Are Bankers Paid Too Much? Are Technology CEOs?

DavidHumus writes with this excerpt from a New York Times article: "Big paydays on Wall Street often come under laserlike scrutiny, while Silicon Valley gets a pass on its own compensation excesses. Why the double standard? The typical director at a Standard & Poor's 500 company was paid $251,000 in 2012, according to Bloomberg News. Mr. Schmidt [Google's CEO] is above that range by over $100 million. ...The latest was the criticism of Jamie Dimon's pay for 2013, given the many regulatory travails of his bank, JPMorgan Chase. The bank's board awarded Mr. Dimon $20 million in pay for 2013, $18.5 million of which was in restricted stock that vests over three years. ...For one, the outsize pay for Mr. Schmidt doesn't square with Google's performance. Putting aside the fact that he is not even the chief executive, Google had net income of $12.9 billion last year. JPMorgan was higher at $17.9 billion...." DavidHumus notes "Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

Comments

tl;dr

[Anonymous Coward]

Yes

Re:tl;dr

[ArchieBunker]

and also yes.

Re:tl;dr

[amicusNYCL]

Seconded, yes.

Here's the difference: technology CEOs run companies that make things and contribute to society. Bankers earn a profit by moving other peoples' money around and taking some off the top. One of those jobs is necessary for us to progress.

Re:tl;dr

[Anonymous Coward]

Contribute to society?

Don't make me laugh. If the Big One hit tomorrow the world would merely get a little more boring.

Re:tl;dr

[slapout]

I find having a bank account very handy for handling my money. Banks do contribute to society.

Re:tl;dr

[buchner.johannes]

A car salesman is paid less than a real estate agent, because selling and buying houses is a bigger investment, happens less often and more things can go wrong.
A real estate agent is paid less than a banker, because selling and buying companies is a bigger investment, happens less often and more things can go wrong.

If you see their income it as a percentage of the successful sale, the analogy works and explains the figures.

Re:tl;dr

[CrimsonAvenger]

One of those jobs is necessary for us to progress.

The Banker? Because without him, those technology CEO's wouldn't have any money to make things and contribute to society.

Re:tl;dr

[Frobnicator]

Compensation is whatever you negotiate.

Fairness is an interesting concept. "Fair" and "Equitable" are different. "Fair" and "Equal" are different. Is it fair that you can have two similarly-skilled, similarly-trained, similarly-experienced programmers working side by side but they have a difference in pay?

If you think it is unfair, then push for labor unions and publicly shared compensation details at every level. Most (all?) state already do this, publishing the salary tables for every job from governor and legislator to university coach to public school teacher to public park janitor. You can look up exactly how much anybody earns, and you can petition the government to change their rates.

If someone is hired when the team is in dire need and the other is hired when the team is flush with workers, then at negotiation time one will be in a better position that the other for compensation. Some people don't like that, and want everyone to be paid based on a standardized table of years of work experience and years of education; look up where they cross, that is your salary.

Personally I prefer a market wage of whatever I can negotiate. Of course, I can negotiate a fairly strong package based on projects I have worked on, roles I have lead, and other measurable results in my history.

Re:tl;dr

[Anubis350]

I find having a bank account very handy for handling my money. Banks do contribute to society.

Bear in mind that investment banks and savings banks used to have huge firewalls between them, so that the one you find useful wasn't the one taking huge risks (it is, or was, also the smaller banks that typically extend credit to local businesses, not the huge investment banks)

Re:tl;dr

[Dishevel]

Just because you hate bankers (Most people do for good reason) is no reason to abandon reasoned thought.

If I own a company and I hire someone I can pay them as much as I want. If I pay them too much my company suffers. That is my problem. In the case of bankers, their salary comes from the profits of the banks and therefore is paid for by the people on the board. It is their choice. If you do not like the fact that taxpayers are bailing them out then take that up with your idiot, beholden senators and representatives. Tell those bastards you do not want to pay to bail out financial institutions. That you think automatic federal deposit insurance entourages people to not care where their money is.

But people are stupid so ... Fuck those bankers. They make too much money!

Re:tl;dr

[i kan reed]

A hard to prove assertion.

Re:tl;dr

[sycodon]

Most companies could not have been started without them and many require bankers to provide cash for capital investments, short term loans, etc. Banking is an integral part of business.

Re:tl;dr

[geoskd]

The Banker? Because without him, those technology CEO's wouldn't have any money to make things and contribute to society.

Horse crap. When the technology company critically needed money, the investment bankers are nowhere to be found. The only people that will put money in that direction are the angel investors. The bankers only become involved when all of the real risk has been removed. Without investment bankers, companies would still be formed and grow, it would just be a much slower, more natural, growth. Investment bankers are, as stated, parasites.

Re:tl;dr

[interkin3tic]

Straw man argument. No one said that banks are useless, just that "bankers" (in the wall street sense) contribute less to society (in the "where most people live" sense) than one would expect, given how much they are paid.

It's not like repealing glass-steagall gave us the internet, smart phones, and a cure for cancer. All that I can see it did was continue a feedback loop whereby the super-rich get richer, get more power, and change the laws to make themselves richer at our expense.

Credit unions serve the purpose you mention, yet they don't at the moment leech off society like chase does. We could do away with the too-big-to-fail entities, and it wouldn't hurt you or me too much. Well, in theory, anyway, I'm sure the extraction process in reality would leave something worse, be it through reform in the current political climate or violent revolution.

Re:tl;dr

[jythie]

Esp when you want to do things like write paychecks, buy a house, or not starve when you retire.

Though it can be argued that their contribution is disproportionate to their pay, esp when talking about, say, futures traders, who's primary impact is to drive up prices and pocket the difference.

Re:tl;dr

[Anonymous Coward]

I find having a bank account very handy for handling my money. Banks do contribute to society.

You find this convenient only because the alternative is you lugging around physical cash instead, which also subjects you to increased risk.

Digital currency would eliminate that concern (which creating others, notably), and I noticed that bitcoin doesn't seem to require society to pay the banker tax by creating millionaire money pimps.

Re:tl;dr

[Kimomaru]

Not exactly. Banks provide a critical service to economies, they don't just "move other peoples' money around". It's not exactly trivial to loan people money to buy homes or set up businesses or loan money for college. Are there problems with a system that incentives bankers and CEOs to be unethical? Yup. Banks are still important, though. It's the incentive to do the right thing that's a problem. I suspect most people put in a banker or CEO position would act the same way - money and power change the way people view the world and how they think in general.

Re:tl;dr

[Penguinisto]

I have a fun question: Why do media reporters complain about CEO pay, when many of the really big media journalists themselves pull in $20+ million a year in salary?

Re:tl;dr

[Penguinisto]

I find having a bank account very handy for handling my money. Banks do contribute to society.

I find that Credit Unions do a far better job of it, and without the rapacious fees, policies, and hassles. They also happen to have better rates (for what that's worth nowadays).

For awhile, I even experimented with using just a simple pre-paid debit card, where my paycheck was deposited into an account tied to the card. It cost me something like $7/mo flat-fee, and I could even have the one I used generate and mail certified checks if needed (I think some of them have online bill-pay services now on top of that.)

I guess I really don't understand what makes people want to use, say, BoA or Chase, when it seems that their sole purpose is to rake as much money out of you as possible. :/

Re:tl;dr

[almitydave]

An interesting thing about bitcoin is that mining is required to validate transactions, and as mining becomes less (and eventually un-) profitable, the only financial incentive for miners to run their 1TH space heaters is transaction fees.

In other words, a little off the top of every transaction to the guy who helps you move your money.

It's worth noting, however, that these are less likely to be "millionaire money pimps" and more likely large pools of many individuals.

Re:tl;dr

[amicusNYCL]

Bankers should not be in the business of buying and selling companies. A banker's job is to store your money until you need it again. What they actually do is move your money around and take points off the top, and enrich themselves. And yes, without Glass-Steagall they most certainly do buy companies, but that should not be the job of a banker.

Re:tl;dr

[Anonymous Coward]

It's a subsidy for those who suck at negotiating.

For instance see the business model of the now defunct Saturn motors.... Not haggling, no price drop, they advertise what you have to pay. Those with real low IQ tend to love not having to get screwed by paying too much.... but those of us with savy can no longer get the lower price that we work hard to get. (fake walking out, befriending dealership people, etc)

They act as if those extra things smarter people do to negotiate better are unfair or something.

Just like with business and unions I'm against it because I have a brain with above average intelligence. I dropped out of high school and made six figures last year. I'm making the money because I'm good at what I do.... but the college grads around here think they should have more of my pie because their rich dad payed for some school. Their unions wouldn't even allow the company to hire someone talented like myself with no college credentials....

Yet I'm a senior software architect at a big firm and doing the work.... I view it as an attack on my natural talent. They want to remove talent from the equation and go back to penalizing someone like me for not jumping through their schooling hoops. I worked hard to avoid their hoops yet still succeed... Now they are trying again to take that from me.

Re:tl;dr

[geoskd]

If you do not like the fact that taxpayers are bailing them out then take that up with your idiot, beholden senators and representatives.

Bailing out the banks was not optional. Congress failing to act when the crash happened would have resulted in deaths. Even a 50% colapse of our global economy would cause millions of people to starve to death or die fighting for food. A 90% collapse would kill half the population in the US in the first winter alone. We have built a system where the banks are in the position where they are too big to fail. If we let them fail, the economy colapses.

It all goes back to the way companies pay their employees. Back in the 19th century and before, companies kept huge cash reserves so that when they issued payroll checks, the checks didn't bounce. for a company like GM or UPS, that payroll reserve would be on the order of billions of dollars. With the advent of the modern banking sector, a brilliant banker thought up the idea of payroll lines of credit. This allows a company to spend its entire payroll reserve, and if there isn't enough in the coffers, they temporarily run a line of credit until the funds come in. In practice, this allows the company to average pretty close to zero in their payroll accounts. It means that companies can re-invest that money into growth.

The down side to that, is what happens when a bank is insolvent. That bank can not loan any money (they dont have any to lend), so they close their customers payroll accounts. Now, the bank can't honor withdrawls because they have no cash, and the companies have not paid their employees because they have no payroll credit account anymore, and they dont keep cash reservces anymore. Now, the employees cant buy anything because they have no cash, cant get cash, and the ATM/debit cards arent working anymore. So they stop buying *anything*. Now they cycle gets viscous. Companies no longer have any income because people have no money, so they cant even honor their outstanding payroll, nevermind next weeks paychecks.

If one bank does it, the economy can absorb the hit. If 25% of the banking sector does it, the shock waves will eventually (a few months out) colapse the entire banking sector, and with it everything else. Everything stops. This happened with the great depression, but at that time the credit economy was only 30% of the whole economy. Today, the credit economy accounts for 98% of the worlds economy. You take that away, and its like taking away 98% of the air under an airplane. It simply cant function, and the result is gonna be messy.

Re:tl;dr

[Penguinisto]

I suspect that a simple change such as requiring a bank be contained to just the state their HQ is located (and break up or spin off the out-of-state assets/customers into separate companies) would be plenty enough to retract a lot of the damage that they've wreaked over the years... plus there would be no more "too big to fail!!!111OMGBBQ!one!" banks.

Re:tl;dr

[amicusNYCL]

It's not exactly trivial to loan people money to buy homes or set up businesses or loan money for college.

I'm not sure what you're thinking of, loaning people money is certainly extremely trivial. Creating an interest plan is trivial math. Giving someone money, or anything else of value, with the promise that they pay you back is not exactly a new idea. People have been doing that for each other since before there were banks.

Bankers would love to make you think that what they do is extremely complex, and very important, and you need them. They're just gamblers though, except they don't gamble with their own money. That's the racket.

Re:tl;dr

[cayenne8]

I have a fun question: Why do media reporters complain about CEO pay, when many of the really big media journalists themselves pull in $20+ million a year in salary?

Why don't they bitch about the high salaries professional athletes bring down? Famous rock stars? Movie stars?

My thing is, why do we complain at all about who makes how much?

I mean, it isn't really a zero sum game. A CEO or basketball star making millions of dollars a year, doesn't take money out of someone doing another job that make significantly less.

The salary of the vice president at McD's isn't taking money meant for the burger flippers pocket....

Re:tl;dr

[Kimomaru]

It's trivial if you're calculating it on a spreadsheet. The math is trivial. If you're doing something in the real world, it's involved. You need staff to review loans and process them. Staff costs money, so you hire people to manage the staff, like managers and human resources (to pay them and manage their benefits). Do they work in a building? Buildings cost money, their utilities do as well - more cost. If the loans are made via credit card (which are usually unsecured loans - in other words, you don't lose your house if you don't pay the bank back), then it's a whole lot of other things like dealing with fraud and identity fraud, and managing a service where the borrower's credit worthiness changes from month to month. All of this is cost, and none of it is trivial.

Re:tl;dr

[dryeo]

Bailing out the banks was not optional.

There were other options such as nationalizing the banks, breaking them into smaller pieces and reselling them after the crisis calmed down.

Re:tl;dr

[Anonymous Coward]

another strawman argument,

I didn't realize facebook / name any other hot social media stock gave us the internet, smart phones and a cure for cancer either.

Re:tl;dr

[DarKnyht]

And the moral we should learn from this is that credit, when used irresponsibly, is bad. Be that personal, business, or goverment credit/debt.

Re:tl;dr

[QRDeNameland]

Here's the difference: technology CEOs run companies that make things and contribute to society. Bankers earn a profit by moving other peoples' money around and taking some off the top. One of those jobs is necessary for us to progress.

Unless/until humanity overthrows the global captialist/monetary economic system, banking is just as necessary for 'progress' as the tech sector.

Banking is not inherently evil...the problem arises when the financial sector grows too politically powerful and can twist the laws to permit them greater and greater capacities for rent-seeking. This is not limited to the financial sector, they just seem to be in a better position to do so than most other enterprises.

The problem is with an electorate that is politically disengaged and doesn't notice when the laws are gradually changed to allow economic players to shift from active wealth creation to passive wealth accumulation, until one day you notice that bankers are ignoring the traditional risks of their business because the laws permit them to privatize their profits while shifting their losses to the public. But this is not limited to banking/finance...even in the tech sector you have the telcos and the trend towards walled gardens where they are more looking to simply skim fees rather than provide better and more useful technology.

I am by no means a dyed-in-the-wool capitalist, but as long as we are stuck with the system we have, it is not very useful to single out banking as a whole as the cancer on the system, and instead focus on how we regulate the actors in the system we have.

Re:tl;dr

[AuMatar]

Because most of us don't have these fees. I have a 0 fee checking account at BoA that just requires me to keep a monthly minimum balance. That balance is a fraction of what I normally have in there, so it isn't an issue. In exchange I get access to my money via the web anywhere, and access to services like cashier's checks at thousands of places across America if I need it. Definitely a good deal for something I would have done anyway.

I could switch to a credit union, but it would have non-zero time cost, cost me money in ATM fees when traveling (I can always find a BoA atm), and make some things impossible while traveling. Not worth it.

BTW- if you are being stuck by fees and you aren't living paycheck to paycheck, the magic words "then I'd like to close my account" is great at making fees go away.

Re:tl;dr

[Anonymous Coward]

The salary of the vice president at McD's isn't taking money meant for the burger flippers pocket....

Um, yes... yes, he is. That's exactly the point.

Re:tl;dr

[interkin3tic]

Wait, what strawman are you referring to? I didn't mean to suggest that facebook gave us the internet either, I'm just saying glass-steagall repeal didn't do much for us, that superbanks aren't really helping much.

Re:tl;dr

[PopeRatzo]

many of the really big media journalists themselves pull in $20+ million a year in salary

Please give an example of a journalist in any media who makes $20+ million. Not a "personality" mind, but an actual journalist.

Re:tl;dr

[Anonymous Coward]

if you utilized any of the online functions that any of the national banks offer, you'll find that most local credit unions lack this feature severely.

online bill pay? Some of them offer and it's not wired electronically, alot of them cut a check and you have to wait 3-4 days to make sure it clears

No fee atms? Some credit unions pay the fee for you, but if you're on the road often, you'll find that there's a limit to this (usually 200$/yr)

Brokerage services, I personally love being able to use TD ameritrade and have money easily transfered between my td account and my ameritrade account all online

Info stolen?
24 hr support calls, even if they might be ineffectual, I do have someone to call. Credit union means i have to do it at certain hours.

and here's the big one, Credit unions are only insured up to 100k in deposits
banks are insured up to 250k

when there's a run on money, you're more likely to get your money back from a bank compared to a credit union.

Credit unions certainly serve a great function, but they are definitely not the end all for everyone.

Re:tl;dr

[master_kaos]

Are you sure? I find it hilarious how huge companies have to lay off thousands of employees, yet the CEOs are still making their 10s of millions in salary. How about first eliminating bonuses, as well as dropping salary before eliminating employees. For example ,Blackberry CEO getting a compensation package of 88 mil literally days before laying off a bunch of employees. How about offering him 50 mil instead and keeping on 700 workers,
And he gets a private jet to travel between his home and Waterloo headquarters at an approx value of 50k per round trip (almost someones full yearly salary) because he is too fucking lazy to move to waterloo to do his job even though he is getting a shitton of money.
And yes I am a bit better because I do live near (and work in)waterloo and know a few people affected by the layoffs.

Re:tl;dr

[recharged95]

OF COURSE

Honestly paying a lot for hyped tech companies sure sounds like an excuse to avoid some type of taxes.... (e.g. capital expenditure)

Re:tl;dr

[PopeRatzo]

The salary of the vice president at McD's isn't taking money meant for the burger flippers pocket....

He absolutely is.

In fact, in the specific case you cite, low-end wages are kept below poverty so that not only is the vice-president of McD's taking money away from the burger flippers, but he's taking money from each and every taxpayer by having the government subsidize his employees.

There are even laws now to codify such arrangements. If a Southeastern state lures a manufacturing plant from say, Washington or Oregon, one of the ways they do it is to agree to allow the company to keep any state income taxes that are withheld from employees wages. The taxes are still taken out of each paycheck, but the money never goes beyond the company's coffers.

Corporations are seeking out this kind of deal, and states, in a rush to the bottom, are giving in so they can show how they're "bringing jobs" to their area.

The issue of sports stars or movie stars is a red herring. There are so few of them as to make it irrelevant, and their pay is directly tied to the profits they are expected to generate for the owners.

CEOs' salaries on the other hand, are entirely a function of a buddy system in corporate boards. Everybody gets a nice income and lifelong security and they scratch each others' backs. You will never hear of the board of directors of a big company or bank asking if maybe they can find a CEO from Pakistan or China who's willing to work for $250,000 instead of $40,000,000, even though there is very little evidence that the CEO has that much impact on a company's bottom line. Despite the fact that it's absolutely the job of the directors to do so. And even if that did ever happen, it wouldn't explain the huge salaries for unproven CEOs for companies getting huge bonuses even when the company is not doing well, which is much more common than most people would imagine. You will often hear, on the other hand, about sports teams deciding not to pay a veteran $40,000,000 if there is $400,000 rookie who can do the job. One of those "minimum wage" players was the quarterback who won the Super Bowl this year, in fact. The guy he replaced was obscenely overpaid and the rookie showed promise and the owners gave him the job.

And there are plenty of other ways in which income disparities directly hurt most people. Just have a look at the work of Richard Wilkinson and co, who have done a lot of work on this issue. Yes, when people at the top make a lot of money and their incomes increase out of proportion to the rest of society, it takes money away from the people flipping burgers and making cars. And writing code.

http://www.ted.com/talks/richa...

Re:tl;dr

[Anonymous Coward]

banks get tech firms the money they need to innovate. don't underestimate their importance.

Re:tl;dr

[Anonymous Coward]

was it in Britain that i saw they made a study on the 'relative value' of various jobs in society, and -quelle surprise!- banksters, insurance company CEO's etc were THE LEAST USEFUL contributors to overall well-being of society; while people like hospital janitors were actually THE MOST USEFUL 'employees' contributing to the public good...
one comment on the whole situation: it is NOT as if we are in some sort of strict meritocracy where these cream-CEO's rise to the top by sheer dint of their full head of hair, above-average height, oh, and superior business acumen... no, it IS (most ESPECIALLY in the rarefied atmosphere of board rooms and executive suites) their connections and mutual socio-economic backgrounds which result in these inbred borderline sociopaths getting ensconced in these positions...
i'm betting you or i *could* run these companies BETTER for the benefit of society; BUT THAT IS NOT what is desired by the masters of the universe who are intent on ripping off as many people as they can, NOT SERVE SOCIETY...
for that, you need a well-heeled, swell-coiffed blue blood who is loyal to their klass...

Re:tl;dr

[mspohr]

The problem isn't the high pay at the top (there will always be greedy bastards in charge), it's how little everyone else in the company gets paid.
Walmart could pay every one of their employees and additional $14,000 a year (lifting many of them out of poverty) and not have to raise prices. Why don't they? Greedy bastards at the top.

Re:tl;dr

[Anonymous Coward]

Not to mention that both actors and athletes have benefited from being unionized workforces, which is one of the reasons they've been able to negotiate a percentage of profits in the first place.

Re:tl;dr

[Dishevel]

The best option going forward is this.

Kill FDIC.

FDIC ensures that normal people do not have to pay attention to where they are putting their money. Safety of your money is not an issue, therefore does not come into the decision making process. When people do not care about the safety of their money they make decisions based on toasters and rates only. This encourages the banks to do what ever they need to to offer more free stuff. At the cost of safety. FDIC is what makes customers and subsequently the banks behave stupidly.

Re:tl;dr

[ultranova]

My thing is, why do we complain at all about who makes how much?

Because if you indoctrinate people into believing income should be earned, they don't conveniently forget all about that when it comes to your income. CEOs are not perceived as pulling their weight, producing nothing but seemingly endless bankruptcies and layoffs, so all that "welfare queen" rhetoric is now turning against them.

I mean, it isn't really a zero sum game.

Of course income is a zero-sum game. Economy produces a certain amount of value per year. If your share of the pie grows, mine must shrink. And if your share is perceived to be unfairly large, then you can expect other people to act against you, driven by both self-interest and a desire to right an apparent wrong.

Of course it's possible to justify larger share as an incentive to grow the pie a a whole. The problem is, the CEOs haven't done so. The 1% are the modern nobility; the accusations about overcompensation are simply the warning rumbles of a good old peasant revolution every king who fails continuously risks facing.

Re:tl;dr

[NoImNotNineVolt]

You forgot the other options:

Summoning Zeus to smite the offending banksters.
Riding the invisible pink unicorn to a world with a sane banking system.
Abandoning currency and moving to a Star Trek economy instead.

