To be fair, the job is fraught with peril.
What do these three have in common? All have been paid astounding amounts of money, yet only one has been openly criticized and ridiculed because of it.
Grasso, the former chairman of the New York Stock Exchange, is only the latest among numerous executives pilloried for their excessive compensation. Certainly many of the CEOs under fire — Kenneth Lay of Enron, Dennis Kozlowski of Tyco and Bernie Ebbers of WorldCom are just a few examples — led their companies in ways that were allegedly inimical to the interests of a wide spectrum of constituents, including shareholders, employees and customers.
It is hardly surprising that they are in the hot seat. Actors, athletes and executives are among the most populous inhabitants of the rarified atmosphere of multimillion dollar incomes. Why is it, then, that corporate executives are coming under fire for excessive pay when athletes like Michael Jordan and entertainers like Oprah Winfrey seem to stir no such feelings of resentment?
Indeed, Winfrey is widely beloved by millions of people, many of whom are women with lower-than-average incomes, and Jordan is respected and admired by millions more, many of whom are men with lower-than-average incomes.
Athletes and entertainers produce something that is clearly evident to their fans. CEOs, in contrast, often have a hard time demonstrating exactly what they bring to the party. Larcker, an expert in executive compensation, says it is common for people trying to explain the high pay of CEOs to benchmark executive salaries to the compensation paid actors and athletes.
The issue is, does that labor market actually work? The statistical nature of most professional sports also contributes to the scrutiny players get. And ultimately fans can vote with their ticket dollars on what kind of value the collective talent on a team provides.
The best pitcher for the buck? And, of course, the New York Yankees are in for their share of opprobrium in the wake of their World Series loss at the hands of the Florida Marlins.
In any case, when it comes to CEO compensation, Larcker worries that the market for executive talent may not be working very well.
But is it functioning well? In many cases, you have friends hiring friends. You have guys like Bill Gates or Michael Dell who have done huge things from scratch and most people would agree they deserve to be paid a lot. Weill used his clerkship to launch, then lose, one financial empire, only to come back and create a second one that resulted in the creation of Citigroup.
Grasso, on the other hand, remained at the Big Board, learning the intricacies of the exchange and making the contacts that would eventually propel him to its chairmanship. Grasso, meanwhile, had presided over the New York Stock Exchange and garnered accolades for getting trading started again quickly after the Sept.
Today, despite his retirement as chief executive officer of Citigroup, Weill remains a powerful voice in the company, continuing to serve as chairman and enjoying the enormous wealth he accumulated along with shareholders who invested in his companies.
Grasso, on the other hand, resigned in ignominy after his massive pay package was disclosed, a package given him by a board of directors that consisted of the CEOs of many companies that the Big Board was charged with regulating.
Former Citigroup vice-chairman John Reed has come in to reform the entire operating structure of the exchange amid concern whether it can survive in its current form. But then, as part of an acrimonious divorce battle, his lavish retirement compensation and benefits were disclosed and suddenly he was tumbling off his high pedestal.
The problem, Larcker says, is that while direct annual compensation is pretty well disclosed, deferred compensation often is murky and only rarely comes to light. Larcker thinks executive pay issues are going to focus similar attention soon on compensation committees.Do CEOs Deserve Their Pay?
View (active tab) PDF; they will work hard regardless of salary. Companies that give CEOs grandiose pay packages are wasting resources that could be put to better use.
market forces would bring their salaries down. Furthermore, they deserve high levels of compensation given their ability to withstand the. Our Personal Salary report not only explains your value in different markets, but provides resources to help you leverage this information.
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Search US Salaries Search Canada Salaries. Executive Pay. Curious about how much executives at top public corporations make? May 01, · Do CEOs deserve their high salaries?
leave a comment» Late last year, Bloomberg reported that South African Chief Executive Officers earn the 7 th most of any country in the world – a whopping R million per person per annum.
Do Media Chiefs Deserve the Lavish Pay Packages They Rake In?
Discovery’s David Zaslav and Time Warner’s Jeff Bewkes each took home salary and It also means that they establish a.
They can get capital for new investment on much the same terms.
And they can gain access to distribution channels that are no less efficient, some of them even identical. Do CEOs deserve their pay? that nobody heeded the warnings of management sage Peter Drucker who determined that the proper ratio between a chief executive’s pay and that of the average worker should be around to-1 (as it was in ).
market forces would bring their salaries down. Furthermore, they deserve high levels of.