene.
The problem is you could have the head of a company who is marginal and earns 1/2 that amount and sends the company into liquidation and the shareholders lose money and the employees lose their jobs.
Or, you can take your best shot with the absolutely best person available.
Based on the figures provided his cost to the company is less than 1% of its increase in worth.
Obscene, yes. Practical, yes.
Supply and demand. The supply of top executive winners is limited.
In an ideal world that exec would contribute 2/3rds of their wage to a needy cause.
It is obscene.
In real terms–setting aside expensive toys–would he be an worse off if he’d made 10% of what he was actually paid? $68.6 million instead of $686m. Would he not have shown up for work if he were paid 1% of what he was: $6.86m, for 13 years. That works out to something like a half million per year, which is still more than 5-10x what most well off workers within the company would pull down. That’s only practical because the rest of the corporate world is playing “Pimp up my CEO”. :loco:
In an ideal world, those execs either wouldn’t make so much, or would contribute 2/3 - 3/4 of such an insane salary to a needy cause: the public purse.
Most obscene.
Supply and demand.
I can’t see that it’s obscene.
Honestly.
I think that figure is wonderfully symbolic of what is essentially a piggish system. Indeed I propose that an extra gas levy be implemented in order that the man recieve a salary increase. I further propose that he be encouraged to invest a portion of his salary into the current effort to flatten and pave California. When that project is completed we can have a competion to see who can burn the most rubber in his SUV. The winner can take over as “Secretary of Blood for Oil” after Bumsveld gets fired.
what exxon does is attempt to make the maximum amount of money possible for its shareholders. if it feels it can do this best by paying a director an obscene amount of money then it should, in fact it is morally obligated to do so.
And with that set of morals at work the world over we watch the world slowly go down the toilet.
Check out NPR On Point’s podcast on CEO salaries. It provides discussion of a number of very good arguments against this scale of compensation.
What he has made is half what JK Rowling has during the same time period. Do you consider her earnings obscene? Undeserved? Instinctively I don’t which is telling.
Rowling is nearly entirely responsible for the success of her series of books. No CEO is similarly omnipotent… one of the arguments made in that podcast: CEO tend to be managers, but they’re now seeking entrepreneurial compensation.
Then perhaps we should encourage all CEOs to play up the E in their title, creating new value and wealth for all the stakeholders in company: customers, employees, and shareholders.
‘E’ here of course would be “Entrepreneurial” - Chief Entrepreneurial Officer.
Of course, I don’t think a free society can or should limit what people receive in their paypacket. That would basically impoverish all employees in the long run, as many would no longer see the benefit of working hard.
Perhaps though C/E/S can pressure companies and boards to be ‘responsible’ in their packages.
Of course, we only hear that information from ‘public’ companies. Private companies aren’t compelled to release such information.
Kenneth
The guy’s heading up a company with vast reserves of a rapidly dwindling resource, the real test of his mettle is the next 10 years. The past decade has been an oil execs wet dream on almost evey front you care to mention. Farker won the lottery getting that gig. Simple. Monkey could’ve done it.
HG
as mentioned, it is a case of supply and demand. with global businesses, this situation accelerates the difference between the top and 2nd place.
the book “the lexus and the olive tree” describes this well. they use the example of michael jordan, when he was playing for the chicago bulls. his stats (free throw sucess %, etc, etc) were about 1-3% better than the bulls lowest ranked player, but he earned 100 times more (apologies in advance if i have the exact figures wrong as it was a while since i read the book). but jordan was the best, and every other player was not.
in the case of sport, the salary is set by the fans, and most are not unhappy that jordan was making the big bucks (pardon the double negative, as it would prob not be true that they were actually “happy”). in business, the salary is set by the board, but really by the shareholders. a “star” CEO will affect the market, and thus the share price, simply on their good name. in accounting terms, their name alone can add to the goodwill of the company.
anyway, that is my $0.02.
ac, so far as I understand the matter, you’re way off base.
There’s not really a market for CEOs. CEOs report to the board–in theory. In fact, most CEOs enjoy very cozy relations with their boards, members of which may or may not be CEOs elsewhere. Board members–particularly if they are CEOs elsewhere–have little interest in holding the line on executive perks. As whoever in that podcast I cited mentioned, everything is cheap when paid for with other people’s money, and rising executive salaries tend to benefit all executives in time. Market mechanisms thus fail to come into effect.
As for the shareholders, it might be nice to have a celebrity CEO, but sacrificing 5-10% of net profits (and a good chunk of change even if there is no profit) is absurd. Thus the formation of shareholder rights orgs. Too bad the bulk of stock is held in a small number of hands and the marginal democratic value of being a shareholder is thus weighted against the large number of people who hold a small share of the stock.