Of course, if we restricted this conversation to plausible options, none of our suggestions apply.

Re:tl;dr

[bobaferret]

The Superbowl?! that's that thing I can't stream over the internet where all of the cool commercials are? Whatever the hell a commercial is anyway... I keep looking for that series on Netflix and the torrents to no avail.

Re:tl;dr

[Anonymous Coward]

One of those jobs is necessary for us to progress.

The Banker? Because without him, those technology CEO's wouldn't have any money to make things and contribute to society.

I assume you had your banker had 300,000,000 clerks take their inkwell and quill to every reader's monitor to distribute that? Or is it technology that makes it all possible?

In a fair world, the guys who repair cesspools and maintain sewers are paid the most. The risk death on the job... from asphyxiation by feces.The rest of us have it easy. My workplace complaint is the glare on my 50" 4k display if I don't sit up straight.

I'll gladly trade salary and responsibility with banker CEOs and Senators. I wouldn't take the cesspool guy's job for 20 years if you paid a $20M bonus at the end. Super. F-ing. Easy.

Re:tl;dr

[Anonymous Coward]

How about cutting the top before anywhere else when there are "layoffs" to be made and handing out increased profits from a bottom up fashion for change.
The happy people would then outnumber the disgruntled instead of the other way around.

Makes sense so it won't happen.

Re:tl;dr

[Quila]

I find it hilarious how huge companies have to lay off thousands of employees, yet the CEOs are still making their 10s of millions in salary

The reasonableness of this is, "it depends." If the company is healthy and making a lot of money, but it found an area that is not profitable and decides to liquidate or downsize it (and has no place else within the company to absorb all of those skillsets), the employees go with that. High CEO pay is perfectly in line with this.

However, if the company is hurting and they are laying off employees in order to cut costs and stay afloat, then the CEO's pay should be the first to be cut.

How about offering him 50 mil instead and keeping on 700 workers,

OTOH, if those 700 workers are making no profit for the company at all, they should be transferred to profitable positions or laid off regardless of CEO pay.

Re:tl;dr

[mythosaz]

http://www.huffingtonpost.com/...

You probably consider Matt Lauer a "personality" at 25M.

Not listed on that report is Brian Williams who makes 10M/year now.
Diane Sawyer makes 12M/year.
Scott Pelley rounds out the nightly news anchors at a paltry 5M/year.

Leading up cable is Maddow at 7M/year.

CNN says the average anchor makes between "$40,000 and several million" depending on tenure and experience.

Re:tl;dr

[Anonymous Coward]

many of the really big media journalists themselves pull in $20+ million a year in salary

Please give an example of a journalist in any media who makes $20+ million. Not a "personality" mind, but an actual journalist.

I seem to recall reading recently that Bill O'Reilly made $20 million working for Fox News. Of course, whether we should call him an actual journalist is, at best, debatable.

Re:tl;dr

[ThurstonMoore]

Most credit unions do not charge ATM fees to other credit union members, even if they belong to another credit union.

Re:tl;dr

[Anonymous Coward]

I suspect that a simple change such as requiring a bank be contained to just the state their HQ is located (and break up or spin off the out-of-state assets/customers into separate companies) would be plenty enough to retract a lot of the damage that they've wreaked over the years... plus there would be no more "too big to fail!!!111OMGBBQ!one!" banks.

I think you vastly under estimate their ability to squelch such initiatives by creating a moral panic.

Re:tl;dr

[Anonymous Coward]

Lets assume you can actually pull this off and get it written into law.

I can tell you the companies would suddenly split into two legal entities. The 'management' company where everyone is paid TONS and the 'worker' company.

That took me about 2 seconds to think up. The highest paid employee is something like 10x the lowest? Ok the lowest makes 1 million a year. You could even setup tiers of companies.

They are willing to setup shell companies to dodge taxes. It would take them about 2 seconds to setup shadow companies that protect their pay structure. Then have them 'working' for the lowest level for a small pittance as a director CEO. But the full funded 'owner' company would pay them the real money.

CEO's do sit on multiple boards...

Re:tl;dr

[dryeo]

Actually what did work, at least in Canada, was not totally deregulating. Due to regulations our banks came through pretty well.

Re:tl;dr

[KingMotley]

Supply and demand. Because if you don't like the job, you can leave, and they can replace you in a couple hours. I fail to see how that is greed when so many people are willing to work for that, and get by on it.

Re:tl;dr

[ezelkow1]

Another +1 to this. Same with chase. I pay no banking fees. The only fee I do pay to them is a yearly 25$ for my credit card and thats only because I have one that earns points with cash back, so I make back that 25$ in 2-4 weeks and the rest of the year get ~50$ back a month. Of course if you dont keep your CC balance cleared out it can easily negate that, but of course that could happen with a CC through anyone

Re:tl;dr

[Altus]

It depends on the credit union you use. Some are better than others for certain tasks. I have USAA for instance which is awesome when traveling. Use any ATM and they pay back the fees that the ATM charges you (up to a reasonable monthly limit) and because they are set up to support the military world wide they have a lot of awesome services like overnighting you cashiers checks that you order online. I also have another credit union that is local to Philadelphia (I dont live in philly anymore) I have kept the account open but its not really all that useful by comparison. There is also DCU which has a lot of good loan products so its worth at least looking around. That said having a local bank can be pretty useful as well.

Re:tl;dr

[Anonymous Coward]

CEOs' salaries on the other hand, are entirely a function of a buddy system in corporate boards. Everybody gets a nice income and lifelong security and they scratch each others' backs.

Worth noting that this sort of thing used to be illegal. Gee, I wonder why? It sometimes seems I can't go through a single work week without somebody asking "why to companies get away with that?" and realizing that the activity in question was illegal 25 years ago.

Yay, Congress. Way to go to bat for the people you serve. Yes, that's right folks, Congressmen are supposed to be your servants, not the other way around. Strange, but true.

Re:tl;dr

[JonnyCalcutta]

You don't? That's sad really and I guess explains why they get away with it.

Re:tl;dr

[Penguinisto]

if you utilized any of the online functions that any of the national banks offer, you'll find that most local credit unions lack this feature severely.

funny, but I have all of the basics - online billpay (via Checkfree, which most banks use), the works. The only thing I don't have is the bells and whistles - e.g. the ability to snap a photo of a check on the phone and have it auto-deposited, but honestly? I so rarely see a check these days it's not worth the bother.

Re:tl;dr

[mspohr]

Ah yes, the glories of the free market will cure all ills.
Do you really believe this or are you just trolling?
"Because if you don't like the job, you can leave, and they can replace you in a couple hours. I fail to see how that is greed when so many people are willing to work for that, and get by on it."
Are you aware:
- Most people don't have an option to just leave and get a better job. Have you heard about the unemployment problem?
- People aren't "getting by" on minimum wage jobs. They need food stamps to eat and Medicaid for health care (if they can get these programs).
- Average Walmart / fast food worker is not a teenager but is a 30 year old trying to support a family and is not "getting by".
Do you actually know any minimum wage workers or unemployed people?

Re:tl;dr

[KingMotley]

Is it fair that you can have two similarly-skilled, similarly-trained, similarly-experienced programmers working side by side but they have a difference in pay?

The problem there is people often have an inflated sense of self-worth, or skill in any particular area. I remember reading one study that showed that when asked a large pool of people how well they knew a subject, the people that rated themselves the highest actually knew the least. As people actually get better at their field, they understood better what they didn't actually know, and rated themselves much lower.

I have really never met two similarly skilled, similarly trained, similarly experience programmers working in the same place. That however, didn't stop one of them from thinking they were as good, and often much better than the other one.

Some people don't like that, and want everyone to be paid based on a standardized table of years of work experience and years of education; look up where they cross, that is your salary.

And usually the people that I find that advocate that type of arrangement are the absolute worst of the bunch. Just because they went to school, and learned nothing (or things that are mostly irrelevant), and sat in a chair in front of a computer for 20 years does not make them better than the guy next to him that lives and breathes it 24x7 for the past 5.

Re:tl;dr

[Tom]

If I own a company and I hire someone I can pay them as much as I want.

Actually, no you can't.

Your company does not exist in a vacuum. It is part of and relies on society. The government, for example, provides laws of commerce that your company could not survive without, and will provide police if anything wants to illegally harm you.

In exchange for the advantages that being part of society brings, it also retains the right to restrict you in some of your decisions. For example, in most countries on the planet, there is a minimum wage - you cannot pay as much as you want, you need to pay at least $x.

Why is it unthinkable to have not only a minimum wage but also a maximum wage, for the same reasons - that it disrupts society to go below/above this limit ?

Re:tl;dr

[Anonymous Coward]

couldn't agree more; people call those individuals dead weight, well those people do a lot more than the CEO does... no matter how good a CEO, there's only so many hours you can put in, there's no way a minute of your time can be worth a year of somebody else's even if they are only wiping down keyboards

Re:tl;dr

[phorm]

If you do not like the fact that taxpayers are bailing them out then take that up with your idiot, beholden senators and representatives

You mean the senators that were being paid by the bankers? There are very few "representatives" of the people anymore.

It's fine for them to be paid reasonable for doing their job. A big part of the problem is that they weren't. What they were doing was sloppy, immoral, and oft-times even illegal. They took huge risks, and then when they didn't pan out, the citizens paid for it.

Re:tl;dr

[Anonymous Coward]

But the burger flippers aren't rookies. They aren't even playing the same game. There really isn't much value in what they do.

Re:tl;dr

[Sancho]

If the CEO's bonus is tied to performance (it often isn't--instead it's usually written into his contract and so really is just formalized compensation--but let's pretend), then being able to do the same or more with less overhead would be a reason to give a bonus.

Re:tl;dr

[Sancho]

If there's a run on banks, getting all of your money back instead of slightly less than half probably isn't going to do you much good anyway.

Re:tl;dr

[Pinky's Brain]

Money is power ... and people are very good at rationalizing how hanging on to their power is in everyone's best interest even when it isn't. By creating this political ruling class of the uber rich we are simply rebuilding feudalism.

Re:tl;dr

[Anonymous Coward]

The best option going forward is this.

Kill FDIC.

Hoo, boy! You need to do some reading to find out why FDIC was created in the first place. Hint: it had nothing to do with offering customers free toasters.

Re:tl;dr

[Anonymous Coward]

Banks. They'll lend you an umbrella as long as it's not raining.

Re:tl;dr

[johnlcallaway]

I guess when you get to be so good people are willing to pay you that much, you will politely refuse it. But you will still put in 7 day work weeks, never get an uninterrupted vacation and be willing to away from your family for long periods because you are just such a nice guy.

Or is it because you will never get to be that good at anything, you feel that you have some right to tell other people how to spend their money.

That 'compensation package worth 88mil' isn't all cash, so dropping it to 50mil doesn't translate into necessarily being able to hire more workers. If the company tanks, all of the stock options in the package are worthless. Their compensation is very much tied to the company's success.

I suppose you are also in favor of getting rid of multi-million dollar sports player salaries and high-priced actors also, especially since they don't really earn it. For that matter, how about we limit the ability of people like Bill Gates and Steve Jobs to make billions also. Let's just put a cap of 50mil/year max for everyone.

That should make it much better for companies .. they won't have to pay as much and can lower their prices. They'll still lay off people, since NOT SELLING ENOUGH STUFF IS USUALLY THE REASON PEOPLE GET LAID OFF YOU IDIOT!

Re:tl;dr

[Nefarious Wheel]

If companies are paying their staff such low wages that they need public assistance just to survive, then the guys at the top need to subsidise public assistance. Tax them at 90%.

Re:tl;dr

[volmtech]

Bankers control the money flow. They don't just skim a little off the top, they take all they can. If you use their services they know how much you can pay and that's what they charge. Through out history the Jews ran the financial institutions so they collected a lot of hate. Animosity for individuals got transferred to the group as a whole.

Re:tl;dr

[Dishevel]

The biggest part of the problem is that we as the people keep voting them into office and do not hold them accountable.

Re:tl;dr

[Dishevel]

You stated that like a minimum wage is good for the poor.

It is not.

Re:tl;dr

[WheezyJoe]

Are you sure? I find it hilarious how huge companies have to lay off thousands of employees, yet the CEOs are still making their 10s of millions in salary. How about first eliminating bonuses, as well as dropping salary before eliminating employees.

For example ,Blackberry CEO getting a compensation package of 88 mil literally days before laying off a bunch of employees. How about offering him 50 mil instead and keeping on 700 workers

Here's why that didn't happen: Blackberry was in financial trouble, losing money each day, which gets the biggest shareholders (including the Board members) really nervous. When a company is losing money (or widely perceived to be), it can't get (or has to pay a lot more for) loans, like the short-term kind (commercial paper) it needs to do day-to-day stuff like pay salaries. The Board demands quick action, and that requires an intact management structure. The Board can't get things done if all its executives are jumping ship to save themselves. But to stick around, the senior-type executives gotta get paid.

Eliminate bonuses? Take a pay cut? Here's the thing: dollar-for-dollar, most senior executives are better off quitting ("retiring"), unless some divorce, gambling addition or coke habit has eaten away all their savings. Also, it's just a thing that senior management types tend to find new jobs (e.g., consultant) more easily than your typical laid-off worker (or just about anyone else). All this adds up to one thing: Mr. CEO can demand the kind of pay that makes it worthwhile for him to come to work each day for a company that isn't sexy, that may not be around much longer, and requires that he do, well, unpleasant things. Like fire 1000's of workers.

And by shedding thousands of workers the company can't afford to pay, he makes the books look better, which gets Wall Street to lend money again, which pays the bills to keep the lights on a bit longer, and makes the Board members a little happier, who pays him a bonus to stick around longer and save them the hassle of having to find someone else to do his job. At least until the company is worth enough on paper that it can be sold off and finally be someone else's problem.

Awful, isn't it? That's how shit happens!

Re:tl;dr

[Dishevel]

No. It was created so that people could put there money in any bank they wanted and not have to worry about weather or not their money was safe.

What I pointed out is that taking the safety equation of of the decision making process of picking a bank was a bad thing.

Re:tl;dr

[Anonymous Coward]

Seconded, yes.

Here's the difference: technology CEOs run companies that make things and contribute to society. Bankers earn a profit by moving other peoples' money around and taking some off the top. One of those jobs is necessary for us to progress.

While I agree with this general sentiment, I feel like a CEO making more than a few million per year is (usually, though not always) undeserved no matter what the field. If that's what the CEO is actually worth, then fine. But what's much more often the case is quid pro quo agreements between board members and CEOs.

Re:tl;dr

[alexander_686]

Oddly enough no – it would lead to more damage. Regional banks are tied to a single region. When the region goes down it takes the banks down with them. No new loans for healthy borrowers to buy cars, houses, or businesses. I can point to dozens of examples from 1900 to the 1980s where this happens. I can’t point to any example like that after banks could expand into other states in the 1990s.

Re:tl;dr

[alexander_686]

I like Credit Unions – used to work for one. But they do have limitations. They tend to be conservative – in my mind much too so. They don’t embrace new technologies, tend not to give loans to people with marginal credit, etc. And they don’t do businesses (mostly – there are a few exceptions out there.) which is where the real money is.

Re:tl;dr

[david_thornley]

You're ignoring stockholders here. The CEO's salary is not paid by the board, it's set by the board. The salary is paid by the stockholders, who see either a greater loss or a lesser profit than they otherwise would have.

Now, if I had any real ability to organize stockholders and control the CEO's salary, that would be nice. As far as I can tell, I don't. Enough stock is held by mutual funds and retirement funds and others that will vote the board's recommendation automatically.

And who cares (besides stockholders and employees) whether the company suffers? The top execs are going to get paid anyway.

Re:tl;dr

[fahrbot-bot]

I suspect that a simple change such as requiring a bank be contained to just the state their HQ is located ...

Technically that would be Delaware for most (all?) banks, though those offices tend to be just shells for taxes/litigation. But I get your point for really big national banks, like BofA, and combined investment/savings banks. There are already smaller regional banks, like SunTrust, as well as state/local banks, which are *not* too big to fail.

Re:tl;dr

[david_thornley]

Why does somebody always come up with an option that places the burden of knowledge and risk on the little guy? You're suggesting that people will know which banks are safe and which aren't, and bankrupting them if they guess wrong.

Re:tl;dr

[Anonymous Coward]

The sports stars and movie stars argument is a loser. Hollywood, despite it's liberal reputation, is the most cutthroat example of capitalism there is.

Pro sports is second on the list. Have one bad season, or even one bad game, and you're gone.

Plus, you won't find a better example of socialism working in America than pro sports. Taxpayer subsidized stadiums and players with strong unions, and just try to start your own league.

CEO's on the other hand, because they usually have pocket boards, and the boards themselves, use corporations to extract wealth, not create it.

Re:tl;dr

[Dishevel]

Do not guess with your money. You demand openness and clarity. Private businesses would spring up offering insurance on bank deposits. Of course those companies would want to keep a close eye on what the financial institutions are doing with the money so they do not have to pay out. Federal Insurance has none of the benefits and all of the pitfalls. That "Insurance" that covered our accounts came out of our pockets.

Re:tl;dr

[Dishevel]

The people in control of the funds want to see growth so they can continue to get accolades and raises.

Re:tl;dr

[Cederic]

Sure there is. A great CEO can spend an hour doing something that leads to several hundred new jobs. Is that hour worth 60 of those newly employed people? I suspect they'd think so.

Running a major enterprise isn't easy. There's an awful lot of information to absorb and decisions to make, and the implications of those are immense. That's why a good CEO is worth a lot of money, and a bad one takes down an entire company.

Sadly it's quite difficult to know which one you've got in advance.

Re:tl;dr

[Cederic]

No. I can't back a 90% tax rate, for anybody.

Had you suggested charging Walmart and its owners the same tax rate on profits that its staff pay on salary, to cover the subsidies, I'd have been right with you. That's all that's needed, and it's a hell of a lot less than 90%.

Re:tl;dr

[AlphaWolf_HK]

Banks are quite useful for society for more reasons than that. Banks make it possible for people and companies to acquire capital in order to start the next big thing where it would otherwise be difficult to do.

Here's a question I rarely see get asked though: Are union bosses overpaid? Think about this one for a second. The teamsters union makes it nearly impossible for other businesses to operate in a profitable manner. For example, they forced Hostess workers to either handle sweets or handle breads, but forbade them from working on both. If a few palettes of breads needed to be sent to the same store as a few palettes of sweets, and the sweets didn't fill the truck, too bad, they had to be sent on a separate truck even though they're going to the same damn place. Union rules.

When the teamsters union finally drove Hostess to insolvency, the union leadership called it a victory because they held their ground. Meanwhile all of those workers lost their jobs, and the union leadership got to keep their million dollar salaries.

Why are people so outraged over CEO pay, yet aren't outraged over things like that? It boggles the mind. IMO quit focusing on what somebody else gets paid, instead focus on yourself and what you do and maybe you'll improve yourself.

Re:tl;dr

[Anonymous Coward]

I guess when you get to be so good people are willing to pay you that much, you will politely refuse it. But you will still put in 7 day work weeks, never get an uninterrupted vacation and be willing to away from your family for long periods because you are just such a nice guy.

Do you think Elon Musk or Jamie Dimon only work Sundays because of their exceptional salaries? Maybe you think Peyton Manning would skip practices if they cut his pay to $15M.

Look, there's no question that money is a motivator, but people playing at that level are much more motivated by "winning." By beating the other team, by getting the better side of a deal, or by building a better mousetrap. Superstars, whether in sports, art, or business, definitely deserve to be well paid, but the notion that they are motivated to perform marginally better by the difference between $10M/year and $20M/year is pretty ridiculous.

There's three qualitatively different groups who benefit from corporate activity: shareholders, executives, and workers. When people bitch about excessive executive compensation, they're saying that the division of profits is unfairly biased to the executives who just happen to be the ones determining the division.

Re:tl;dr

[Fned]

Bailing out the banks was not optional.

Iceland. Your argument is invalid.

Re:tl;dr

[khallow]

so that the one you find useful wasn't the one taking huge risks

That bank isn't taking huge risks with slapout's bank account due to FDIC insurance. Moral hazard rears its ugly mug once again.

Re:tl;dr

[master_kaos]

Actually yes, I do think that reducing sports player salaries, actors, etc would be better. It is pathetic how someone who provides almost zero value to society is getting paid millions, while a farmer down the street who is feeding the local community is struggling to keep afloat after a drought.
And yes I wouldn't accept that much money, or take it and donate it to a worthy cause. I make an average salary and I already donate some of it to the needy. I honestly wouldn't even know what I would do with that much money and have zero use for it. If I had 2 mill in my account right now I could easily never earn a dime for the rest of my life and be content.. I don't want a mansion, I am perfectly happy in my 250k home. I dont want a 300k car (although maybe I would buy a 60k car). I don't want a private jet, yaht or whatever. Sure I would live a tad more extravagantly that I do now if I had the money but not much more.

Now you mention people like Bill Gates and Steve Jobs -- they earned it. I have ZERO problem with people making billions of dollars from something that they built with their own bare hands. And I also wouldnt have a problem with the CEO of Blackberry getting 88 million dollars if he completely turned Blackberry around and made it extremely profitable, but not until that time comes. Maybe dropping the package to 50 mil wouldn't translate to hiring more workers, but I can guarantee you some of those workers would rather rather take a paycut for stock options of equivalent value then to be laid off.

I am not saying layoffs didn't need to happen, of course they did. I just find it disgusting how they offer a new CEO such a huge compensation package when they are in the financial turmoil they are in. I know it is mostly stock options, but that is present value, so sure if it bombs to 1/4 he still makes out like a bandit with 22 mil all while doing a piss poor job. If it goes to zero, well obviously he didn't deserve a penny of it anyways..

Re:tl;dr

[khallow]

Bailing out the banks was not optional.

Bankruptcy works here too. And it's more effective at preventing future excuses for bailouts.

Re:tl;dr

[PopeRatzo]

The sports stars and movie stars argument is a loser. Hollywood, despite it's liberal reputation, is the most cutthroat example of capitalism there is.

Pro sports is second on the list. Have one bad season, or even one bad game, and you're gone.

Plus, you won't find a better example of socialism working in America than pro sports

So, let me get this straight: You're saying that pro sports and Hollywood are "the most cutthroat example(s) of capitalism" while at the same time being the best example of socialism "working in America"?

That's some trick right there.

Re:tl;dr

[PopeRatzo]

There really isn't much value in what they do.

Except that without the burger flippers, I don't see how McDonalds' business model could work.

It's not like they can hire people in India to flip burgers for them in Chicago.

I think there's a good argument that the people flipping burgers are more important to McDonalds' model than whoever happens to be their CEO.

Re:tl;dr

[PopeRatzo]

You probably consider Matt Lauer a "personality" at 25M.

You have an extremely broad definition of "journalist".

Re: tl;dr

[krups gusto]

Wow.  60 jobs in one hour?  I totally deserve 365*24-1 hours of snorting blow out of stripper belly buttons after all that hard work writing a check using other peoples money.

Oh wait blow and hookers is bad this week.  I meant my quarter billion dollar yacht.  I work off that yacht so don't get all offended.  And I also work while on the helicopter flying me to my yacht. 

Re:tl;dr

[tburkhol]

I pay no banking fees. The only fee I do pay to them is a yearly 25$ for my credit card and thats only because I have one that earns points with cash back, so I make back that 25$ in 2-4 weeks and the rest of the year get ~50$ back a month.

Just because you're not writing the bank a check doesn't mean you're not paying fees. The bank charges 2-4% on every credit card purchase you make. You can imagine that "the store pays it," but the store is paying it with money they got from you.

Re:tl;dr

[AthanasiusKircher]

Just because you're not writing the bank a check doesn't mean you're not paying fees. The bank charges 2-4% on every credit card purchase you make. You can imagine that "the store pays it," but the store is paying it with money they got from you.

Very few stores these days charge different prices for "cash" vs. "credit." Sure, you might see some coffee shops or convenience stores say, "Minimum $10 charge for credit cards" or whatever, and gas stations occasionally do it, but not most other places.

So, you can imagine that "I'm not paying the fee by not using a credit card," but you are anyway. Everyone who shops at stores subsidizes those credit card users. So you might as well get a rewards card and get 1% or 2% cash back or whatever, and actually collect some of that fee for yourself. Just pay off the card every month. (I've literally made thousands of dollars doing this.)

The only place I don't use credit cards is small independent shops like independent coffee shops or whatever, because I figure I'll save them the bank fees. Everywhere else -- well, their prices are set, so I might as well take a cut where I can get it. If more stores offered "cash only" reduced prices, I might reconsider my policy.

Re:tl;dr

[AthanasiusKircher]

It cost me something like $7/mo flat-fee, and I could even have the one I used generate and mail certified checks if needed

Woah... I can name a half dozen banks off the top of my head where you could get all that service for free. Most credit unions I know also give you free checking if you carry a reasonably large balance (like at least a few thousand dollars).

I guess I really don't understand what makes people want to use, say, BoA or Chase, when it seems that their sole purpose is to rake as much money out of you as possible.

In my entire life, I've probably only paid maybe $25 in banking fees, and that was almost all due to a couple foreign checks and one overdraw payment when something got crossed in the mail. I'd run screaming from any place that charged me a "flat $7/month fee." And assuming you have reasonable balances, you wouldn't pay that at either BoA or Chase.

Re:tl;dr

[whoever57]

Sure there is. A great CEO can spend an hour doing something that leads to several hundred new jobs. Is that hour worth 60 of those newly employed people? I suspect they'd think so.

Running a major enterprise isn't easy. There's an awful lot of information to absorb and decisions to make, and the implications of those are immense. That's why a good CEO is worth a lot of money, and a bad one takes down an entire company.

Is the CEO putting his own money (not salary, but personal wealth) on the line if he makes a bad decision? If not, then your value argument doesn't work. What about engineers who invent something that may earn a company hundreds of millions of dollars, do you expect them to be paid millions?

The fact is that CEOs are worth what it would cost to replace them with someone broadly similar, and probably there are many people who could do the same job but never get the opportunity.

Re:tl;dr

[locopuyo]

- Average Walmart / fast food worker is not a teenager but is a 30 year old trying to support a family and is not "getting by".

Citation? My personal observations are heavily conflicting with this, but maybe it is because I live in a well off area.

Re:tl;dr

[Gryle]

My thing is, why do we complain at all about who makes how much?

In some (not all mind you) cases it's because a person struggles to make ends meet working 80 hours a week and sees other people who work 40 hours a week taking home three times his/her pay and wonders why he or she isn't getting the same breaks.
Now, we can unpack that last sentence until Hell freezes over but at the end of the day most of us in the US are tied to this idea that life ought to be fair (or at least unfair in our favor, to quote Bill Waterson).
Personally I don't object to bankers making a great deal of money. Unless of course they were those bankers who managed to crash the national economy and put a decent-sized dent in the global economy and not serve any jail time because the Justice Department decided these pricks were too valuable to prosecute.

Re:tl;dr

[KingMotley]

Are you aware that the current US unemployment rate is just slightly over HALF the european unemployment rate, and is almost (but not quite) back to normal pre-collapse levels?

Are you aware, that if you are working a minumim wage job, and you skip starbucks, iPhones, and live with either your parents, or roommate(s), that you can indeed get by quite well?

Yes, I know minimum wage workers, all of them have iPhones or iPads, cable tv, cars, etc and don't collect food stamps or use medicaid for health care, do you?

Re:tl;dr

[tlambert]

The salary of the vice president at McD's isn't taking money meant for the burger flippers pocket....

Um, yes... yes, he is. That's exactly the point.

Not really. If you took every dime the CEO of McDonalds made last year, and divide it among the burger flippers employed by McDonalds, it comes out to exactly $8.14 per *year* for each of them.

McDonalds employs a *lot* of burger flippers.

Re:tl;dr

[Anonymous Coward]

So instead of them working hard and supporting a family, you want them to scrounge off mum and dad? Yep the system seems to be working fine.

Re:tl;dr

[Anonymous Coward]

Did you even read the last paragraph you wrote? The simple solution would be to just make lots of smaller banks that arent 25% of the banking sector. Break up the too big to fail banks into little shitty banks they should be and let the best ones win.

Re:tl;dr

[Copid]

My guess is that each of those people is worth every penny. Why? Because they're entertainers, and the value of an entertainer is very easy for their employer to figure out. Butts in chairs, eyes on screens. If you dumped Maddow and replaced her with some newbie, even if that newbie was really skilled, you'd probably lose your audience.

CEOs are a much more interesting case. Is it really the case that nobody could do the same quality job for less than $10M? Almost certainly not. Nobody in the executive team who makes a fraction of that is qualified? Doubtful. It's hard to figure out how much a CEO will be worth when you hire him. It's even hard to figure out how much he's worth after he's been working there for a while. There are tons of factors involved.

Some theorize that for public companies, a "superstar" CEO is less about hiring somebody who can run the company and more about investor confidence and buy-in. In that sense, they're more like entertainers than managers. That's why they can jump from fireball to fireball and still get great contracts. As long as they put eyeballs on the screen during the financial news and get people buying stock, they're winners.

Re:tl;dr

[HiThere]

This is only true if it's reasonably possible to find reliable evidence as to which banks are safe. This is something that you can rely on banks to hide.

Re:tl;dr

[Copid]

Yeah, the age of bank runs was a real blast. The problem with the idea that we can all carefully assess whether our bank is "safe" enough for our deposits is that "safe" doesn't just mean that they're financially sound and well-run. "Safe" also means that the other depositors aren't going to panic and cause that financially sound and well-run bank to collapse anyway. Those runs are unpredictable herd behavior events, and no bank is safe from them.

The interesting thing about our big collapse was that what we saw was a "run" on the money markets. The FDIC did away with traditional bank runs (yay!), but over time, we found a way around the old model of taking insured deposits and loaning them out. We created a big money market for short term credit between banks, and banks started getting big chunks of their low rate short-run financing that wasn't insured, and when the panic happened, that channel froze up. Practically speaking, it was a lot like a bank run, and if left to wind down on its own had the potential to take out any otherwise healthy financial institution. Doing away with the FDIC doesn't do away wtih the money market run problem. It leaves that problem in place and adds back in the classic Mary Poppins style bank run.

Re:tl;dr

[HiThere]

How do you propose to hold them accountable? Voting doesn't do the job in a plurality wins voting system. If a majority were required it would be different. Which is why I'm in favor of either IRV or Condorcet Voting. But that's not what we have. Plurality rules if pretty much guaranteed to drift into two major parties, with nobody else having any effect, and those two parties drifting together on matters of actual importance to those with power. Perhaps if the amendment allowing presidential/vice-presidential tickets hadn't been voted in, this would not have been the dynamic, but top votes to president, second to vice president had it's own problems.

Re:tl;dr

[HiThere]

Sorry, the animosity came first. Jews were forbidden to own real estate, so they couldn't run most businesses, and were forced into only a few businesses that didn't require setting up an immobile facility. Like monelending, gold smithing, etc. They couldn't farm, except as a serf (and, IIRC that was also often forbidden). So they bacame skilled independent tradesmen. They had no other choice. One of the professions open to them was moneylender. This was forbidden to Catholics, so most money lenders were Jews. But they were forced into those jobs by existing prejudice and laws. (Mind you, being in those jobs *did* tend to increase prejudice, so in that sense you are correct.)

Re:tl;dr

[Anonymous Coward]

"Because if you don't like the job, you can leave, and they can replace you in a couple hours. I fail to see how that is greed when so many people are willing to work for that, and get by on it."

So you are saying if we gang up on you and rob you, you will leave us alone? Since we showed you what we really think, and you showed us that you are willing to let it happen, you won't press charges, but just kindly smile and wave and thank us for the feedback? Good to know.

Of course, its YOUR fault you are outnumbered. Its YOUR fault if you get robbed.

I bet you are LYING.

Re:tl;dr

[davester666]

I just threw up in my mouth.

Re:tl;dr

[davester666]

Well, didn't the CEO decide to go into that area that is doing poorly? Or is he only responsible for the stuff that winds up being profitable?

If the new division doesn't work out and the people have to be laid off, then obviously the CEO made a poor decision.

Re:tl;dr

[Anonymous Coward]

Although I program, technically I was a "banker." Actually I was a banker on the inside of the Investment Banking "Chinese wall" which mean that I potentially had access to insider information.

I managed collateral, so you could say that I contributed very little to society, since, even as a banker, I didn't even manufacture a profit.

On the other hand, my collateral was used to ensure that people didn't default (even when it was obviously clear it was in their interests to do so). So, perhaps I manufactured a willingness for people to honor their agreements, hence making the world a bit more predictable (and sane).

All I'm getting at is that it is very easy to discount what isn't understood. Programmers get paid to "play around" on computers. Banker get paid to "contribute nothing" to society. Politicians get paid to "endlessly debate". School teachers get paid to "babysit". etc. It seems that nobody inside of the USA is willing to admit that someone outside of their field of expertise actually works or contributes anything meaningful to society. That's a damn shame, as nearly every job has some contribution to society that is meaningful and necessary in some context. What happened to this country that makes everyone so eager to short shift their fellow man's accomplishments?

Re:tl;dr

[KingMotley]

No, I do think that people should live within their means, and there is nothing wrong with families living together. You do realize that the US is pretty much alone in the world with children NOT living with their parents, right?

Re:tl;dr

[Anonymous Coward]

Supply and demand. Because if you don't like the job, you can leave

Except for the part where humans have to eat almost everyday, that could work.

Re:tl;dr

[mysidia]

Except that without the burger flippers, I don't see how McDonalds' business model could work.

We'll find out most likely next time the minimum wage goes up. The cooks can be replaced with robots.

Re:tl;dr

[Anonymous Coward]

Why don't they bitch about the high salaries professional athletes bring down? Famous rock stars? Movie stars?

For one, those professions have actual metrics associated with them which you need to prove before you get a big payday. An actor doesn't get $20m until they prove that their name being attached alone will bring in millions of dollars in ticket sales. CEOs will often get millions for running a company into the ground. Second, actors, athletes and musicians haven't found a way to get the bulk of their pay at a tax rate below what most people in this country. Whereas CEOs and other Wall St types have figured out how to classify their pay as an investment that gets taxed below 20%, no matter how much they get paid, actors and athletes pay a ton in taxes.

I think the reason why people complain about high pay in tech and Wall St is that often it's not correlated with creating anything of value or making the world better in any way...often times they make the world a worse place. Tech CEOs often get a pass because they are, at least partly, responsible for something of value. But the ones that do a poor job (Fiorina, Elop, Balmer, etc) do get flak for how much they make. Wall St doesn't get a pass because what little value they create is dwarfed by the mess they often make. They're seen as leeches on the otherwise productive economy.

Re:tl;dr

[Anonymous Coward]

Sadly it's quite difficult to know which one you've got in advance.

It's a bit easier to tell when you pay them. Solution: pick the best one you can find, but set their salary to the median employee salary at the company and make the rest of their compensation stock options. If the stock goes down, they make almost nothing. If the stock goes up, they make millions and probably deserve it.

The only thing you need to protect against is short-term thinking. To remedy that, compensation for the board of directors should be yearly options grants that don't vest until 10 years after the grant, regardless of whether they remain on the board.

Re:tl;dr

[flaming error]

"Is that hour worth 60 of those newly employed people?"

No.

In the first place you have a dimensional analysis problem of non-matching units.

In the second place, one CEO can't do the work of 60 people. That's why he had to hire them.

You're right that his job isn't easy. No interesting job is. Lots of people work hard.

The average CEO makes 340 times his average employee. The CEO does not work 340 times harder than his average employee. He doesn't know 340 times more than his average employee. He doesn't single-handedly bring in 340 times more productivity than his average employee.

Instead he gets the credit (and sometimes blame) for what every other person in the organization accomplished.

Good CEOs deserve respect. Not worship. And not money disproportionate to his contribution.

The reason CEOs get paid so much is not because the free market prices them so high. It's because they are on each others' Board of Directors and they all figured out they could overcharge their companies and share the spoils amongst themselves.

Re:tl;dr

[Tom]

Care to elaborate? Because right now, you are just making a statement with no supporting evidence.

Re:tl;dr

[Zenin]

And I'm sure you could find countless folks willing to do the dirty work for such "unsexy" companies for just 1% of what modern (US) CEOs are taking home. And chances are they'd be far more qualified and effective to boot.

The fact is the rest of the planet doesn't have this issue. The rest of the planet doesn't find it necessary to throw ungodly amounts of cash at folks to get them to take a CEO job. Only in the US does this happen, and their performance, globally speaking, is pathetic in comparison. So we're paying far more and getting far less.

Your entire theory is bunk.

Re:tl;dr

[bingoUV]

But among other reforms is surely the item that banks shouldn't go down* (i.e. collapse) when the economy they work in goes down* (i.e. lower economic activity, slowdown, recession etc.) ?

It is being discussed in neighbouring threads here, that traditional money-lending banks are now dabbling in stocks, futures, options and 10th degree derivatives of those items. There is no more the firewall between the money-lending and
these "innovative" activities. If a firewall is ensured, and banks regulated to take less risks, I don't see why a slow economy would mean a dead bank. The bank should get lower profits, a bit higher non-performing-assets, but if initial risks weren't too high bank shouldn't die.

* The different meanings of "down" is what I am deducing from your statement, and it is important for the point I am making. This is because regions don't typically die and low profits/occasional losses of banks isn't typically catastrophic.

Re:tl;dr

[Bugamn]

Did Betteridge's Law break?

Re:tl;dr

[Anonymous Coward]

You've just set the bar impossibly high. Journalists are "personalities", if they have moved out of the podunk newspapers.

Re:tl;dr

[Anonymous Coward]

Because most of us don't have these fees. I have a 0 fee checking account at BoA that just requires me to keep a monthly minimum balance.

I had BoA for a year before they decided to charge me a bunch of overdraft fees while I had plenty of money in my account, causing me to go negative, making some cheque bounce, adding more fees, then refunding the invalid overdraft fees, but leaving the over $200 of other fees charge by others.

I went to the bank manager and asked him WTF is going on. He said there was a bank error but he could not refund my money. I had no money at the time and was behind on my rent as it was, was going to school, and working full time but barely making enough money to eat. What was I going to do, hire a lawyer?

Re:tl;dr

[alexander_686]

* The different meanings of "down" is what I am deducing from your statement, and it is important for the point I am making. This is because regions don't typically die and low profits/occasional losses of banks isn't typically catastrophic.

It not about a slow economy – it is about the regional economy. For example, in the 1980s the overall economy was doing but in the Midwest the farm economy was collapsing from a bubble in land prices. Failing farms took down the local implement dealers, restaurants, etc. Banks were failing left and right. Since banking was (mostly) limited to the state where the bank was located, stronger outside banks could not step in. With large losses on the books the banks just stopped lending – they did not even have the capital to lend to parts of the economy that was not tied to farming. I can point to Texas with oil, Pennsylvania with steel, etc.

Bigger banks are more diversified and act more like you are suggesting.

To correct a point, “traditional” (i.e.regional banks who core business is savings, lending, and money management) banks are still bared from dabbling in stocks – that is stocks can not be used as capital for the loan portion of the business. As for derivatives (options, futures, etc.) I am all for them. They can help banks manage their duration risk – which is a bank's biggest risk. I will point to the S&L crisis where banks had lent out money at 6% but had to to pay 15% to their depositors. Since the introduction interest rate derivatives few banks have fallen do to duration. Of course it is a different thing if the banks engage in derivatives for speculative profit making instead of hedging risk.

Re:tl;dr

[Quila]

Well, didn't the CEO decide to go into that area that is doing poorly?

I was thinking of it as a new CEO coming in.

But as for starting a new division, that means the CEO created those jobs. If it doesn't work out, then at least those people had jobs for that time. If it creates a net loss for the company, his pay should take a hit too.

Re:tl;dr

[cayenne8]

In some (not all mind you) cases it's because a person struggles to make ends meet working 80 hours a week and sees other people who work 40 hours a week taking home three times his/her pay and wonders why he or she isn't getting the same breaks.

Well, that's life, and life is tough, no?

I mean, many people are lucky. Many people work hard and lift themselves up, many people start from lower ends of the spectrum. But that's just life and nature.

Equal opportunity != Equal Results.

The US is still free enough, that if you don't like what you're doing, you can, through extra effort....better your lot in life. You may have to sacrifice time, you may have to move, etc....but it *can* be done.

Re:tl;dr

[Dishevel]

It would also become an under served niche in the market. I bet if you saw that you would create a business around it. Helping people find safe banks and insuring them vs loss. The idea of an insurance policy on your bank deposit is not a horrible idea. Having it run by the federal government and paid for by the taxpayers though is.

Re:tl;dr

[Dishevel]

It does work when the people are not lazy. Money does not buy elections if large sections of the populace stay aware of local politics instead of Americas Got Talent.

We are receiving the government that we people as a whole deserve.

Re:tl;dr

[Dishevel]

I have already replied to someone else on this matter.

It does not matter though because the facts are simple and readily understood. It is emotion that is getting in the way. Much better to feel like you are a good person because of the things you say and button you press once a year than to spend time and effort working in your community to change individual lives for the better.

Re:tl;dr

[WheezyJoe]

And I'm sure you could find countless folks willing to do the dirty work for such "unsexy" companies for just 1% of what modern (US) CEOs are taking home. And chances are they'd be far more qualified and effective to boot.

The fact is the rest of the planet doesn't have this issue. The rest of the planet doesn't find it necessary to throw ungodly amounts of cash at folks to get them to take a CEO job. Only in the US does this happen, and their performance, globally speaking, is pathetic in comparison. So we're paying far more and getting far less.

Your entire theory is bunk.

Well, I wasn't trying to suggest a theory, more an observation. :-\
and I tend to think you're right that U.S. companies are paying far more and getting far less. The nagging question is why this keeps happening.

If I have a theory, it's that when money gets big, people start getting irrational. You can't control whether the man you hire is going to do a good job or not, but you can control how much you pay him. Pay him less, and he fails, shame on you because you were too cheap and you got what you paid for. Pay him more, and he fails, shame on him because you did all you could.

Puts a well-connected CEO-type in a real sweet bargaining position, which would tend to keep inflating CEO salaries.

Re:tl;dr

[Anonymous Coward]

No, not impossibly high.
Journalists are people who make phone calls, search through government records, interview people on and off the record and otherwise find the 'story' by putting facts together, finding discrepancies and asking hard questions until they get an actual answer, not just a response.
The people you are talking about simply read what is put in front of them. They are not journalists in any way. Perhaps they were when they were younger, but now they are 'talking heads' or actors, or news personalities.. But they are not journalists.

Re:tl;dr

[Anonymous Coward]

Says the rich dick who likes to drive fast in his porshe and dodge cops with a radar detector.

But you're right. Life isn't fair. But we strive to make society treat their members as fairly as possible. Because if that social contract falls apart we'll fucking eat you.

The US is still free enough, that if you don't like what you're doing, you can, through extra effort....better your lot in life

And with just a little more freedom, we'll return to the rober baron era of the late 1800's and the fat-cats can sit back and rest on their laurels with no worry about these young upstarts disrupting their business.

Re:tl;dr

[mspohr]

Lazy, lazy people. You'd rather believe your random observations (which are worthless) than actual facts and won't take a minute to just Google it.
Here, bozo, I Googled it for you (try "average fast food worker") and the first page has all the answers (and more):
Take the first result on the page:
http://www.motherjones.com/pol...
Median age of fast-food workers:
29

Median age of female fast-food workers:
32

Percentage of fast-food workers who are women:
65%

Percentage of fast-food workers older than 20 who have kids:
36%

Income of someone earning $8.94/hour:
$18,595/year

Federal poverty line for a family of three:
$17,916/year

Income of someone earning $15/hour:
$31,200/year

Income needed for a "secure yet modest" living for a family with two adults and one child
In the New York City area: $77,378/year
In rural Mississippi: $47,154/year

Growth in average real income of the top 1 percent since 1960:
271%

What the current minimum wage would be if it had grown at the same rate as top incomes:
More than $25

Re:tl;dr

[Stuarticus]

It's more than "handy" for handling your money, it's essential, that however is part of the problem.

Re:tl;dr

[mspohr]

"For every job that pays a median wage of at least $15 an hour there are 7 job seekers, the report found. The study defined a low-wage job as one that pays less than $15 an hour -- which happens to be the wage fast-food workers demanded in protests around the country last week.

In some places even $15 an hour may not be enough to get by. The definition of what constitutes a living wage varies nationwide, the report found. Workers in Montana need just $13.92 per hour to make ends meet, while New Yorkers need at least $22.66 per hour. Regardless of the variation, it still takes a lot more than the current $7.25 national minimum wage, or even the $10.10 minimum wage President Obama has proposed, to survive anywhere in the country."

http://www.huffingtonpost.com/...