Okay this is a simple question so bare with me you intelligent people.
Why is it obscene that a CEO who clearly did his job=caused the company to gain profits, reap the benefits of all that? I am certain that this man wasn’t working 8 hour days, but scarificing his life for this company for it to gain so much.
What I find obscene is how sport stars, entertainers, and the like can make millions just based on their physical nature/talent(if they have any) and so forth.
Indulge me in seeing the diffence, pls.
I’d say it’s obscene because the pay of the CEO is disproportionate to his real value (hard to prove save by "what if you had replaced A with B at time X, but I do believe there’s something like a ‘just price’ that’s entirely separate from ‘what the market will bear’). It’s obscene because any notion of all members of the company (not to mention society) being in the same boat is blown completely out of the water. The value ascribed seems to be entirely based on celebrity and on a market that doesn’t exist, and where it does exist, is an artifact, not a fundamental law of nature.
I agree that the money entertainers make is likewise obscene, but at least in that case there’s a genuine market. Franchise owners want to pay their stars less than than the stars hope to make; entertainers only make the big bucks so long as there’s an audience willing to line up and fork over big bucks. Neither is allowed–nearly invited by others–to pillage our purse.
There are a lot of motives capable of driving a society, and greed is undoubtably one of the strongest. Certainly, it’s one of the best for achieving rapid results without overly much oversight. But like any motive, left uncheck it unfailingly ends up driving society over a cliff.
[quote=“Jaboney”]I’d say it’s obscene because the pay of the CEO is disproportionate to his real value (hard to prove save by "what if you had replaced A with B at time X, but I do believe there’s something like a ‘just price’ that’s entirely separate from ‘what the market will bear’). It’s obscene because any notion of all members of the company (not to mention society) being in the same boat is blown completely out of the water. The value ascribed seems to be entirely based on celebrity and on a market that doesn’t exist, and where it does exist, is an artifact, not a fundamental law of nature. [/quote] Oh that went so far over my head. Dumb it down please. LOL
There are a lot of motives capable of driving a society, and greed is undoubtably one of the strongest. Certainly, it’s one of the best for achieving rapid results without overly much oversight. But like any motive, left uncheck it unfailingly ends up driving society over a cliff.[/quote]
I guess the bottom line of this arguement/discussing is how much greed has gotten out of hand and no one is in power to put these people in check.
LOL. Sorry Namahottie, my bad. 
I don’t think that guy’s worth that much.
If you could go back in time, pull him out, and stick someone else in place, how much would change? Tough to say, but I’m guessing not much.
Having someone in charge who is so highly, publicly valued creates all kinds of unreal expectations and unreasonable pressures on the the next guy to sit in the big chair. Think of Alan Greenspan. He’s been called “the best central banker since God.” Lots of people think he’s always right. That puts so much pressure on the next guy, how’s he going to manage it? Creating a myth surrounding the big guy means destroying everyone’s faith in the group when he goes. It happens a lot, in business and sports. (Who took Jordan’s place on the Bulls when he retired the first time? How’d he do?) That kind of myth can be useful for a time–strikes fear into the hearts of your enemies, for one thing–but in the end it kills you. It’s not worth it. He’s not worth it.
How do you convince people who work further down the line to “give it their all” when you’re “taking it all”? Why should I, a little guy, work my ass off so that the boss can give himself another $5,000,000 bonus while cutting my benefits and threatening to outsource my job? Do I want to see his kids, grandkids, great-grandkids, and great-great-grandkids all coasting through life on one fat cat’s fat payday, while me and mine scrape by? Why should I support that kind of excess? I’ll work hard to make the company a success if I can share in that success. I’ll put in an honest day’s effort, if I’m treated honestly. But if the boss is making 250 times more than I am, I don’t think that’s right.
Just because someone is willing to pay the price (with someone else’s money) doesn’t make it the right price. If you’ve got access to Michael Jordan’s bank account, how much are you going to be willing to spend on transportation? Is the price you’ll be willing to pay for a Bentley the right price, given that it’s not your money? Do you need a Bentley? Wouldn’t a Caddy, or maybe a shiny pickup do (maybe even a better job)?
“The Market” is a great way of solving a lot of economic problems, but not all of them. It’s not perfect. It’s been designed to work in certain ways, and it’s dependent on all sorts of things, and I think that too many deals like this ultimately unbalance the market and destroy the system.
(I hope I did a better job expressing myself that time around. yeah?)
i don’t see how you could say that. it’s legal and no one is being harmed by it. as far as anyone being harmed the arguments Jaboney makes above seem like a real stretch to me. i also disagree with your last paragraph J, I think the market will do a far better job of correcting such behavior if it proves harmful to a company than any form of arbitrary regulation.