Re:tl;dr

[Anonymous Coward]

Because there is a big difference.
Athletes rock stars and movie stars all deserve a very large PERCENTAGE of the earnings from what they do because THEY are the product. without them there would be 0 money.
Now, we can argue about what kind of society puts such emphasis and large amount of resources and money into meaningless sports or whatever, but it is entertainment, people pay for entertainment, and the entertainer does deserve to get a very large cut of the revenue from their performances.

A CEO is NOT the product, and they do not labor to create the product. They and the VP's and such around them do NOT deserve to get such a large percentage of the revenue. Without them, almost nothing would happen at all to the company. Labor would still labor. Middle management would still middling manage, creative types would still create, the warehouse would still ship and receive.

You can't say with any clear thought at all that McD's can only afford to pay $8 an hour to the people who actually labor to make the company profit, but it can afford to pay the top 20~ people tens upon tens of millions. (despite the fact that McD's pays $15 an hour in Australia and other places and STILL makes profit)

At some point it IS a zero sum game. Companies only have so much revenue, and the FED has only printed so much money.
Take too much out of circulation by letting the rich 1% hoard it and the market starts to fail. You end up with workers who want to work and consumers who want to consume but neither can happen because we don't have enough actual BILLS flowing through the system anymore.

Re:tl;dr

[Anonymous Coward]

Of course income is a zero-sum game. Economy produces a certain amount of value per year. If your share of the pie grows, mine must shrink.

Whoa there. Hold up.

This isn't true and if you run with that assumption it forms into some very dangerous ideas.
Income, the economy, all that jazz, is most certainly not a zero-sum game. It's only zero-sum if you ignore all the actual work and all the actual spending. The middle part, where the decision about who gets paid what for the work that happened in-between, sure, that's zero-sum.

The restraunt brought in a million bucks in revenue, it spend half a million on rent/food/taxes. How much does the waiter get? The cook? The owner? The busboy? That's a zero sum game.

But if the waiter and the owner kick out the busboy and the cook, do you think there's going to be a $1m in revenue next year?
If the waiter busts his ass and draws in more customers, or the cook just doesn't give a fuck if half the grill burns then there is simply more or less pie to go around. Step back a bit and you'll see the game is not zero sum.

Same goes for the economy on the whole. People can work harder. Huricans can fuck up your shit. People can face existential dread at having to compete with China.

If you fall into that logical pit of thinking that the problem is merely a matter of distribution, then you might be tempted to take the whole pie and distribute it manually. That really didn't work out so well for the French, Russians, Chinese. Revolutions TEAR IT ALL DOWN, and subsequently there's simply less pie. Now, if you go from getting 1/100th of a pie, to 1/5th of half a pie, then it's a step up. But don't pretend that HALF the GDP didn't just go down the pipe.

Now. All that said, even in non-zero-sum games, those fuckers can steal your slice of the pie. CEO's pay has gotten ludicrously out of porportion for the "work" they do.

Re:tl;dr

[swalve]

Perhaps. But there is also the possibility that not employing that bigshot VP would mean the company performs worse and those burger flippers would never have had a job to start with, or make even less money.

Re: tl;dr

[Anonymous Coward]

So you're saying he could cut his salary in half, still be rich, and give the employees a 50% raise with no impact to profits but a significant improvement in morale and performance? Sounds good to me.

Re: tl;dr

[Gen_Music]

Yet if you take Tim Cook's $500m bonus and divide it by every employee in Apple, not just the foot soldiers, it works out at over $7k per employee.

Re: tl;dr

[Anonymous Coward]

Read again. $8.14/52/~40

Re:tl;dr

[Copid]

The FDIC is paid for by premiums paid by the member banks. It receives no appropriations from Congress. Is it a good idea now?

Re:tl;dr

[Copid]

A minimum checking balance is a backdoor fee. It's money you don't earn interest on that you're loaning them for free. Just multiply your checking balance by the amount of interest you'd earn in a year if you had it sitting in your savings account and that's your fee. It's a minor issue with interest rates being very low these days, but it's a bigger deal under more normal circumstances.

Re:tl;dr

[Dishevel]

FDIC get money from banks. But the the bailouts caused by this are paid for by taxpayers.

Re:tl;dr

[n7ytd]

There are even laws now to codify such arrangements. If a Southeastern state lures a manufacturing plant from say, Washington or Oregon, one of the ways they do it is to agree to allow the company to keep any state income taxes that are withheld from employees wages. The taxes are still taken out of each paycheck, but the money never goes beyond the company's coffers.

Corporations are seeking out this kind of deal, and states, in a rush to the bottom, are giving in so they can show how they're "bringing jobs" to their area.

I've heard of states (or counties or cities) giving breaks to corporations for income, property, or other taxes, but I've never heard of an arrangement where the company is allowed to keep any withholdings from employee's payrolls as you claim... do you have a concrete example you could share?

Re:tl;dr

[MooseMiester]

Yes, but let's not leave out the CEO's of the big Political PAC's, the Union bosses (who essentially bribe politicians to ensure they have huge salaries), the public school system administrators (who make huge salaries while teachers have to buy school supplies out of their own pockets), and MOST OF ALL the politicians, who cut one deal after another to get campaign contributions, and then use the money to take lavish trips with the whole family. Let's not forget the Obama's, who spend the taxpayers money like water for their own personal pleasure.

And this is the whole problem with the CLASS WARFARE argument. The same people working overtime to whip up emotions about EVIL CORPORATIONS are just as EVIL, it not MORE SO. But we never hear about that, do we? Instead, they expertly whip up emotions about EVIL CORPORATIONS.

In Detroit, the difference between the Unions, the Government, and the Mafia is all but indistinguishable. Study it. It's the poster child for Democratic party corruption and the effect it has on the poor and the middle class. But alas, all we hear is about those evil Rethugnicans who are in bed with big business. Sure, plenty of them are corrupt to the bone too....

Selective class warfare... is propaganda. Let's apply this idea across the board. Start by limiting campaign contributions, give politicians free airtime during election years, and no more play to play. Right to Work in all 50 states - including the public sector. We own the government, we do not own corporations. The government we can fix. and until it's fixed, nothing is going to improve.

Re:tl;dr

[Copid]

OK, seriously, the FDIC is a non-issue here. The major problem was on the non-FDIC insured side. We didn't do bailouts to protect FDIC covered accounts, and for the most part, it wasn't FDIC covered money that was at risk. Doing away with the FDIC would not affect any of those things. If you want to talk about how people treat money market funds with indifference, that's great and highly relevant, but it has nothing to do with the isse you're railing against. If you think the picture of the failure is, "Grandma put mony in her FDIC insured savings account and banks lost it in subprime," then you're missing the vast majority of the picture.

The fact is, we haven't had a bank run since the 1930s, and that's 100% attributable to the FDIC. That's a huge win. The fact that we can still have "bank runs" in the money market isn't something you fix by eliminating the FDIC.

Re:tl;dr

[Dishevel]

FDIC insures your account up to $100K (Used to be $10K). The ensures that the people putting their money into one of these institutions will not consider the safety of their money in choosing which institution to hold their money in. Once the consumer stops looking at safety the banks need to compete on something else. (Free Checking, More ATMs, Prettier Cards, Toasters, Whatever.) So the banks need to make more money and do not need to keep safety on the front burner. This leads to riskier decisions by the banks. They need more money to compete. Those risky decisions cause issues. Those issues cause banks to fail. Those banks failing cause me to bail them out. This is why FDIC causes the bailouts. Removal of FDIC will do two things. Consumers will care deeply about safety. Private companies will offer to insure the deposits at certain banks that they can see are doing safe things with money.

Then the consumer can care only about which insuring agency seems to watch the banks more closely and will trust that companies word. That company will wathc the banks like a hawk because A: They do not want to pay out and B: When a bank failks that they are watching then the people will no longer trust that institution and bail out of the other banks that company insures.

Competition is good. FDIC is bad.

Re: tl;dr

[tlambert]

Are you using "new math"?

$8.14 per year works out to $0.0039 per hour; if you gave them half of that, it's even less, it's $0.00196 per hour.

So every 5 hours of work would get you approximately an extra penny.

Re:tl;dr

[tlambert]

The fact is the rest of the planet doesn't have this issue. The rest of the planet doesn't find it necessary to throw ungodly amounts of cash at folks to get them to take a CEO job. Only in the US does this happen, and their performance, globally speaking, is pathetic in comparison.

You are, of course, aware that you are trolling BlackBerry Limited, formerly known as Research In Motion Limited, a Canadian company, and blaming the U.S., right?

Re:tl;dr

[cayenne8]

I'm FAR from being rich....

Re:tl;dr

[tlambert]

so that the one you find useful wasn't the one taking huge risks

That bank isn't taking huge risks with slapout's bank account due to FDIC insurance. Moral hazard rears its ugly mug once again.

FDIC insured funds limit is $250,000. If all of slapout's funds are insured, then the total deposit amount is less than or equal to $250,000. The bank would definitionally not be taking a huge risk, since there's nothing "huge" about $250,000 from the banks perspective.

It used to be possible to have a much larger amount in a savings bank and have it not be subject to investment bank risks before the firewalls were dissolved, and the investment banks subsequently acquired all the savings banks so they could tap (and risk) those savings.

FDIC is "Well, at least you didn't lose everything" insurance. If you have retired with only $25,000/year in savings, guess what? That's not even enough to keep you in a terrible retirement home in Kansas, let alone cover medical insurance and other costs - you're going back to work, or you get to live under the viaduct with all the other homeless people.

Re:tl;dr

[Copid]

Once the consumer stops looking at safety the banks need to compete on something else.

As I'm reading you, giving away toasters is an expense which causes banks to "reach for yield" and if we made them unstable, they could compete on stability rather than giving away toasters. Since they don't need the toaster money, they stop reaching for yield. But banks always profit maximizing, and they're always going to compete on whatever issues they can. The notion that they'd be less profit maximizing and would compete less on fancy features if they had one more variable to compete on is completely made up.

Also, you do realize that the systemic failure was triggered by institutions that were not at all regulated by the FDIC and don't take insured deposits at all, right? This wasn't overreach by traditional banks. It was primarily the investment banking industry that was taking the major risks. Traditional FDIC insured banks were doing pretty much what they always did. The "risk" aspect of it appeared when the investment banks started to fail, and once that happens, nobody is safe. Traditional capitalization requirements suddenly become "not good enough" and everybody gets burned.

This is similar to the old "Community Reinvestment Act caused all those bad loans!" argument that ignores the fact that most of the loans were originated by institutions that weren't subject to the CRA. The reality is that we already have a parallel banking system that takes in money from consumers, loans it out and invests it, and is not subject to the FDIC or any of our traditional banking regulations. It's called the investment banking industry, and it was the indusry that collapsed spectacularly. When the results of a thought experiment conflict with the results of a real experiment, the real experiment wins.

Removal of FDIC will do two things. Consumers will care deeply about safety.

Yes, so much so that they occasionally panic, run on a bank, and caues it to collapse. We've seen this movie before.

Private companies will offer to insure the deposits at certain banks that they can see are doing safe things with money.

OK, and now we're back to basically the FDIC situation again. You have an insurer that the bank pays for that enforces capital requirements and traditional lending behavior. Just like what the FDIC does. Can you be specific about what these private insurance companies would do that the FDIC doesn't, because FDIC membership comes with pretty substantial regulation about capitalization and what can be done with the deposits. Or even better, can you point to some data that shows that non-FDIC institutions actually behaved better and were more stable during the crash? Because as far as I can tell, the data points in exactly the opposite direction.

Re:tl;dr

[Anonymous Coward]

Yea
Since, labor monopoly.. WalMart has driven thousands and thousands of smaller stores out of business. If you want a basic clerk job, where the fuck else are you going to work? Old Mr. Franks soda shop? Bills tire? Lady Sunshine garment shop? They are out of business.
All across America we have dead downtown's. A two decades ago Wall mart came in with 'Buy American', they under cut the local competition, then once they were out of business they raise prices, lower wages, then just to kick a guy while he was down they outsourced to China causing even more people to loose their jobs at small and midsized manufactures across America.

So yea' just fucking go work someplace else you dumb free loader on welfare. How dare you expect to be able to live on wages you get for working full time.

Re:tl;dr

[PingPongBoy]

Not really. If you took every dime the CEO of McDonalds made last year, and divide it among the burger flippers employed by McDonalds, it comes out to exactly $8.14 per *year* for each of them.

McDonalds employs a *lot* of burger flippers.

You forgot to mention that is based on the burger flippers staying with the job until the age of 65.

Re:tl;dr

[PingPongBoy]

How about offering him 50 mil instead and keeping on 700 workers,

OTOH, if those 700 workers are making no profit for the company at all, they should be transferred to profitable positions or laid off regardless of CEO pay.

OTOH you need a real sumbitch in order to chop hundreds or thousands of employees and perhaps still keep the company alive, and these guys don't come cheap.

Re:tl;dr

[PingPongBoy]

And I'm sure you could find countless folks willing to do the dirty work for such "unsexy" companies for just 1% of what modern (US) CEOs are taking home.

So true. The janitorial and maintenance positions are fully staffed and it was 1% for the whole lot rather than individually.

Re:tl;dr

[HiThere]

Even in local elections, plurality rules leads to inferior outcomes for most voters...even for most aware voters. And in local elections there are likely to be a number of reasonable candidates (due to the lower barrier to entry). This already gets worse as the city size increases, largely because of the increased barrier to entry, and the increased importance of election propaganda.

In majority rules voting systems you can start with several candidates, and rank them by preference. You don't need to immediately eliminate those that you don't believe have a chance, so you can vote your real interests. This can frequently produce unexpected results when you find that more people than you expected support some candidate. OTOH, it also imposes the requirement that you be informed about at least your top few preferences. So it doesn't eliminate the requirement that you make an informed choice.

Still, as far as I can tell, a lottery would be better than pluriality rules. This is a bit difficult to be sure of, however, as it would require restructuring the positions of authority slightly so that no one individual could exercise too much power, because sometimes a lottey will pick a real loser. OTOH, sometimes the current system will pick a raving lunatic...or someone with Altzheimers, so that would be a good idea anyway.

P.S.: What the HELL is happening to the message entry? It's gotten horribly worse recently. I don't know whether to blame Slashdot changes or Firefox (well, IceWeasel). But it's worse on Slashdot than on other sites.

Re:tl;dr

[PopeRatzo]

Yes, but let's not leave out the CEO's of the big Political PAC's, the Union bosses (who essentially bribe politicians to ensure they have huge salaries), the public school system administrators

Before you decide to include that group with CEO's (whose average salary is $6.7 million), why don't you take a guess at how much the most highly paid CEO of a political PAC, union boss or public school administrator makes.

Not the average mind, why don't you guess at how much the most highly paid of those three groups makes?

As a hint, I'll tell you that the top three highest-paid union bosses are heads of unions of professional atheletes. Now hurry and go see how their salary compares to the $6.7 million average that a CEO makes.

And if that doesn't embarrass you enough, why don't you go see how much the highest-paid public school administrator makes?

Re:tl;dr

[PopeRatzo]

I've heard of states (or counties or cities) giving breaks to corporations for income, property, or other taxes, but I've never heard of an arrangement where the company is allowed to keep any withholdings from employee's payrolls as you claim... do you have a concrete example you could share?

No problem. Reuters says there are at least 2700 companies with such arrangements.

http://www.csmonitor.com/Comme...

http://thinkprogress.org/econo...

http://www.huffingtonpost.com/...

Re:tl;dr

[PopeRatzo]

We'll find out most likely next time the minimum wage goes up.

No, you won't.

The minimum wage has been raised lots of times and it's never caused higher unemployment.

Re:tl;dr

[micahraleigh]

Zero sum is wrong. The rising tide lifts all boats.

Ronald Raegan lowered margin tax rates for the wealthy and raised them for the lower brackets (so they payed closer to the same amount) and the unemployment rate went from 10.8% to 5.4%. Read about the Laeffer curve for more examples.

You are really resting your evidence on your own presuppositions. I guess all sides do that, and it's better than name calling.

Re:tl;dr

[PopeRatzo]

My guess is that each of those people is worth every penny. Why? Because they're entertainers, and the value of an entertainer is very easy for their employer to figure out.

I thought they were journalists.

If they're entertainers, they are not, by definition, journalists.

Re:tl;dr

[Anonymous Coward]

Scratch fractional-reserve lending and you'll find that you won't need to worry about the stability of banks.

Re:tl;dr

[Copid]

I thought they were journalists.

Some of them probably think they are too. I'm not sure that it's always applicable. If you do journalism by interviewing people on TV, they're journalists. If you do journalism by researching stuff and putting together news stories, probably not so much.

If they're entertainers, they are not, by definition, journalists.

What definition is that? There's a reason the word "infotainment" exists. People aren't watching Bill O'Reilly to get news distilled and efficiently transported into their brains. They're watching him to see him bust heads, but they also get some news in the process. Baseball players play baseball on camera, but they're entertainers. Porn stars have sex on camera, but they're entertainers. Bottom line is that if your job is to put butts in chairs and eyes on screens, you're an entertainer for the purposes of figuring out what your salary should be.

I think that like you, I'm inclined to dole the word "journalist" out a little less generously. If you're just reading news that somebody else gathered, you're not a journalist. If you interview newsworthy people and get information out of them for public consumption? I'd say that qualifies as journalism.

Re:tl;dr

[AuMatar]

Except that I'm going to have some money in a checking account anyway, in case of emergency (not to mention every investment strategy should include cash). The minimum is under the amount I'd have for emergency. So no, it really doesn't cost me anything.

Re:tl;dr

[Anonymous Coward]

- Most people don't have an option to just leave and get a better job. Have you heard about the unemployment problem?

They do, and until they realize that's the only action that will act as an incentive (rather than government force backed by guns and prisons) for businesses to raise entry wages, free markets will continue failing to resolve the issue.

- People aren't "getting by" on minimum wage jobs. They need food stamps to eat and Medicaid for health care (if they can get these programs).

Full time @ minimum wage is OVER the poverty line in the US, thus according to the govt, they are indeed "getting by". But just barely. What they need is to stop buying luxury items like iPhones.

- Average Walmart / fast food worker is not a teenager but is a 30 year old trying to support a family and is not "getting by".

The median age of a person making minimum wage is 24. Roughly 1/4 are in fact teenagers, 16-19.

http://www.bls.gov/opub/ted/2013/ted_20130325.htm
"Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less."

Do you actually know any minimum wage workers or unemployed people?

Most people don't, since minimum wage workers only make up ~3% of the US workforce.

http://www.heritage.org/research/reports/2013/02/who-earns-the-minimum-wage-suburban-teenagers-not-single-parents

Re:tl;dr

[bingoUV]

It not about a slow economy â" it is about the regional economy

Makes no sense. Regional economy could be slow, non-Regional economy could be slow, Regional economy could be non-slow, non-Regional economy could be non-slow.

False dichotomy taken to stupid extremes.

farm economy was collapsing

Again, use of confusing words. Economy rarely "collapses" as in cease to exist, whether regional economy or non-regional economy. Economies just slow down. But banks "collapse", as in cease to exist, much much much more frequently. Using the same word for both banks and economies merely serves to confuse.

Also, farm economy could fail as in cease to exist, but this is not what you had mentioned earlier, to which my response was directed. You said "regional" economy which is what I was addressing.

For example, in the 1980s the overall economy was doing but in the Midwest the farm economy was collapsing from a bubble in land prices. Failing farms took down the local implement dealers, restaurants, etc. Banks were failing left and right

And bubble in land prices could not have been seen by the banks? Bubble developed all of its own without contribution from banks? No. From many reports, banks were a major cause of the bubble, exactly due to taking undue risks.

Which is what I was saying - simple banks that just lend money have no business taking risks - fuelling bubbles nor failing just because some local businesses fail.

Re:tl;dr

[ComputersKai]

Poverty will always be present in society, unless we totally change our culture. Instead, however, we can redefine poverty, and make it less negative than it maybe, perhaps is, nowadays.

I hope I don't sound to much like your politicians :-) .

Re:tl;dr

[ComputersKai]

Still, I find it kind of silly that us Americans get so hyped up over sports events like the Superbowl (though entertaining), and how companies spend so much money advertising during it, while people in the third-world starve and suffer under dysfunctional governments, not to mention other problems like a lack of some basic necessities.

....Well actually we do notice, but it's more like we notice some horrendous thing happening in some regime for a day, and forget about it right after, while for these other events we hype over days afterward(Superbowl ads, anyone)?

Re:tl;dr

[khallow]

FDIC insured funds limit is $250,000.

Per account.

Re:tl;dr

[gerddie]

DavidHumus notes: Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?

In other words: There is also the possibility that not employing that bigshot VP would mean the company performs better and those burger flippers would make more money.

Re:tl;dr

[PopeRatzo]

What definition is that?

Well, the dictionary one is fine by me. We'll agree that a "journalist" is one who engages in journalism, so let's get the definition of that:

Full Definition of JOURNALISM

1
a : the collection and editing of news for presentation through the media
b : the public press
c : an academic study concerned with the collection and editing of news or the management of a news medium
2
a : writing designed for publication in a newspaper or magazine
b : writing characterized by a direct presentation of facts or description of events without an attempt at interpretation
c : writing designed to appeal to current popular taste or public interest

Nowhere does it say anything about sitting at a make-believe desk, in makeup, on television, giving an opinion or tossing softball pre-approved questions to politicians who are also in makeup, sitting at a make-believe desk.

Re:tl;dr

[alexander_686]

Let us go back to your original post where you suggest banks be confined to a single state – which I am calling regional banks. There is a lot of history here.

Let us go back to the 80's. The farm economy did not slow – it declined. Farm income dropped by about a 1/3. Between 81 to 83 the US economy grew by 12% but in the state of Iowa it fell by 11% - not just the farm economy – the whole economy of Iowa. 30 to 40 banks were failing each year in Iowa alone. This is not a isolated example. There are 100s of examples in the last 80 years where regions suffered negative growth. Some have asset bubbles, others not.

...simple banks that just lend money have no business taking risks...

And there is the rub, the business of banks is to take risks – they do it every time they lend out money. The question is how much and what types of risks they will take on. You want banks to take on specific regional risk by tying them to a single state, that is you want to make them riskier.

Re:tl;dr

[bingoUV]

I NEVER suggested banks be regional. Read the post again.

Re:tl;dr

[tlambert]

Not really. If you took every dime the CEO of McDonalds made last year, and divide it among the burger flippers employed by McDonalds, it comes out to exactly $8.14 per *year* for each of them.

McDonalds employs a *lot* of burger flippers.

You forgot to mention that is based on the burger flippers staying with the job until the age of 65.

No, the calculation was based on 2080 hours per year, which is a full 40 hour work week for 52 weeks.

I admit that that may be an unrealistic idea, given that federal mandates kick in if you work more than 29 hours a week. So assume they drop the employee hours to avoid the federal mandates for full time employees, they would get their extra penny after 3.6 hours instead. It's still only $8.14 a year.

To put it in simpler terms: each employee would be able to buy 3 Happy Meals(tm) a year with the extra income.

Re:tl;dr

[sjames]

The athletes, rock stars, and movie stars aren't deciding to pay others poorly. The CEOs are very much involved in deciding that the people doing the actual work will get minimum wage. The bankers are the ones who are in control of banks foreclosing on homes they don't even hold a mortgage on. How many people has Freddie Freeman put out on the street? Not even one.

Re:tl;dr

[sjames]

This is Blackberry we're talking about. They are not doing well at all. Apparently the CEO is making the company no profit at all. They should lay him off.

Re:tl;dr

[sjames]

So why do CEOs that crash the company usually find a chair pulled out and waiting for them elsewhere?

Re:tl;dr

[sjames]

Only if that person and ONLY that person could have managed it. Otherwise, no.

The building's maintenance engineer put in a siphon break that kept everyone in the building from getting dysentery with a non-zero fatality rate. Does that mean he's worth at least two weeks worth of the CEO's productivity?

Re:tl;dr

[sjames]

True, the bailout had to happen but it didn't have to come with no strings attached. We don't have to allow them to remain too big to fail. We can and certainly should prosecute the blatant fraud that made the crisis so much worse.

Re:tl;dr

[sjames]

What is so implausible about nationalizing a failed bank? Other than a government that is too corrupt to do the right thing.

Re:tl;dr

[Anonymous Coward]

Only a person who never read Marx can say that...

Re:tl;dr

[NoImNotNineVolt]

In a country that worships the invisible hand and associates nationalization with the Reds, it just couldn't work. The global economy would collapse due to a nationwide explosion of heads in the USA.

Re:tl;dr

[Quila]

They fired him a few months ago. Unfortunately, he probably got a golden parachute.

Re:tl;dr

[n7ytd]

Wow. Just wow.

Re:tl;dr

[Anonymous Coward]

These are newsreaders, not journalists. When has Brian Williams or Diane Sawyer ever actually investigated anything, or even written a story? If they're brought in on an 'investigation', it's to put a face familiar to viewers on a tightly scripted encounter that the actual journalists have set up.

Re:tl;dr

[sjames]

It barely counts as a layoff when they give you a parting gift that could support a family for life.

Re:tl;dr

[Quila]

Golden parachutes need to turn to lead when the CEO took the company into a downward spiral.

Re:tl;dr

[sjames]

Agreed.

Re:tl;dr

[MooseMiester]

Point taken, but the difference is that CEO's didn't setup a system by which they couldn't be fired, through years of cozying up with politicians, and getting legislation passed that gives them tenure, no matter how bad they behave.

I know some wealthy folks - who are in business. It may surprise you to know that these people work their asses off.

Instead of this class warfare against evil corporations bullshit, we should be celebrating the fact that we have a system where ordinary folks, with hard work, dedication, and skill can achieve a salary of this magnitude. Instead, we direct all this hate and anger towards them - and ignore all the other evil in the world, much of which is because of the political system that WE THE PEOPLE have allowed to occur. It is my position that the endless class warfare, designed to make people angry and therefore less able to think clearly, is solely designed to prevent the spotlight from shining on the politicians evil doings.

Screwing people over for money is wrong. Greed happens my friend and it cannot be regulated, or legislated out of existence. People are greedy and often act in their own self interest. An open exchange of ideas, and real journalism exposes the worst of the capitalist CEO's. Stealing from the public trust, in the form of corrupt government, however IS THE WORST CRIME OF ALL - Especially when you prance around and mouth platitudes about how you care about the little people, and are going to protect them from the evil capitalists.

Re:tl;dr

[Anonymous Coward]

Most (~70%) of Google's income is from advertisements. How useful is that to society? Encouraging us to spend more of our money? At least banks keep our money safe and easily accessible. Granted, Google has created a lot of great technologies like Search and Maps but their income is fundamentally no different from the income made by financial firms. They are a capitalistic company looking out for their own before their customers.

Re:tl;dr

[Anonymous Coward]

"For example ,Blackberry CEO getting a compensation package of 88 mil literally days before laying off a bunch of employees. How about offering him 50 mil instead and keeping"

Ok, that's a fine idea and all... but this is not what they chose to do. And that's the thing here, that these organizations are making economic and business decisions for themselves and like it or not, be it prudent or not, they choose to pay this one man this sum and to lay off the others.

That said, what would you do about this? Would you support mandating that different economic decisions be made on punishment of prison? (And I am not trying to single you out, just playing devils advocate for the purposes of dicsussion) Because I know there are many out there that would call for this. Here is the question we have to ask about that. In such a case, who then get's to make the decicions about who gets paid more, who gets paid less and who gets fired and so on.

And then in such a world, eventually your pay would then be at the whim and discretion of this decisionmaking body in one way or another... are you content to allow this? That is to put it another way, do you not want the chance to work your way up to being the man who earns 10's of millions of dollars in salary?

In the end no system is perfect, we must look for the system that is the least disagreeable. I believe the one that results in the most productivity. So far that system has shown to be capitalism supported by the free market (and do spare me the silly nonsense about there being no "perfect free market" blather, it's so tiring.)

Re:tl;dr

[stenvar]

Are you sure? I find it hilarious how huge companies have to lay off thousands of employees, yet the CEOs are still making their 10s of millions in salary.

The purpose of companies is not to employ as many people as possible, but to make products as efficiently as possible.

For example ,Blackberry CEO getting a compensation package of 88 mil literally days before laying off a bunch of employees.

Blackberry CEO has to be one of the shittiest CEO jobs in industry; you have to make that a really sweet deal for someone reasonably good to take it and stay in that job.

Re:tl;dr

[stenvar]

You can shout about what someone "deserves" until you're blue in the face, but the fact is if you don't want to get total losers in those positions, you need to pay them what they are getting.

Most of these people already have enough money that they really don't need the hassle of these positions and that giving them less simply won't interest them. And they always have the option of running their own company.

Re:tl;dr

[stenvar]

Because if you indoctrinate people into believing income should be earned, they don't conveniently forget all about that when it comes to your income. CEOs are not perceived as pulling their weight, producing nothing but seemingly endless bankruptcies and layoffs, so all that "welfare queen" rhetoric is now turning against them.

CEOs don't receive "welfare", they are paid by their companies, and what they get is what their companies voluntarily pay them. You don't like it? Don't buy their stock, simple as that. Welfare, on the other hand, is forcibly extracted via taxes and redistributed; people have no choice about paying for that. "Welfare" is what you get if you can't work; if you do work, you're not on welfare, even if your job doesn't meet the Marxist value-of-labor criteria that you seem to subscribe to.

The only CEOs that get public funds are those whose companies receive government subsidies or bailouts; that should, of course, stop. However, progressives like Obama and his administration have been handing out corporate welfare hand over fist.

Re:tl;dr

[stenvar]

No one said that banks are useless, just that "bankers" (in the wall street sense) contribute less to society (in the "where most people live" sense) than one would expect, given how much they are paid.

And who becomes the arbiter of how much people are worth?

If a private entity voluntarily pays you a salary, that's what you're worth; whether other people judge your job to be worthwhile really is completely irrelevant.

Re:tl;dr

[stenvar]

Bailing out the banks was not optional. Congress failing to act when the crash happened would have resulted in deaths

Bullshit. Even if these companies needed saving, were plenty of options besides shoving trillions of taxpayer dollars in the hands of big financial companies that made bad bets. The administration didn't even follow minimal rules for how such bailouts were supposed to be handled, and instead just gave away vast amounts of money to private firms.

And don't try to weasel out of who is responsible for this gigantic act of crony capitalism and corporate welfare: President Obama.

Re:tl;dr

[laddiebuck]

I used to think like that until somebody's comment put it into perspective. The average worker's screw-up can cost the company X dollars. The average CEO's screw-up can cost the company a thousand times that, can tank the company. I find it reasonable that people be paid to do their jobs without mistake in proportion with the responsibility they bear - paying for risk rather than achievement. However, I also think that by this standard, military officers and commanders should be much much more highly paid.

Re:tl;dr

[Anonymous Coward]

The minimum wage has been raised lots of times and it's never caused higher unemployment.

Idiot. Even most leftists know better than that.

Re:tl;dr

[vakuona]

Who modded this insightful?

Banks don't just take deposits. Banks also lend money to businesses. In fact, banks lend more than they take in deposits due to the magic of the fractional reserve.

If banks just took your money and placed it under a pillow (figuratively) until you needed it, then you would have to pay some hefty fees for that. The fact that they can make money with your money is one of the reasons you can have "free" or close to free banking.

Re:tl;dr

[Anonymous Coward]

Are you kidding me???

If the CEO who screwed up got canned and sued for the damage done by their mess-up, then their many hundreds of times average employee salary might be suitable insurance for them against messing up... Instead, if they mess up, they more times than not get their golden parachutes and move on to the next high paid gig. (see Mark Hurd... Mess up at HP, get a sweet gig at Oracle... and many other examples...)

Re:tl;dr

[sonamchauhan]

Er, not really. The real reason is not 'shit happens' but the cozy arrangements that boards and management have put in place; traditions solidified by mutually-beneficial remuneration contracts. Members of the board used to be 'management' in their previous life, and management aim to be board members in the next.

> Here's the thing: dollar-for-dollar, most senior executives are better off quitting ("retiring"),
> unless some divorce, gambling addition or coke habit has eaten away all their savings.

How true, I am not sure. Maybe you are right about older CEOs. But most CEOs are not willing to retire. MBA schools meanwhile, pump out dozens of whippersnappers. With pay differences being huge between CEO and 'CEO-2' levels , there are ample alternatives to highly paid CEOs -- 'cheaper' CEOs (as in the past), governing councils instead of CEOs, co-CEOs, even rotating CEOs. Now to be sure, not all these are good ideas for all companies. But one - 'cheaper CEOs' - for certain is an idea that worked quite well in the decades past.

Re:tl;dr

[Perky_Goth]

Are you aware that the current US unemployment rate is just slightly over HALF the european unemployment rate, and is almost (but not quite) back to normal pre-collapse levels?

You are aware that Europe decided to go full on retard austerity, unlike the US government that decided to fund jobs, right?

Re:tl;dr

[amicusNYCL]

Investing in stocks or funds is one thing. Having the bank just outright buy and own and companies that drill for oil, ship it to refineries, refine it into gas, and shipping the gas to gas stations is a major problem. When any company, not just a bank, controls an entire supply chain that is an obvious possible problem (i.e. price manipulation gets really, really easy). When the owner company is a bank then that creates a whole new set of possible issues. That was the entire purpose of Glass-Steagall. The banking system ran just fine with the Glass-Steagall restrictions in effect.

Re:tl;dr

[K. S. Kyosuke]

A CEO or basketball star making millions of dollars a year, doesn't take money out of someone doing another job that make significantly less.

Like any investment, the money is perhaps justified if the CEO's absence would make the company perform proportionally worse. Sadly, I have no idea how to measure whether that is the case, except that when executives get the same huge bonuses while laying off people, something tells me that the performance of the company has worsened without that having any impact on their remuneration.

Re:tl;dr

[Maxo-Texas]

I have a bank account and a credit union account.

The credit union does everything the bank does (including online bill pay) and is much less expensive unless you have a lot of money. If you have under $15,000 to sit around doing nothing (or in bonds doing something), you really should go with a credit union.

And their executives make a lot less- providing exactly the same service to members.

Re:tl;dr

[AK Marc]

I guess when you get to be so good people are willing to pay you that much, you will politely refuse it.

They aren't "good". I wager a good number of Slashdotters could do a better job than the average CEO. Even the CEOs that do horribly get paid lots, in many cases, the worse they do, the more they are paid.

Re:tl;dr

[AK Marc]

Supply and demand. Because if you don't like the job, you can leave, and they can replace you in a couple hours.

There are 500 CEOs in the Fortune 500, and I'm guessing millions who would be willing to take those jobs, yet that supply and demand gets paid much much more than the jobs people find less desirable.

Re:tl;dr

[Anonymous Coward]

Agreed. So why do we continue to let the banks grow after all that? Shouldn't we be dividing them up so they aren't too big to fail?

Re: tl;dr

[KingMotley]

Want to do something and are qualified to do something are two different things.

Re: tl;dr

[AK Marc]

What are the qualifications? Based on the public articles I see sometimes (more than one should see), lying about having a business or law degree is all you need to do.

Re:tl;dr

[Askmum]

We are currently on strike in our site of a US firm that basically invented everything about computers that we use now. Our bosses want to give us 0 extra but meanwhile the top brass divided $42.000.000 on bonusses between them. That's easily about 400 year's salaries worth for the people they want to give nothing to.

So: yes.

They are all paid too much

[cfulton]

But, the kitty that they are paid from is soooo large that from the corporate perspective they are not all that expensive. And free enterprise etc. So, paid too much yes. Anything we can really do about it no.

Re:They are all paid too much

[SQLGuru]

At the top tier (VP, Pres, CxO), pay should be capped as some (documented) multiplier of the lowest level salary. Bonuses should be tied to company performance. That's it. If the CIO wants to get paid more, he either needs to raise the rates of those below him or improve the performance of the company in some meaningful way. When a company making billions pays its executives $50M but lays off thousands making $40K, it feels really crappy. Sure, I understand that sometimes those layoffs boost performance and what not, but there really is a point where having MORE money doesn't really do much for you.......whereas losing your job is VERY disruptive.

Re:They are all paid too much

[CastrTroy]

Not to mention, if we're going to start talking about the relatively few bankers/CEOs that are getting paid too much, we should also talk about all the other people doing jobs where they get paid too much, especially when they are paid by tax payers. There are bus drivers in my city that make over $100,000 a year. There's people who are employed at various government agencies who do nothing but play minesweeper all day, while collecting good paychecks and getting pensions that don't no sane company would offer in the private sector.

Re:They are all paid too much

[Billly Gates]

*devils advocate*

Why should they be capped?

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

Doing so would make great talent do something else or not try as hard and everyone looses out.

If someone is paid too much the market takes care of that with something called a firing. Losing your job does suck and is very disruptive but the shareholders need a return and who is the shareholder? Your elderly mom, YOU, etc. If you have a savings plan you own shares. Also investment money is needed to expand or go into more markets. They only way to do that is to have great accounting books.

Yes it does suck to be laid off at a human level, but ask yourself what are you providing? The reason you are let go is because you fix some computers. The CEO on the otherhand changes the lives of milllions of people.

You want that cash and job security then you ought to be a better worker and provide greater value. The sky is the limit and the CEO didn't start out like this overnight. It was not luck. Even company founders are poor. It took Zuckerberg 10 years before he became very wealthy.

The free market takes care of everything if you just bud out and not interfere.

Re:They are all paid too much

[mrchaotica]

At the top tier (VP, Pres, CxO), pay should be capped as some (documented) multiplier of the lowest level salary. Bonuses should be tied to company performance. That's it. If the CIO wants to get paid more, he either needs to raise the rates of those below him or improve the performance of the company in some meaningful way. When a company making billions pays its executives $50M but lays off thousands making $40K, it feels really crappy.

The fact that executive pay being so disproportionate to employee pay "feels really crappy" is not a problem. The fact that executive pay being so disproportionate to employee pay destabilizes society by destroying the middle class is a problem!

Re: They are all paid too much

[Anonymous Coward]

Too bad that free markets are a theoretical ideal that doesn't really happen in real life. Sure, market forces shape outcomes. But market failure is a real thing that happens. You can't rely on the market to correct it's own failure.

Re:They are all paid too much

[CastrTroy]

I've heard about this idea, but I think there are some major flaws. Basing the CEOs pay on the pay of their lowest paid employees doesn't work out. Microsoft probably has very few low paid employees by virtue of business sector they are in. They design software, so the majority of their employees are going to be paid quite well. Starbucks on the other hand sells coffee. Even though they pay pretty well, I would have to say that the average Starbucks employee makes nowhere close to the same amount as the average Microsoft employee, and they shouldn't because that job simply doesn't require the same expertise. Should the Apple CEO get a large salary because their employees are well paid, or should he get a small salary because Apple's devices are made by low paid workers in China. Sure they are directly employees of Apple, but if it wasn't for the low paid factory workers, Apple wouldn't have so much money to spread around to their official employees.

Re:They are all paid too much

[Anonymous Coward]

I think I agree with you in that it would be a bad idea to cap anyone's pay. In the end, that would probably kill our economy. I do think executive pay is a ludicrous problem. As a skilled employee who provides a lot of value for my company, I find it appalling that executives make order(s) of magnitude more than me. I wholeheartedly believe they ARE NOT that much more productive.

I do take exception to your comments about "better work." If things were a bit more free market in that regard--if you could actually legitimately work your way up and auction your skills out, etc--I'd be on the same page as you. But most of the time the corporate world looks at good work with a presumptuous attitude. They approach it as if you're damn lucky to have your job, and you'd better do good work or you're going to be out on your ass. For worker productivity, this is good, I think it keeps the world turning. But for actual advancement potential, it ranks really low on the list of what actually helps you succeed. You need to be connected. You have to golf or drink with the right guys. You need to be a good workplace politician, a good self-salesperson. If you have the "right" combination of skills (that have nothing to do with company success), you could be a completely unproductive loser and still attain high ranks. Those of us who work hard see that system and feel contempt.

One thing you're right about, a lot of what gets a CEO to his position isn't luck. But it also isn't the right kind of skill, the kind of skill that makes his salary worth 1000 times that of a brilliant engineer.

Re: They are all paid too much

[Anonymous Coward]

Too bad that free markets are a theoretical ideal that doesn't really happen in real life. Sure, market forces shape outcomes. But market failure is a real thing that happens. You can't rely on the market to correct it's own failure.

Too bad that fairness is a theoretical ideal that doesn't really happen in real life. Sure, government force shape outcomes. But government failure is a real thing that happens. You can't rely on the government to correct it's own failure.

Re:They are all paid too much

[geekoid]

Performance based on what? over what time frame? how to you deal with companies that are at or near the peak level?

Re: They are all paid too much

[Anonymous Coward]

Too bad that you're a victim of your own culture. You expect millions born and raised into a capitalistic system to grasp something NOT consumerist hogwash? Government is a tool (at least, it should be), and so is the market. The market is a tool of segregation and disparity, and isn't connected to the real world whatsoever. My rock is ten dollars, I sell it to you for 20, remember?

Re:They are all paid too much

[AchilleTalon]

You are right since the devil is right as well.

There is absolutely no reason to cap the CEO or anyone else salary based on whatever equation anyone can come with thinking he is clever than the next door guy.

CEO salary is determined by investors, those who are taking risks in the company and hired him to take care of their investment in that company.

If the investors believe this guy to earn that salary, it is up to them to reduce the salary and compensations or to fire him to hire someone else capable to take care of the investors' money.

It is not a matter of how much money someone needs to be comfortable, it is a matter of how much money this guy will bring to the investors and shareholders.

No investor wants the CEO to spend more money than needed in employees wage and salary. No investor wants the CEO to not spend enough money that the company will be put at risk or go to bankrupcy lacking the talented people it needs to make money. You can disagree with what the investors think and their strategy for the company, that's fair. However, it is not to someone which have no money in the company and who risks nothing in the enterprise to decide.

Re:They are all paid too much

[nine-times]

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

Huh? People do work very hard for 70 hours a week without making 20 million dollars for it. It happens all the time. Sometimes because they have to, and sometimes because they enjoy their jobs. And getting MBAs? Do people actually need to get MBAs?

If someone is paid too much the market takes care of that with something called a firing.

Are you sure about that?

the shareholders need a return and who is the shareholder? Your elderly mom, YOU, etc.

Except often they're not, at least not to a meaningful degree. Your elderly mom probably has a 401k that gives her a 0.001% share in the company without knowing it. Mostly "the shareholders" are rich people.

The sky is the limit and the CEO didn't start out like this overnight. It was not luck. Even company founders are poor. It took Zuckerberg 10 years before he became very wealthy.

You're conflating some different issues here. The sky is the theoretical limit, in abstract, but not really so much for everyone. Zuckerberg did not start off poor. He started out upper-middle class. And he was lucky. He found himself with a good idea at the right place and at the right time and with the right help. Any number of things could have gone against him, resulting in Facebook never becoming the company that it is today.

So while it wouldn't be fair to claim that Zuckerberg sat around doing nothing and just happened across success, like finding the winning lottery ticket, it's also not fair to everyone else to paint the picture as though Zuckerberg created his own success through pure brilliance and hard work. He made smart decisions and worked hard, but others made equally smart decisions and worked equally hard without ever making a million dollars.

Re:They are all paid too much

[Anonymous Coward]

The only way you're going to have your cake and eat it too is to stop buying the subjective theory of value. Period. Link dollars to atomic mass, labor rewards resource allocation....it's at least a step in the right direction. The tripe about "connections" is great, since, ironically, it goes against the entire spirit of a meritocracy. But everyone seems to be a-ok with this, and I have no clue why.

Re:They are all paid too much

[Wookact]

There are bus drivers in my city that make over $100,000 a year.

I hate to be that guy but source?

Re:They are all paid too much

[Anubis350]

Interesting to think about actually. Using your 2 examples I would bet that MS has a much larger Janitorial and Maintenance/Physical plant staff directly on the payroll, many of whom likely make less than the average Starbucks employee

Re:They are all paid too much

[Anonymous Coward]

> Why should they be capped?

Because it is morally wrong to make that much money. Why can't you Republicans comprehend that?

Re:They are all paid too much

[AchilleTalon]

BTW, bankers are an exception due to what happened with the financial crisis which ended with governement pumping tons of dollars to keep them afloat no matter how bad they did. At then end, everyone did pay for the risk, not just the shareholders and investors. That's what was unacceptable. The rules were bent in that case at the advantage of bankers.

Re:They are all paid too much

[Anonymous Coward]

Yes, the idea of capping has a single flaw: it's based on solidarity. Society has to choose whether to live in a society which cares for everyone, or for only a few. Neoliberalism is the latter form with the most unregulated capitalism. But in results in a crap world for most people.

So, the idea of capping boils to this point: can you accept that if everybody has more you will have more too?

Re:They are all paid too much

[Anonymous Coward]

"I think I agree with you in that it would be a bad idea to cap anyone's pay. In the end, that would probably kill our economy."

Please explain how that could possibly be the case. How would putting more money into more hands _kill_ the economy? Are you fucking stupid?

Re:They are all paid too much

[Anonymous Coward]

"no one would take the risk or the very hard work like 70 hour work weeks"

Sorry, this is a ridiculous statement. Are you seriously suggesting that people would simply stop working hard because of some arbitrary cap in salary. Don't you think it is more likely that people would work hard enough to make it to the max level?

The CEO may make the hard decisions but how can we trust their decisions if they only worked that hard for the money? They're obviously only going to decide on what's best for *their* wallet.

I really don't see how people can defend the insane amounts of money that boards and CEO's are awarding themselves. There is far more benefit to the greater good if we cap wages at some reasonable amount and have the rest distributed among that.

Re:They are all paid too much

[ERJ]

Came here to say this. In addition, all this would lead to is contracting out all the low wage jobs. Walmart Store Staff, Inc. a separate but wholly owned subsidiary of Walmart Management, Inc.

Re:They are all paid too much

[nabsltd]

You want that cash and job security then you ought to be a better worker and provide greater value.

There are no jobs that allow you to earn CxO-style money (i.e., millions in compensation per year) without managing other people. So, regardless of how good you are at programming/network design/chip design/whatever, as long as you actually do real stuff, you won't ever become stinking rich from the sweat of your own brow.

Conversely, because the vastly overpaid do nothing but manage other people, it seems quite reasonable that their maximum compensation be tied to that of the people they directly manage. Because, without those people doing the work, that CxO won't be able to look "brilliant" for raising the stock price.

Re:They are all paid too much

[Manfre]

Wrong. CEO pay is determined by the board, not investors.

Re:They are all paid too much

[Registered Coward v2]

At the top tier (VP, Pres, CxO), pay should be capped as some (documented) multiplier of the lowest level salary. Bonuses should be tied to company performance. That's it. If the CIO wants to get paid more, he either needs to raise the rates of those below him or improve the performance of the company in some meaningful way.

Not really. Setup the corporate structure so the the C-Suite are figureheads and have the tier below them run the company. Pay the C-Suite a small amount and pay these below them like they do today. Of course, to prevent that you need to cap all pay at multiples based on where they are in the org structure; which means an engineer couldn't make more than a manager.

Re:They are all paid too much

[Billly Gates]

Jobs was worth every penny after what he brought to Apple.

Apple didn't magically invent the iphone, imac, ipod, appstore, and Steve led the way. It brought value to hundreds of millions of people.

Yes if you are skilled doing programming/network design/chip design/ you can get wealthy. The key is to not work for someone elses dream.

Think of a product or server you and your fellow coworkers can provide? Start a company with your partners and make something. Or move to a place with startups in Silicon Valley where you make less starting out but have options in owning shares of the company. Many will fail but you will have many clients on your resume fast until one sticks and you strike gold.

You are more valuable than you think. Just because your current company doesn't value what you do as part of the bottom line, doesn't mean your skillset wont benefit someone else more greatly. ... of course if you have a baby and a wife there is also risk. Are you willing to take that? If not then being paid a lot less is worth the price in terms of job security and benefits.

Re:They are all paid too much

[SQLGuru]

I never dictated what the multiple is.....just that it be documented and adhered to.....for Microsoft, the multiplier might be lower (or higher) than that of Starbucks. Even if the multipliers are the same, it probably makes sense for the CEO of Microsoft to be paid more than the CEO of Starbucks since the market cap for MS is close to 6X that of Starbucks.... But regardless, the idea is just that it be documented. If the CEO needs a raise, it's because the company is doing better --- which means that everyone deserves a raise.

More concrete example:
Lowest wage is $25k
CIO multiplier is 100 (for a salary of $2.5M)
CEO multiplier is 400 (for a salary of $10M)

If the company does well, typically, the bottom guy gets another $1,000.....but the CEO usually sees a raise from $10M to $20M. With the cap limitation, the only way to get the CEO up to $20M is to raise the bottom guy up to $50K. If the company didn't do enough better to justify that, then the CEO doesn't deserve to double his salary.

Re:They are all paid too much

[Anonymous Coward]

Nobody should be working 70 hour weeks anyway, regardless of the compensation. It's detrimental to health. 40-50 is generally considered the maximum a person can work without performance suffering (and there is an argument that most people only really have a good 30 hours of work in them each week - the other 10-20 hours is just networking and fluff - like posting on /. like I am now.)

Re:They are all paid too much

[CastrTroy]

I understand why you would doubt me, but here you go. Mind you, it's mostly because they are doing a ton of overtime, but really I don't want my drivers doing too much overtime, as there's only so many hours you can safely drive in a week.

Re:They are all paid too much

[Anonymous Coward]

Ok we cap CEO's because we do not like them.

What about VP's? // obvious choice for who is getting paid too much

Middle managers? // next obvious choice for who is getting paid too much

What about you? // cant have workers making more than other workers they make others feel bad

oh.... Your logical progression chain leads to everyone making some fixed amount. Even though we can easily see some make more than others and should be rewarded better. That is our society. Communism sounds good on paper until you figure out your gain for doing something is equal to doing nothing. Being greedy creatures we take advantage of it. Oh now we need someone to enforce it. We just went from a free state to one where you work because the guy with the gun says so.

Re:They are all paid too much

[UnknownSoldier]

Banks are capped on the amount of money they can loan out.

10x is a good number. It guarantees every employee will be treated fairly instead 1 person making 99% of the wages, and the 99 other employees getting 1%.

Would you really want to work for a company that doesn't respect everyone's pay grade?

--
First (public) Contact is coming 2024
Are you ready for one answer that will spawn infinite questions?

Re:They are all paid too much

[Anonymous Coward]

Because it doesn't really help us as a society? What is the point of creating single-dimensional human beings who are focused on a number in their bank account that they could not meaningful spend in their lifetimes (sometimes their children, grandchildren, and great-grandchildren's lifetimes)? Let's get real - addiction to money is similar to any other kind of gluttony - video games, drugs, food, alcohol, gambling, adrenalin. In moderation, it can enhance your life. In excess, it can wreck yours, and especially in the case of money, the lives of people who happen to be intertwined with yours.

Back to your argument, about who is the shareholder? It is someone with money. So when we lay off low wage earners (highly correlated with people who don't have money) to provide an incrementally greater return to those people who already have money, we create a highly dysfunctional system where if you have money, you will have more money. But if you don't, you'll get stomped on real quick by people looking to cut costs.

In the end, this does not help us as a society. We enacted laws creating corporations to advance the interests of this nation. The people who have been most addicted to the corporate game seek to feed their gluttony further and justify the status quo. We need to find a middle ground where we balance the needs of shareholders against our interest in improving everyone's standard of living. It can be done - Canada, Australia and certain European countries have figured out how to do it.

Re:They are all paid too much

[__aagmrb7289]

I think, perhaps, you don't know what the word "fact" means. I get that this is your opinion, and it may even be right. But you are not espousing facts.

Re:They are all paid too much

[Billly Gates]

The middle class is being destroyed in western nations due to not being as valuable as they once were due to globalization and an over supply of college educated folks

Not because the rich can force us all to work for less. The middle class is growing in Asia and in India at an exponential rate. It will return back again as the price of dollar declines and inflation goes up in these countries. Some companies are manufacturing back in the US as the cost savings have dwindled.

The market determines your salary and it goes up and down for each individual/company. My example in another post was you can get rich programming. ... at a .com or inventing a new app rather than POS code at pizza hut, where food production is valued higher.

You can't pay an engineer minimum wage. He will find a job elsewhere where he is valued more.

Some is true with the middle class here. Many jobs were lost because India can do them for a fraction of the price and Americans are lazy (seriously not flamebait) and do not work as many hours as foreign counterparts.

Re:They are all paid too much

[orasio]

If you are trolling, sir, congratulations, it's a beautiful piece.

Re:They are all paid too much

[Anonymous Coward]

These CEOs don't have it that bad... a good chunk have had there education paid for, no debt, and even investments made by others (family).

I started a company out of college. Was a CEO from the start. Not that unlike Zuckerberg. No MBA mind you. I did have some help (near free housing), no debt (ie no college debt), etc. Wasn't too bad work wise. I did work 40 hour weeks in the beginning. 5 years in I'm working more like 20 hour weeks and work at whatever hours I want (ie afternoons only). Simply started a company and focused on the parts which had clear demand already and inadequate supply. Spread out from that point doing what I wanted and revolutionizing my market. Not quite Zuckerberg mind you. I'm not quite that much of an ass hole. I haven't made a 30 billion dollars yet, but have another 5 years or so to do it by a 10 year standard. My employees are paid shit, even if I've been fairly reasonable and competitive wage wise. I have it easy. I have plenty of cash to throw around. Life for me is good.

Are CEOs paid too much? Probably. I'm quite the socialist, in that I'm pro-some-level-of-equality (nationalized health care, education, minimum housing/food for all, etc), but don't think I'm not a selfish asshole, I still want my perks. I don't want to be the sole person funding such a system. I still want to have some money to throw around at houses, boats, vacations, etc. Keep in mind I don't think these things should come before all in society have some minimal levels of comfort.

Re:They are all paid too much

[Anonymous Coward]

When a company making billions pays its executives $50M but lays off thousands making $40K, it feels really crappy.

Having recently witnessed this at the megacorp that I work for, I do have to put a little water on the flames.

Not everyone getting laid off deserves to be paid just because. A lot of the people getting laid off were long overdue to be removed due to lackluster performance that, for some reason, never resulted in them being individually laid off (the real reason is most likely risk aversion to avoid litigation). For instance, I saw the worst software engineer in my life milking the company for about a year and a half--never actually turning in work--until he was finally laid off, and he was probably in his 40s with kids. Many people I knew hated him for it, but when he finally got laid off everyone talked about how it was too bad. No, he should have been fired rather than laid off, and it's a shame he was ever even hired.

Now, with that said, CEO pay can be outrageous, but I see absolutely no reason to cap it. My opinion is that I always want to be able to make as much money as possible and therefore I cannot fault others for doing the same. Theoretically, it's what you do with that money that should be how people judge you (Scrooge or after-trauma Scrooge?). What I cannot appreciate is that it always ends up being the peons that get the modest raises (1% - 4% where I work tends to be normal range) "because times are tough", but then the CEO will get an extra $1 million added to their salary. That's what I think is wrong, and it shows incredibly poor leadership; if times are tough, then the CEO could most likely take a $1 million pay cut without effecting his life style, and put that money back into the salary bucket for everyone else. And, when times are good, the peons still see the modest raises while the CEOs get explosive raises.

It's the poor leadership effect that makes me want to change jobs. No matter how good I do at work, I am most likely looking at a 4% maximum raise because I have to split the bucket with my peers, which translates to an almost unnoticeable amount of money by comparison to those on top. Combined with crushing bureaucracy, it really explains why people go to megacorps for experience, and then leave to form their own startups that have dramatically better people working for them.

Re:They are all paid too much

[fsck-beta]

and board is determined by investors...

Re:They are all paid too much

[S.O.B.]

I've heard about this idea, but I think there are some major flaws. Basing the CEOs pay on the pay of their lowest paid employees doesn't work out. Microsoft probably has very few low paid employees by virtue of business sector they are in. They design software, so the majority of their employees are going to be paid quite well

Microsoft may design software but not everyone in the company designs software. There are secretaries, mail room and other support staff. And it doesn't matter what the majority of their employees get paid, the solution suggested was a multiple of the lowest paid employee. There is only one lowest. Of course it would suck to be that person.

Re:They are all paid too much

[Anonymous Coward]

*devils advocate*

Why should they be capped?

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

Doing so would make great talent do something else or not try as hard and everyone looses out.

If someone is paid too much the market takes care of that with something called a firing. Losing your job does suck and is very disruptive but the shareholders need a return and who is the shareholder? Your elderly mom, YOU, etc. If you have a savings plan you own shares. Also investment money is needed to expand or go into more markets. They only way to do that is to have great accounting books.

Yes it does suck to be laid off at a human level, but ask yourself what are you providing? The reason you are let go is because you fix some computers. The CEO on the otherhand changes the lives of milllions of people.

You want that cash and job security then you ought to be a better worker and provide greater value. The sky is the limit and the CEO didn't start out like this overnight. It was not luck. Even company founders are poor. It took Zuckerberg 10 years before he became very wealthy.

The free market takes care of everything if you just bud out and not interfere.

Except that executive compensation is not decided by a free market. It's decided by a small group of interlocking directors who sit on the compensation committees of each other's boards. There's no market incentive to reign in excessive compensation. Quite the contrary, if a board member starts questioning another company's CEO's salary, someone might question his/hers. The horror!

Re:They are all paid too much

[geoskd]

CEO salary is determined by investors, those who are taking risks in the company and hired him to take care of their investment in that company.

No, CEO pay is not determined by investors, it is usually decided upon by an executive compensation committee whom the board of directors has selected. Individual investors have about as much say in the whole process as individual voters have in controlling the laws that congress passes. For all intents and purposes, they two are wholy separate. I would agree that the process is working, if each individual investor got to select what percentage of their share of the profits should go to CEO compensation. Let the CEOs earn their pay the way politicians do. Make them campaign for it. Make them explain to every investor what they are doing to earn that pay. If each investor had real control over their own piece, you would find CEO compensation to be far more reasonable, and far more tied to their performance...

Re:They are all paid too much

[Manfre]

Do you honestly believe that is how it really works?

Re:They are all paid too much

[CastrTroy]

I guess if you ratio it at 400, then it works out, since even if you only pay your employees $10,000 a year, you could still earn $4,000,000 per year as CEO. But there are organizations like Wagemark which think a ratio of 8:1 makes more sense. I think it's hard to find a correct ratio for this kind of stuff though. Put the ratio too low and the CEO earns little more than the employees, even though so much responsibility is on his shoulders. Put the ratio too high, and you can pay the employees whatever you want, while still being quite rich.

Also, you still don't account for how the organization can be restructure to ensure that the low paid employees don't actually work for the same company as the CEO. In fact, CEOs that keep lower paying jobs in house would be penalized, while those that offshore everything to companies in third world countries would be rewarded.

Re:They are all paid too much

[unimacs]

Microsoft wouldn't have to use the same multiplier as Starbucks.

FWIW Ben and Jerry's Ice Cream used to have the policy that the highest paid employee's wages couldn't exceed 5 times the wages of the lowest paid worker. This policy ended in the mid 90's when one of the original CEOs stepped down and they wanted to hire another. They still boast that every worker is paid a livable wage.

The problem is that if a good candidate for CEO can get paid significantly more elsewhere, you're going to have a difficult time hiring them unless there's something about you company that makes them rather work there.

Same thing with sports. If one team is offering you a 10 million more than another, where are you going to go? In sports it's pretty easy to track the performance of individual athletes. To me its much harder to gauge the performance of the CEO. If a company is performing well, does that necessarily mean that they have an excellent CEO?

In the long run these increasingly high salaries relative to other workers is unsustainable, - both for athletes and for CEOs. Ultimately their salaries comes from the rest of us. If we can't afford to go to football games, or even pay for cable, eventually the revenue stream for sports dries up.

Re:They are all paid too much

[gutnor]

That would not work, the intrinsic problem is that they control huge amount of money, and since they sit at the top of the pack they take the largest share, no matter their relative contribution. That's pure animal instinct and that will not change unless you use fear of god or something similar to have them behave.

What would they do ? Hollywood accounting: all the non management worker in a fully-owned subsidiary making shiton of losses because of the cost of contracting the boss from the parent company. Or they would force everybody to be an independent contractor. Unless we get back into full-employement economy, they can basically do whatever they want to work around that problem.

To really solve it you need to work on the actual problem: make the market tougher. Free market is a legal construct where companies fights, you can make it as tough as you want. As long as the rule are fair, competition will still play. For example increase the administrative overload for large group to tremendous level and smaller, leaner companies will take over.

Secondly, you want to change subtly people mentality. People would find it weird for to give the medals and money to the team coach rather than the actual player. Well, with a few exception, everywhere else that is considered normal.

Re:They are all paid too much

[jxander]

It wouldn't be a hard cap, but a figure relative to the lowest (or average mean/median) wage of the company they oversee

If the CEO wants a raise, give everyone else in the company a raise... if the company can afford to pay its workers better, and still have left over cash for the CEO's raise, then he truly deserves it. On the flip side, if a company has to start cutting back, lowering wages or laying people off, that should have a direct negative effect the CEOs pocketbook

Re:They are all paid too much

[RabidReindeer]

no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

As opposed to all the software developers and other salaried workers who are expected to work 70 hour weeks and NEVER see that level of compensation. Or, for that matter the people at janitorial level who do their 70 hour weeks by working 3 separate jobs and see even less compensation. But if you're management, you're "magic".

Doing so would make great talent do something else or not try as hard and everyone looses out.

You "loosed" the education derby. Sorry, after about the first $150K or so, you're no longer working to earn money, you're making money to score points. It no longer matters how hard you work at that level, just how much you are in a position to extort.

If someone is paid too much the market takes care of that with something called a firing. Losing your job does suck and is very disruptive

No, people don't get fired simply because they're being paid too much. They may lose bonuses or get a pay cut, but there's no need to actually fire someone. And when you're in the millionaire club, the major disruption is that you lose points with your fellow millionaires, not that you're going to have to become homeless. Especially considering the fact that some CEOs can earn more getting fired than ordinary workers will earn in an entire lifetime of 70-hour work.

but the shareholders need a return and who is the shareholder?

The self-same persecuted corporate officers that you're so diligently defending (BTW, don't expect a check from them for doing so). Also mutual funds looking for quarterly returns. Not many of us are making a living solely off stocks or even from funds. Almost none of us have enough shares to vote on what we really want, which is generally something that returns a steady income or growth instead of yo-yo-ing as the major stockholders shuffle around corporate divising in the game of merge, acquire, and divest.

Also investment money is needed to expand or go into more markets. They only way to do that is to have great accounting books.

Actually, since major moves are usually funded from outside sources (I'm involved in one right now, in fact), your accounting books are less important to the money people than your track record. People are more likely to lend venture capital, buy bonds, or whatever, if they think you are likely to succeed.

Yes it does suck to be laid off at a human level, but ask yourself what are you providing? The reason you are let go is because you fix some computers. The CEO on the otherhand changes the lives of milllions of people.

You want that cash and job security then you ought to be a better worker and provide greater value. The sky is the limit and the CEO didn't start out like this overnight. It was not luck. Even company founders are poor. It took Zuckerberg 10 years before he became very wealthy.

The free market takes care of everything if you just bud out and not interfere.

At this point, you've just shot all credibility. CEOs are magic, and everyone else is useless. If you want money and security, you need to work 70+ hours and "provide greater value", nothwitstanding all of the people who did that and got canned so the CEO could get a bigger bonus. No luck was ever involved, and The Free Market is magic and fixes everything if you just leave it alone.

Your mom is calling. The milk and cookies are ready, so leave the basement and come up into the kitchen. And don't forget to do your homework. You really do need to do that homework.

Re:They are all paid too much

[Anonymous Coward]

*devils advocate*

So you acknowledge they're devils? Well, that's a start.

Why should they be capped?

Because as others have stated the supposed mechanism of the free market somehow capping executive pay is obviously not functioning in some circumstances. There is no rational reason why one company would pay 5x the pay of another company that earns roughly as much without some real justification that said person is really worth. Well, are they?

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

Of course it'd distort "the free market". That's the whole point! That's an incredibly poor excuse in its own right to deride an idea because well, banning contracts for hire also would "distort the free market". As for the latter point, well, no, obviously you're wrong because we have a clear example of another person in a similar role *not* being paid the sort of compensation package outlined and typical pay is much lower. Honestly, the general system to actually reward risk is for the people taking the risk to bond the risk with reward. But, daily pay has nothing to do with risk per se--no more than any other employment--and as such it is irrational to pay a person in the form of stock or stock options or whatever and further there's no real justification for the outright day pay being so substantial.

Doing so would make great talent do something else or not try as hard and everyone looses out.

That happens all the time for all sorts of reasons. A great scientist may be a great killer. Should we allow murder just because it might stop the next pandemic? About the only real argument that could be made is that money buys you so very little and hence it's enough of a token reward that it's not comparable to actually substantial harm if we lacked other sorts of regulation. That'd probably ring a lot truer if there wasn't a constant backlash against people who do use money for substantial harm over others through their exclusionary purchases or lobbying of laws or whatever. Until we as a society do away with or at least mitigate these issues, then substantially higher pay is going to be a focal point of discussion.

If someone is paid too much the market takes care of that with something called a firing.

Uh, no. Perhaps a pay cut. Perhaps nothing. Perhaps even the pay is increased. There's obviously a lot more than "a firing" that is used to "remedy" the situation. And as the person in charge of hiring/firing, it's very unlikely a person who is paid too much will fire themselves.

Losing your job does suck and is very disruptive but the shareholders need a return and who is the shareholder? Your elderly mom, YOU, etc. If you have a savings plan you own shares. Also investment money is needed to expand or go into more markets. They only way to do that is to have great accounting books.

Yet oddly my elderly mom and me can't change the pay of the CEO because we don't have controlling shares. The best we can do is try to invest in companies that pay their CEOs reasonable rates. But, in the scope of a company that makes billions, even millions in waste translate to sub-penny differentiation in share prices and dividends. So, while the long-term future might eventually be effected by these bad pay packages, there's no real motivation in the short-term for anyone to fix the problem and there's no motivation to squirrel out the companies who are bad at accounting. In the end, a penny price change in the product would likely more than compensate; but that's obviously a bad mechanism to judge whether pay is reasonable.

Yes it does suck to be laid off at a human level, but ask yourself what are

Re:They are all paid too much

[Billly Gates]

A skilled worker would go elsewhere.

However for someone out of work for awhile or fresh out of school with no experience an asshole company would make sense for resume building but would go out of business soon as they would get monkeys to run it.

What happened with the wealth increase is globalization shock and a steep recession. But after you cut back you have pent up demand and this is what happened last year as people are buying again which is increasing as well as the pull an employee has with negotiating a wage.

Believe it or not there are still shortages on skilled workers in this country. It is bashed on slashdot as false but many companies which use averages for compensation have to pay more to gain people with the right skill sets.

Re:They are all paid too much

[pitchpipe]

So we socialized the risk. Let us also socialize the profits.

Re:They are all paid too much

[phantomfive]

So true.

Re:They are all paid too much

[hey!]

Well, I think before throwing our hands up we should examine your assumptions. After all, CEO salaries aren't set by some nebulous, magical oracle called "the free market". They are set and approved by specific organizational entities within a corporation: the compensation committee and the board of directors respectively.

*If* these organizational entities operate as they are supposed to in advancing the interests of the proprietors, then *yes*, this is free enterprise and there's nothing we can do about it short of meddling with how the proprietors choose to foolishly spend their money.

But it *also* follows that if these committees were doing their job, the CEO wouldn't be paid "too much". He'd be paid the minimum amount necessary to secure management of comparable expertise.If the CEO is paid "too much", then it follows these corporate organs aren't doing their job -- in fact that it is commonplace for corporate management to fail in their duties toward the stockholders.

This points to something wrong in the laws and regulations protecting the interests of the proprietors from corporate officers abusing their positions. For example people serving on or advising the compensation committee could be in a position to receive financial favors from the CEO whose pay was being decided. This is actually sort-of legal. New regulations this year under Dodd-Frank require conflict of interest to be weighed in selecting the compensation committee, although people with such conflicts aren't actually banned. But it makes no difference what the duties of a corporate officer are supposed to be if nobody ever gets busted for breach of duty.

Re:They are all paid too much

[dave562]

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

As someone who has put in 70 hour weeks, the answer is to hire someone else and spread the work around. If there is so much work that 70 hour weeks are required on a regular basis, that is a staffing issue that should be remedied by hiring more people, not working one person into the ground and giving them a pay bump.

The higher I get up the ladder, the more I realize that "executives" are just regular people who have slightly above average social skills. They are usually successful because they surround themselves with successful teams, most of whom make significantly less than they do. Those CEOs who are "changing the lives of millions of people" are worthless without a whole staff of 6 figure managers, and the staffs of those managers backing them up. It takes a seriously skewed ego to believe that the CEO is worth 10-100 times more than the people just beneath them.

Re:They are all paid too much

[jxander]

*devils advocate*

The free market takes care of everything if you just bud out and not interfere.

Devil's devil's advocate : That last line kinda kills the whole argument.

If we butt-out and let the free market flow, then maybe it would take care of everything ...maybe. But we don't. We meddle. We let the current Top Dog set the rules (through things like campaign donations and outright bribes) thereby circumventing the free market and giving themselves many undue advantages, aside from simply being bigger

Re:They are all paid too much

[mrchaotica]

Nothing in your post explains why executive pay has risen from 50x average pay (in the 60s) to 500x average pay now.

Re:They are all paid too much

[jollyreaper]

Shit, accidentally modded your post as smart. Posting to correct this.

Re:They are all paid too much

[swb]

"Say on pay" wouldn't be such a hot topic in corporate governance (it even has its own wikipedia page) if investors actually had that much influence over executive compensation.

Most top executive compensation is detrmined by compensation committees made up of board members, many of whom are also top executives elsewhere. I don't want to risk you limiting my compensation if it exposes me to a risk you might limit mine. There's a moral hazard for these people.

The consultancies who get involved in executive compensation face the same risks -- those that come out and say that compensation should be decreased will likely find themselves losing business. Another moral hazard where self-interest keeps them from advocating for anything but the status quo.

The end result is that rank and file investors have little to no control over this and many barriers are erected to prevent shareholders from voting in more than an advisory way on this, let alone an up/down vote or even less likely, dictating compensation strategies.

Even in situations where CEOs have the concentrated authority to make big decisions unilaterally, I find it hard to believe that they are *individually* performing all the work required to make them. They are instead relying on legions of experts and other labor to make a decision, something which I don't think is magical enough to warrant the sheer scale of pay they recieve because they individually aren't doing the work but are demanding the scale of pay as if they were.

Even then, when they make terrible decisions that cost billions of dollars or oversee others who lose this and they lose their jobs, they still walk away with so much money its difficult to see any accountability they face. Maybe if you face the prospect of earning $20 million dollars you should also face the risk of losing $20 million dollars personally. But the current system is just win-win for them outside of bragging rights at the club.

Re:They are all paid too much

[Anonymous Coward]

It would certainly NOT distort the "free market". The largest market distortion around is the pathological avarice of people in power. Their greed gives them power far beyond the value of any actual contribution they make. It's grossly unjust, and the root evil underlying most of society's problems.

Re:They are all paid too much

[Anonymous Coward]

Your source basically pointed out that they were working enough hours to be doing two jobs. So, yeah, a skilled bus driver making 50k for a 40 hour week is completely fair, it's working all the extras which broke it.

In other words, you killed your own point - they're getting paid a fair wage for the work they do, they're just working far far more than they should do.

Re:They are all paid too much

[Anonymous Coward]

The world is full of people working 70 hour weeks for decades for minimum wage. That is how the wealth is created.

Re:They are all paid too much

[Anonymous Coward]

Interesting to think about actually. Using your 2 examples I would bet that MS has a much larger Janitorial and Maintenance/Physical plant staff directly on the payroll, many of whom likely make less than the average Starbucks employee

Apparently you've never worked for a large business. Janitorial services, maintenance, etc, are almost always contracted out.

Re:They are all paid too much

[Karl Cocknozzle]

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

Doing so would make great talent do something else or not try as hard and everyone looses out.

Once upon a time these earnings were effectively capped by vigorous oversight from boards of directors, and that didn't seem to create a mass-exodus of talent, nor did it in-any-way slow down innovation or competition.

Plus, if somebody is really so "talented" they have "earned" $100 million per year I would postulate their time would be better spent starting their own business so instead of just getting a "cut" of the company's profits he gets all of them. Certainly if he's actually worth $100 million he's got more than enough talent to make that happen.

If someone is paid too much the market takes care of that with something called a firing.

CEOs aren't "fired" the same way you and I are. You want them gone? Great! You trigger their golden parachute and they're set for life! Such total lack of accountability is what leads to blundering performers walking away richer than an oil tycoon for delivering zero value, or in some cases, erasing millions in value through mismanagement. Sears comes to mind, as the spectacular recent example of some arrogant hedge-fund asshole negotiating an enormous pay package for himself and then nearly putting the company under in just a couple short years.

And the fact that you'd try to conflate such masters of the universe with a salaryman's layoff sort of underscores why your point of view is more than a little half baked. Maybe quarter-baked? But even that's generous.

Re:They are all paid too much

[Anonymous Coward]

I hope you don't drive a car then.

Re:They are all paid too much

[Karl Cocknozzle]

The fact that executive pay being so disproportionate to employee pay "feels really crappy" is not a problem. The fact that executive pay being so disproportionate to employee pay destabilizes society by destroying the middle class is a problem!

Not to mention that it also, over time, erodes and eventually destroys the value in these companies as they shed employees and shunt more and more of the profits to the C-suite for disbursement as bonuses, high salaries, and lavish perks. That massive largesse encourages the taking of huge risks to generate the short-term gains required to ring up the eye-popping bonuses.

When they fail, the company gets hurt, maybe goes bankrupt, but the price is payed by working people in the form of layoffs.

Re:They are all paid too much

[Anonymous Coward]

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation. Doing so would make great talent do something else or not try as hard and everyone looses out.

This is assuming that great leaders and the best people for positions of power are motivated by wealth and that great leaders are rare and require that level of simgle-minded dedication to your job to be successful.

There is interesting research showing that existing top leaders don't actually make great decisions, and the more they are perceived to be great the risker decisions they make (that generally imperil the company/others and less so themselves). There is also research showing the success has more to do with aspects out of control of the decision makers (which is why they don't always run their companies into the ground). As we study this more it seems that, in general, companies succeed or fail despite their leaders for reasons out of their control. This is hard for humans to intuit, but we're terrible at statistical and rational thinking.

More importantly for the health of the business (and the society it exists in) I would imagine you could see large benefits if you could set wages so that jobs that don't affect other people's lives and no one wants to do are the highest paid positions to attract those simply motivated by financial wealth. The last thing you want is a leader who chooses their own success over the business, customers or employees. The people you want to attract to positions of power are those that feel a strong responsibility to others. Beware the "workaholics" too; those that sacrifice friends and family for work are suspect - it demonstrates a lack of responsibility to others.

The idea that the existing market (note: not free, as that certainly isn't the case for the current market) can solve these situations belies the fact that the market is heavily distorted by those in existing positions of power. Law/regulation, when not co-opted by great power, is designed to provide collective power to those who with little individual power and apply it equally to those with the power to shape their (market, etc) environment to their benefit. The answer isn't lack of regulation, rather a system for just regulation and the ability to detect and remove regulatory parasites. In turn, those regulations should be removing the parasites and predators from positions of power where they can cause the most harm.

Re:They are all paid too much

[hey!]

I've worked with federal, state, and local agencies in public health and environmental monitoring. What I've seen in these agencies isn't that different from private sector, if anything the people there work a little harder than average for a little less pay than they could probably get elsewhere. This may not be representative of public service in general because these specific areas tend to draw young idealists.

Goof-offs are found in private sector too; there's no magic formula for identifying them and getting rid of every last one of them. Fortunately, most people prefer *not* to goof off at work, unless there's serious passive-aggression in the relationship between workers and managers. Nearly everyone prefers to feel they're doing productive work, so if there is a pervasive pattern of poor work habits there's a problem with management.

If your local government is particularly overstocked with gold-brickers, it probably says something about who you are electing to local office. They're either hiring the wrong people (patronage hires in particular), putting managers in place that set the wrong tone, or mismanaging the budget. Budget issues in particular are susceptible to abuse; too little funding, or too much can bring work to a halt.

Re:They are all paid too much

[Anonymous Coward]

The statement that ground my gears was they had to be bailed out because "they were too big to fail". Then they are too big. Back in a oil/financial crisis in the early 1980's there was a bank closing every day in Oklahoma for several months. No one thought they were 'too big to fail'. Many banks survived because they didn't fall into the false boom market (similar to the housing market of more recent times), much like many of the smaller bank of the more recent times.

Any business can, and for the good of the market, must be allowed to fail. We don't bail out small institutions, and we shouldn't bail out large ones either.

Re:They are all paid too much

[nmr_andrew]

I'm not sure on the pay cap, but it should definitely be decided by the investors and not a compensation committee that's made up of members of the board who all sit on each other's boards and play golf together.

I do agree 100% on the bonus, though. First, I have a big problem with the concept of a "guaranteed" bonus; if the company hasn't performed well, why is the guy in charge getting a bonus? Of course, it doesn't take much thought to get at the real reason they have these given that we're talking about US corps. The CEO's salary gets taxed at normal rates. Bonuses, however, get taxed at the much lower capital gains rate. This is one reason you'll see a Fortune 500 CEO agree to work for a $1 (or even $1M) salary but then take home a huge bonus.

Re:They are all paid too much

[Anonymous Coward]

pft... "Skilled" bus driver? Wut?

Right, anyway, so a bus driver in Ottawa, Canada makes $50K/year.

Ottawa is a fairly expensive place to live. The CPI is 85.78 in Ottowa and 69.8 in Omaha, NE.

So it's like they're making $41K/year when I compare it to prices that I'm more used to.

If he literally works enough overtime to double his wages, then yeah, sure, he'd make more than me. But not by much. And I've got a kooshy job where I can browse slashdot while I wait for my incompetent co-workers to get the ball out of their court.

Yeah man, this sounds pretty fair.

Re:They are all paid too much

[Anonymous Coward]

It would distort the free market

There is no fucking free market.

There has never been a fucking free market.

There never will be a fucking free market.

The free market takes care of everything if you just bud out and not interfere.

Horseshit. The free market is a myth, and it gets manipulated by the big players for their own benefit.

You know, like when the tech companies decided not to poach one another's staff and keep down salaries. Like how companies have legislators pass laws to entrench their monopolies. Like how the fucking RIAA essentially writes laws.

If you think there is a a free market, or that such a thing could ever exist ... you're a fucking idiot.

The free market is a fucking lie, and it always has been.

Re:They are all paid too much

[Anonymous Coward]

Their salaries are currently capped, They can not take more than the company earns. And the suggestion to hold them to some form of multiplier from the lowest paid worker is no different. The issue boils down to how their bonuses are calculated, if they need to layoff 50,000 people to make the numbers match for their bonus then they do it. Their jobs are only good for about 5 years, oh and then they get the golden parachute. Checkout one of the Home Depot CEO's he got 225 million for leaving but while is was there he did not earn anywhere that much money.

Re:They are all paid too much

[Anonymous Coward]

"say on pay" isn't a hot topic. It is now the law. And guess what? With a few high profile exceptions, almost all executive pay practices have been approved. Shareholders feel that CEOs are earning their pay. It's no one else's business how much CEOs are paid. End of story.

Re:They are all paid too much

[pseudorand]

> It would distort the free market and no one would take the risk...
Risk? What risk? The DOW did hit ~7k briefly, but last year it broke record highs on a daily basis. If you happened to be the idiot who sold at 7K, you lost. If you just kept your money where it was, you're doing pretty well. And why is that? Because congress plunged us deeper into debt and the federal reserve printed money like it was going out of style. And in the long run, those things will disproportionately hurt the lower and middle class in the form of higher taxes* that stifle job creation and inflation that erodes wages and savings.

So why would our government do this when there's obviously a lot more poor and middle-class voters than rich ones?
> ...and who is the shareholder? Your elderly mom, YOU, etc

Ah yes, that's it. Because the system forces all of us to take the same risk, independent of our financial means.
Between FDIC and NCUA, each adult can have $500k of government-insured bank and credit union deposits, far more than most of us have in liquid assets. Why would we possibly put our money at risk in the stock market? Because they pay almost no interest, yet government policies almost ensure inflation and profits in the stock market. So while we won't loose our deposits to bank fraud or runs on the bank, they'll slowly decrease in purchasing power. So instead we have to put it at the same risk that the very wealthy take in the stock market. Which means that when those systemic risks actually happen, the government HAS to bail out the markets or everyone, rich or poor, looses. This means the tax payer is actually on the hook to make sure the rich stay rich.

* Why do taxes and inflation hurt the poor and middle-class more? Because wage increases always trail inflation. And because the rich make most of their money through capital gains, paying 15% federal income tax while the rest of us pay more. We also pay a higher percentage of our salary in social security and medicare (there's a cap on how much of your salary is taxed for those). And since we have to spend more of our salary to survive, we pay a higher percentage of our earnings in sales tax. So I'm all for a flat income tax, but it has to take the place of all other taxes.

Re:They are all paid too much

[Anonymous Coward]

so then almost no one will get salary and everyone becomes contract workers?

Re:They are all paid too much

[mark_reh]

"The free market takes care of everything if you just bud out and not interfere."

Yeah, that's why our taxation and healthcare systems are so good and so efficient. You've been watching too much CNBC and Fox "News".

Re:They are all paid too much

[mrchaotica]

Excuse me. Please run `awk s/fact/idea/g` on my post.

Re:They are all paid too much

[cheesybagel]

He just drank too much of the koolaid.

Re:They are all paid too much

[Anonymous Coward]

Jobs was worth every penny after what he brought to Apple.

$1/year? Yeah, sounds about right.

Re:They are all paid too much

[Anonymous Coward]

So only the CEO and the VPs will work for the "company." Everyone else will be in a separate company to whom they subcontract out work.

I love the idea of such a rule, but in practice it would be nearly impossible to enforce (and good enforcement would cost tons of taxpayer money).

Re:They are all paid too much

[Khashishi]

What's wrong with distorting the free market? The free market isn't magically good. The idea that the free market takes care of everything is just faith.

Re:They are all paid too much

[Anonymous Coward]

That is just /asking/ for stupid tricks to bypass it. Hell doing so is already easier than existing organizational tricks. A trivial one would be "nesting companies". You have one at the top with just management. They "contract out" all company functions to the shells. Thus your janitors, and low level workers, etc. are divided into shell companies. No one is better off from it and it just adds an unneeded layer of buearcratic inefficency.

Re:They are all paid too much

[Khashishi]

and investors are fund managers

Re:They are all paid too much

[cheesybagel]

Board is usually 'institutional investors' i.e. banks and insurance companies. Small stockholders don't have a chance of influencing it.

Re:They are all paid too much

[Immerman]

Just to add further support, the 99% actually own less than 2% of the stock market, even if we all united into a single well-organized voting block our vote wouldn't matter. Meanwhile the 0.1% are mostly executives themselves, and aren't about to vote their peers out of a cushy job for fear of reciprocation. And the 0.001% that are pulling the strings behind the scenes aren't going to mind executives skimming a little pocket change if it buys them staunch allies in the class war.

Re:They are all paid too much

[Khashishi]

Every worker is expected to bring more value to a company than their salary. Otherwise the company would have no reason to hire them. The salary isn't really closely attached to the value that a person brings, but what the person can negotiate in the market.

Re:They are all paid too much

[Anonymous Coward]

The relatively small subset of investors who have enough voting stock to hold some actual power.

Re:They are all paid too much

[Immerman]

Very few *workers* would be affected. Full-time at federal minimum wage works out to ~$15k/year. 10x would be $150,000/y. I might go with 30x myself, which is where things actually sat for CEOs for decades without regulation or ill effects - so we know it's viable, and that ups the cap to $450,000. And it's not like that number is set in stone, you just have to give your lowest paid employees a raise before you can give a proportional one to yourself (and let's be honest, the executives and board of directors have a nice little incestuous relationship going on which means that's essentially what happens. Historical evidence shows that no matter how badly they screw up it's vanishingly rare for board members to get voted out by investors except on recommendation of the rest of the board)

And if such a cap were implemented on the national level, where exactly would all those put-upon executives jump ship to? It's not like the rest of the world is clamoring to hire their self-entitled asses.

Re:They are all paid too much

[NoImNotNineVolt]

While most of your post is wrong (CEOs taking risk: what are they risking, personally? CEOs working 70 hour work weeks: does golf count as work now? MBAs working without compensation: salaries well above the median income are "without compensation"?), I can't help but pick on:

who is the shareholder? Your elderly mom, YOU, etc. If you have a savings plan you own shares.

Alright, so let's say I've got a 401(k) retirement account. Well, odds overwhelmingly suggest that your employer limits your investment options to just a handful of mutual funds. You want some GOOG shares? Well, you can't do that with your 401(k). And those mutual funds, well, they hold shares of publicly traded stocks as well. But they hold those shares, along with the voting rights that go with them. So, let's say I hold some FOCPX mutual fund shares. Roughly 10% of FOCPX's assets are invested in AAPL. I'm an Apple "shareholder" [*shudders*], so I'm the one that gets to hold Apple's board accountable. I'm the one that's supposed to pressure the board to fire an asshat CEO. But I can't, because FOCPX is the real shareholder here, and I have very little power over them thanks to the [unimaginably ineffective] SEC.

So let's get that little lie put to bed. If you have a [certain type of] savings plan, your money is enabling someone else to own shares. You yourself don't own shit. You're a peon, and you have no say in anything. You have nothing to do with the CEO, not directly, and not indirectly. You are a slave to the system, and you won't be missed when you're gone.

Re:They are all paid too much

[Tom]

Sure, I understand that sometimes those layoffs boost performance and what not

The later.

I've been through several cycles of acquisition - layoffs - restructuring and as I worked closely with the CEO and HR at the time... can't mention details, but the main reason for layoffs is rarely actual projected performance gains and more often political - like the pressure on the CEO to meet some higher-up corporate key figure. We once laid off workers from the call center even though nothing whatsoever was wrong with them because competitors in the same market had a "better" ratio of agents to customers. No other figure considered. Not quality, cost, time, customer satisfaction. Some corporate clowns had decided that the customers-per-agent ratio mattered.

Re:They are all paid too much

[Quila]

So we have a theoretical service-oriented company that by nature hires a lot of people at say $20 an hour and the CEO is locked to 50x that pay. A new CEO comes on board and vastly expands the business, quadruples the number of $20 an hour employees and subsequently quadruples profits for the company. This guy is still locked to $20x50? But he performed so much better, raking in four times the profits and helping the economy by hiring thousands of people. Why shouldn't he get paid more for excellent performance?

Then what if the company hires a few people whose job is to pull paperclips from piles of paper? That gets hired at $10 an hour because it is a completely talentless job. Does the CEO now have to take a 50% pay cut because of your rule?

Re:They are all paid too much

[mrchaotica]

Shareholders feel that CEOs are earning their pay

No. Institutional investors -- funds managed by people in the same club with the CEOs -- have the same vested interest in perpetuating the graft and collusion.

Now fuck off, shill.

Re:They are all paid too much

[NoImNotNineVolt]

So I thought of a product I and my fellow colleague can provide. It would take only about two man-years to implement, with no significant capital outlay.

The thing is, we can't find anyone to support us and our families for the year it would take for us to implement the product (not to mention any additional time we'd require to actually, you know, sell it). Of course, we could continue at our day jobs and work on this project in our spare time (as though we have any), but it's likely that competitors would already be fielding a superior product in the decade or two it would take for us to do so.

See, it's not so easy when you're not already rich.

Re:They are all paid too much

[Immerman]

And who do you think the investors are? The 99% controls less that 2% of the stock market. The investors are already either members of the executive class who are directly benefiting from the arrangement, or members of the 0.001% that are hardly going to object to executives skimming a little pocket change when it buys them staunch allies in the class war. Allies that are far more visible than themselves if things turn sour (as they usually do, eventually).

Re:They are all paid too much

[Tom]

It would distort the free market

There's no free CEO market, even if you consider it as a market, it doesn't satisfy most of the requirements for a free market.

no one would take the risk or the very hard work like 70 hour work weeks

You've gotta be kidding. Millions of people work 70+ hours a week for a pittance compared to what these people make.

Doing so would make great talent do something else or not try as hard and everyone looses out.

Yes, that is the problem. Every large company pays $xxx mio. to its CEOs because - drumroll - everyone else does it, too. No single company can break out, because they've all chained themselves in a positive feedback loop. Which is why regulation is needed to make sure everyone complies.

If someone is paid too much the market takes care of that with something called a firing.

Which is total bullshit. Above a certain paygrade, you don't get fired, you get a golden parachute and the next job somewhere else.

You want that cash and job security then you ought to be a better worker and provide greater value. The sky is the limit and the CEO didn't start out like this overnight. It was not luck.

Ok, now I'm not even sure anymore if you are being satirical or not. Of course there's a ton of luck involved. For every Facebook or Apple there's another 10 or 100 companies with the same roots that you never heard about because they went nowhere.

Re:They are all paid too much

[NoKaOi]

who is the shareholder? Your elderly mom, YOU, etc. If you have a savings plan you own shares. Also investment money is needed to expand or go into more markets. They only way to do that is to have great accounting books.

Which is exactly why the parent says that bonuses should be tied to company performance. If a company is driven into the ground and share prices drop, then the CEO shouldn't get a bonus. If, on the other hand, the company grows and share prices go up, then it makes sense to give the CEO a bonus proportional to their success.

The reason you are let go is because you fix some computers. The CEO on the otherhand changes the lives of milllions of people.

And the job of the computer fixer is to fix computers. If he sucks at it then he gets fired. The CEO, on the other hand, has the job of improving/growing the company. If he sucks at it, he still gets a massive bonus. That's what doesn't make sense. Yeah, the CEO of some companies can change the lives of millions of people. If they change those lives for the better, they should get a bonus. If they change those lives for the worse, they shouldn't get a bonus.

You want that cash and job security then you ought to be a better worker and provide greater value.

Oh, wait. So you agree, if the performance of the CEO does not provide greater value to a company, then they shouldn't get a bonus and they should be fired?

It took Zuckerberg 10 years before he became very wealthy.

That's an exception to the norm.

The free market takes care of everything if you just bud out and not interfere.

Once a company goes public, they are opting out of the free market. They are accepting money from the public. If a company wants to stay private and privately accept money from private investors, that's a whole different ballgame. But we're talking about public companies here for the most part. If the "too big to fail" companies get bailouts from the government to prevent the entire economy from collapsing, how is that a free market? Why should the C*Os of those companies get to keep their jobs, much less get massive bonuses? Even without bailouts, when a company decides to go public they are opting out of the free market and agreeing to play by a particular set of rules that are supposed to benefit the public whose money pays their salaries and bonuses. The problem is the system has become corrupted to the point where they can screw over their money source and still get massive bonuses and keep their salaries.

Re:They are all paid too much

[cheesybagel]

CEO pay is overrated. From what I can see CEO pay is not directly tied to performance at all. Not to mention that most CEOs get to be CEOs because they like power to dictate over other people. Salary is less relevant.

Re:They are all paid too much

[Anonymous Coward]

"say on pay" isn't a hot topic. It is now the law. And guess what? With a few high profile exceptions, almost all executive pay practices have been approved. Shareholders feel that CEOs are earning their pay. It's no one else's business how much CEOs are paid. End of story.

If it is a publicly traded company then I'm pretty sure the SEC would disagree with you on this.

Re:They are all paid too much

[gnupun]

At the top tier (VP, Pres, CxO), pay should be capped as some (documented) multiplier of the lowest level salary.

Why are these idiotic and evil-commie statements modded up? The lowest level salary employee works for the CEO, not the other way around. Why do you insist on making a relationship between salaries of high-tier management and low-level manual labour? This is equivalent to saying, "all SQL programmers should be paid 15 times the amount they spend on grocery." How is that fair to developers who consume less food? Shouldn't the salary be based on performance and market demand instead?

Re:They are all paid too much

[Anonymous Coward]

Are you three years old?

Re:They are all paid too much

[Uberbah]

Jobs was worth every penny after what he brought to Apple.

Jobs is also the best argument against the overcompensation of CEO's. Just for starters, the pennies he cost the company numbered 100 annually for the first few years he was back at the job. He also could have demanded sums of compensation that would have made $220 million-a-year Larry Ellison jealous, as Apple first caught up to and then surpassed Microsoft. But he didn't.

Re:They are all paid too much

[PrimaryConsult]

Bonuses are *not* taxed as capital gains; bonuses get handled the same way as overtime or other "supplemental wages". Here is one source.

Re:They are all paid too much

[david_thornley]

Ever known a poor person? Many of them work as hard as any CEO. Lots of people get advanced degrees without that financial incentive, more rigorous degrees sometimes than an MBA. Why are CEOs so lazy that they require that much money to work as hard as people who get far less money?

If I'm paid too much, I'm likely to be laid off. (Happened once; the company was in financial problems and laid off the higher-paid programmers.) This does not appear to happen with CEOs.

CEOs did not necessarily become CEOs by luck. For many of them, it was because their parents were in the right social class, so they went to the right prep schools and colleges, and made the right contacts. On the other hand, many did. What was it about Zuckerberg that made him so rich? Was it that he was providing a service nobody else did? Um, no; there were similar companies all over the place. Was it that Facebook turned out to be the right service at the right time? Isn't that largely luck?

And which CEOs are in companies that employ millions of people? The CEO can change the lives of non-employees by virtue of the work of the employees. Somebody might fix computers, and the computers may be among those that affect millions of people. The CEO has a greater effect, sure, but it's not like everybody else is doing nothing important for people outside the company.

Re:They are all paid too much

[david_thornley]

Either the janitorial stuff is contracted out, or it would be if this were made law. If I were CEO, and was faced with a cap, I'd try to see how many low-paying jobs I could outsource.

Re:They are all paid too much

[Anonymous Coward]

If we butt-out and let the free market flow, then maybe it would take care of everything ...maybe. But we don't. We meddle. We let the current Top Dog set the rules (through things like campaign donations and outright bribes) thereby circumventing the free market and giving themselves many undue advantages, aside from simply being bigger

Also, it should be pointed out that people may not really like the way the "free market" decides to handle this. Not to alarm anyone, but the "solution" frequently gets very messy and violent. The winners and losers in this scenario can be very unpredictable.

Re:They are all paid too much

[painandgreed]

Jobs was worth every penny after what he brought to Apple.

Of course it was, Jobs' salary was $1/year. He said he only got that to get the health benefits.

Still, he also got a jet out of the deal, and I believe he also got some stocks also. Which just shows that if you regulate the CEO's salary, they'll find other ways to get their money.

Re:They are all paid too much

[antifoidulus]

Um, if you are measuring an engineers output by the # of hours he works then you are an idiot, pure and simple.

Re:They are all paid too much

[Magius_AR]

CEOs aren't "fired" the same way you and I are.

Sure they are. I know quite a few people who were fired with crazy good severance packages. Sure, they weren't set for life, but being able to piss around for 3 months before even _starting_ to look for a job is sure as hell an overpayment.

Re:They are all paid too much

[Anonymous Coward]

"CEO salary is determined by investors, those who are taking risks in the company and hired him to take care of their investment in that company." --- The CEO salary is determined by the Board of Directors, which is made up of industry insiders, many of who are CEOs or former CEOs. And as far as being elected to the Board of Directors, the individual investor has very little influence, because institutional investors, aka the "banksters", control most of the shares. It's a big circle jerk when it comes to determining CEO payouts.

Re:They are all paid too much

[AthanasiusKircher]

Either the janitorial stuff is contracted out, or it would be if this were made law. If I were CEO, and was faced with a cap, I'd try to see how many low-paying jobs I could outsource.

Yours is the most insightful comment in this whole section of the thread. Every time I see this proposal about tying executive salaries to the lowest-wage workers in a company (or even median salaries or whatever), I'm amazed at how many people don't consider the unintended consequences.

Obviously the idea is that executives should try to bring up the standard of living of all the people who work for their company -- but you're absolutely right, CEOs will just outsource the lowest-paid workers.

I can see some of the responses -- "Well, in that case, tie it to median household income in the community, or city, or state where the company is located. CEOs will have to work to raise the standard of living in their community to profit more." And that won't work either: you'll just get big companies moving all their jobs to cities or states with the highest median salaries.

No matter how this sort of regulation tries to "fix" things, there will be loads of repercussions as CEOs and executives try to find ways to "game the system" and still maximize profits.

Personally, I still think something needs to be done. But a lot of these proposals are rather naive.

Re: They are all paid too much

[Anonymous Coward]

What's morally wrong here is you trying to force your morality on others. Why can't you liberals get that through you head?

Re:They are all paid too much

[Anonymous Coward]

Jobs was lucky. Apple would not be where its at without that luck. Without Napster and the sheer amount of content they put out in the ether, the iPod likely would have crashed and burned if they even had tried. Without that content and the rampant content that file sharers were spreading, do you honestly think they would have been able to negotiate to get the price points they needed? The labels would have told em to pound sand. And without those earlier victories, its likely they would have not done crap with the iPhone, and w/o that, there wouldn't have an iPad.

Now I'm not saying Jobs wasn't good, he sure as hell was. But its very easy to overstate what he did. He had a beautiful scenario, and executed well, but the scenario was put in there largely by luck.

Contrast this with Larry E. There's a man that largely made his own luck. In many ways, I can't stand the guy, but I have to give him that he really made his way.

Re: They are all paid too much

[Anonymous Coward]

I'll tell you why: it's because many of them have been indoctrinated by our wonderful education system, into thinking socialism and communism is the new normal in the US.

Re:They are all paid too much

[Copid]

The problem at the top end is that for "superstars" it's less of a market and more of an auction. Auctions are really good at finding the best use of an asset with a known usefulness (e.g. a pile of raw metal or a rare automobile part), but they're practically guaranteed to overpay for assets whose value is a function of estimated future performance.

Think of it this way: Let's all estimate how well NBA superstar X will do next season (in terms of ticket dollars produced, which is a function of his total awesomeness next year). If you put all of our estimates together, we'll probably get a bell curve, and it's pretty likely that the center of that bell curve is a solid guess for the real results (at least, if we repeat this experiment enough). That's a good idea of what the upper limit on "market price" would be if that guy was a commodity. But he's not. There's only one of him. And he's going to go to work for the person who made the estimate waaaay over in the rightmost tail. How often is that guy right? Not very often. Repeat this over time, and you end up with a class of superstars that often get paid more than they actually produce.

I don't have a good solution for it, but the superstar phenomenon is a real thing that tends to produce this weird result.

Re:They are all paid too much

[Anonymous Coward]

Jobs made the money. Wozniak actually invented the Apple. There was a book published in the early 1990's called "how to become a billionaire" that documented the common traits of every "self-made" billionaire in the US to that date, including Bill Gates. Among their common traits? Everyone who made it from the Rockefellers to the first technical wizards "invented" a new industry by stealing someone else's work and then heavily lobbying the government to ensure that the laws favored their ongoing dominance of the market. Every. Damn. One.

The book mentioned that Oprah might cross that threshold and become the exception that proves the rule, but even she is known for being a nasty player in real life.

This idea that "I am more valuable than I think" is not my problem, nor is it the problem of any one of the millions of people for whom the current system doesn't work. Our problem is that we know perfectly well that we live in a system that screws over almost everyone in order to maintain "opportunities" for a select few players who have spent the bulk of their privileges making sure that literally everyone on the planet has to give them at least a few bucks now and again. If you don't think the game is rigged, prove it by voting against the interests of Goldman-Sachs or Comcast anywhere in the US.

Re: They are all paid too much

[Anonymous Coward]

To bad there isn't such a thing as a free market. A market is an artificial mechanism created through property law. Markets exist only where people can own things and where contracts are enforced (both artificial constructs). I'd like to see single handedly defend his fortune against a horde of hungry unemployed. Without property laws and contract law and the other security mechanisms provided by government one would only be able to hold what one can defend with a spear...

I ask the dangerous question why does anyone need to own much beyond what they need to meet their basic needs?

Oh I forgot... Otherwise the American Dream ("you too can be rich if you work hard enough") pyramid scheme wouldn't work.

Re:They are all paid too much

[Anonymous Coward]

The good thing about "I think" is that you can do actual research and weight your "thinking" against reality. In this case, there are large amounts of evidence suggesting that tying CEO total compensation to the wage of the lowest paid worker has created huge, very visible improvements in the entire company. I know math isn't most people's strongest suit, but just a small application of it is enough to figure out that one CEO's $40m salary can easily pay for a LOT of more employees to fit the rapid growth that tends to come by freeing up so many resources within the company in the first place.

The entire premise of your argument is that salary should not be capped. This notion has been artificially implanted into people with low critical thinking skills, who have been told all their life that "they too" can become ultra wealthy one day just by working hard, when the cold hard reality is that roughly 97% of all multi-millionaires inherited 100% of their money, and that percentage is rapidly reaching 100%. It's quite possibly one of the most important messages for the rich to indoctrinate into the poor, as otherwise the retribution against the rich would be swift and quite merciless as history has shown.

Re:They are all paid too much

[RuffMasterD]

I would like to see this one step further. The CEO should justify his pay to their employees, because they are the biggest stakeholders in the company. Investors can drop a company like a hot potato if they smell a rat, but employees depend on their job to feed their family and pay the mortgage so they are largely stuck for the medium to long term. It really is in the employees best interest to see a company well run in the long term, so they are in the best position to decide how much pay is enough to attract the right king of talent to lead them. If they offer too little and the company folds, then they are unemployed. If they offer more than the CEO is worth, then they sacrificed their own pay raises and bonuses for nothing. Get the balance just right and everyone maximises their gains.

Re:They are all paid too much

[Cl1mh4224rd]

Maybe if you face the prospect of earning $20 million dollars you should also face the risk of losing $20 million dollars personally.

Corporation, n. An ingenious device for obtaining individual profit without individual responsibility.
—Ambrose Bierce

Re:They are all paid too much

[Anonymous Coward]

If you're thinking the janitor is getting paid too much compared to you, based on how hard you had to work to get the education and how hard you have to work now, then you can always become the janitor.

Same for the CEO. If he doesn't like being paid only 2x as much as middle management, then he could become a middle manager instead. Nobody's MAKING him earn a little more money in a more demanding job.

Re:They are all paid too much

[Karl Cocknozzle]

CEOs aren't "fired" the same way you and I are.

Sure they are. I know quite a few people who were fired with crazy good severance packages. Sure, they weren't set for life, but being able to piss around for 3 months before even _starting_ to look for a job is sure as hell an overpayment.

But that's just the point: It is extremely rare for somebody outside of the C-suite to get such a privilege.

Outside of c-level executives, such lavish and generous severance packages are occasionally found in situations where the person worked at a place for decades and got laid off in year 25 or something like that. There is no other job category I can name where you can completely just ruin the business, screw the pooch utterly, and still not just get severance, but indeed, be contractually entitled to walk away with a multi-million dollar severance package. Most people fired for cause (i.e. incompetence) are not given fat severance packages--they may get 4-6 weeks pay in exchange for signing something saying they won't sue the company, but that would basically be it. But even if your professional bud gets three whole months salary, so what?

C-suite guys routinely get fired with millions in their pockets.

Re:They are all paid too much

[Whorhay]

Additionally the market for labor is manipulated all the time by executive level decision makers. We have everything from the abuse of the H1B Visas to huge chains relying on social safety nets for their workers so they can run a hugely profitable company on minimum wage employees.

Re:They are all paid too much

[CastrTroy]

Except that it's a really inefficient way to run things. When the driver works overtime he's getting paid at a premium, usually 1.5 times their usual pay . Before overtime hours are given out, they should ensure that nobody who hasn't reached their overtime quota (such as part time employees) wants to fill those hours. If there's enough overtime that there's still a lot of overtime for employees to pick up, then more people should be hired. Obviously a little bit of overtime is OK because of the overhead of hiring an employee is higher then letting someone work an extra hour or two a week, but they should aim to optimize their expenses. There shouldn't be enough overtime for workers to be able to double their salary. It's also dangerous for people to be overworked and driving a large vehicle.

Re:They are all paid too much

[werepants]

*devils advocate*

Why should they be capped?

It would distort the free market and no one would take the risk or the very hard work like 70 hour work weeks, MBAs, and other things for dozens of years without the compensation.

That's why there are no non-CEO's working 70 hour work weeks, right? Bullshit. Many of the hardest working people I know are in low paying jobs - take teachers, for one, many of whom work 70 hour weeks periodically just out of care for the students. Research shows that after a pretty modest point (70k or so), increased pay doesn't increase productivity or happiness.

Yes it does suck to be laid off at a human level, but ask yourself what are you providing? The reason you are let go is because you fix some computers. The CEO on the otherhand changes the lives of milllions of people.

If I do a poor job at work, I get let go and will have a tough time finding a new job without my previous employer's recommendation. If a CEO does a poor job, he gets a bonus and hired by one of his buddies at an even more ludicrous salary. If by "changing the lives of millions of people" you mean BSing about synergy and choosing who to lay off, there's some lives changed. However, the brilliant engineer that actually designs the product that people love will never see more than 6 figures (if that).

The free market takes care of everything if you just bud out and not interfere.

Just like it has been taking care of everything for the past 30 years, while the average person's wage decreases (in real dollars) and the CEO pay goes through the roof? Give it a couple more decades of this, combined with disappearing jobs thanks to automation and increased competition for basic resources, and things are going to get ugly. Stop defending the people (and the system) that are pissing all over you.

Re:They are all paid too much

[Anonymous Coward]

Americans are lazy (seriously not flamebait) and do not work as many hours as foreign counterparts.

A popular myth, especially on Slashdot where Anti-USA posts get lots of positive mod points simply by being Anti-USA.

As with all myths, the reality is quite different:
"Americans working more, relaxing less than their peers"
Tom Schaller says that despite increased productivity, U.S. workers have not enjoyed higher pay or more vacation time
August 20, 2013|Thomas F. Schaller|Baltimore Sun

"compared with other industrialized nations U.S. workers rank first, averaging about 1,800 hours annually. That's 400 more hours than the Norwegians and 330 more hours than the French"

"So if Americans are working hard, they must be playing hard, too, right?

Sorry, it's just the opposite: The same country that ranks first among industrialized nations in total wealth productivity per year and second in wealth productivity per hour ranks dead last in terms of vacation time taken, especially paid vacation."

Re:They are all paid too much

[sjames]

Funny then how much they scream at the suggestion of bumping up the minimum wage a bit. Is it the amazing shrinking kitty?

Re:They are all paid too much

[sjames]

Angel's advocate: The market is already distorted at the bottom and that seems to be fine and dandy with the same CEOs.

As for the CEO affecting all those lives, so does the black death.

Re:They are all paid too much

[sjames]

The purpose of an economy is to serve all of the people, not the other way around. If our current system can't do that, then it must change.

Re:They are all paid too much

[Anonymous Coward]

They are legalize bank robbers :(

Re:They are all paid too much

[Anonymous Coward]

Nothing in your post explains why executive pay has risen from 50x average pay (in the 60s) to 500x average pay now.

Because they haven't brought back the guillotine? ...yet.

Gee..

[3.5 stripes]

I'm guessing people are focusing on the bankers because google didn't fuck the world's economy.

I still think it's bullshit.

Because

[boristdog]

Because the tech sector hasn't crashed the world economy...yet?

Re:Because

[swillden]

Because the tech sector hasn't crashed the world economy...yet?

In addition to that, I think there's a perception that bankers make their money by exploiting the people, by charging them more for mortgages, paying them less in interest, etc. Basically, by sucking money out of these common transactions that everyone has to make. The money paid to bankers could, the argument goes, have been left in the pockets of the average person.

In contrast, doing business with tech companies is more voluntary. No one has to buy an iPhone or an iPad, while buying a house or condo is more mandatory (even renters get hit, since their landlords have mortgages and pass the costs along). Using Google is perhaps harder to avoid, but the average person's perspective is that they don't pay Google anything, so the money paid to Eric Schmidt doesn't come out of their pocket. In fact, the advertisers who pay Google get their income from the people, so the average person actually does contribute to Schmidt's income, very indirectly (though there's a good argument that the advertisers would have needed to advertise regardless and since Google has made advertising more efficient the net effect of Google's work has been to reduce the amount consumers pay).

Anyway, without getting into the degree to which these perceptions are accurate (not very), banks are seen as parasites, while tech companies are seen as adding value, and that has a strong impact on whether people feel the companies have the right to pay their people exorbitant amounts of money.

Re:Because

[Anonymous Coward]

1999-2000 Tech bubble?...

Re:Because

[boristdog]

A lot of stockholder money disappeared and there was a couple-year glut of web developers, but didn't crash the economy.

Re:Because

[guru42101]

Bankers again. Investing a lot of money into garbage ideas

Re:Because

[Anonymous Coward]

Because the tech sector hasn't crashed the world economy...yet?

Says the young kid who needs to read up a bit on that whole "dot-bomb" era.

Believe me, there was a crash, and there were plenty in the unemployment line because of it.

The only reason it wasn't a global impact was because social media hadn't taken over people's lives at that point. We still used phones to talk back then too. Lot has changed.

Re:Because

[Anonymous Coward]

A lot of investors sought safety in real estate after the dot-com crash. That helped build the base of the housing bubble. In those days I used to remark that the economy was like a python that had swallowed a pig and hadn't pooped yet. The money was the metaphorical pig, passing through the digestive tract of our economy, swelling sectors into bubble proportions as it passed. Ultimately it was transformed into shit that rained down on people.

Good management turns money into valuable things. Bad management turns it into shit.

Re:Because

[phantomfive]

1999-2000 Tech bubble?

The tech bubble crash is really interesting to compare to the banking crash. More money was lost in the tech crash, but the impact on the economy was much less. The reason for this is because in the tech bubble, equity was lost, but in the banking crash, it was debt.

Some economists see this as an indication that banks should be financed the same way tech companies are financed, with shares of stock instead of savings. Hard to say but it's an idea worth thinking about.

Re:Because

[Billly Gates]

1999-2000 Tech bubble?

The tech bubble crash is really interesting to compare to the banking crash. More money was lost in the tech crash, but the impact on the economy was much less. The reason for this is because in the tech bubble, equity was lost, but in the banking crash, it was debt.

Some economists see this as an indication that banks should be financed the same way tech companies are financed, with shares of stock instead of savings. Hard to say but it's an idea worth thinking about.

Problem with that theory is it would enforce banks not to lend and to just hoard cash or pay off investor dividends to each other. Banks would get cheap like regular companies and the economy would suffer as businesses would not be able to get lines of credit going to do things like pay its bills while it waits for revenues to come back in.

A wiser solution is to consider debt an expense rather than an asset of course this wont happen as they have lobbyists and corruption on every government in the world!

For the non accounting backgrounds an asset is something that has value cash or can be turned into cash (-eg. property). So am I 1 million richer because I have some bum owing me 1 million? No he can't ever pay it! But the balance sheets say I AM RICH!!

Mathematically if you make debt an expense until the owner pays part of it back and it turns into an asset over time as it is paid that would be better wouldn't it? It would discourage lending but the economy would improve as poor people would not get loans they could not afford and it would force home prices to plummet as banks would encourage 15 year loans instead of 30 and with less debt people would have more income and so on.

I am sure with %risk calculated in and the value of the debt dynamically change as it is paid it can be a 50/50 asset and liability. It would also make it hard for banks to sell debt to each like hot potatoes while cooking their books to unrealistic insane levels.

Re:Because

[Anonymous Coward]

Crashes that tend to not affect the population at large indicate a degree of disconnection. In the tech crash, mostly tech money was being reinvested in tech. It was leveraging the profits in a field to the same field. Trust me, within the tech field, the crash was felt, but outside of it, not so much.

Banks finance home loans, so any bank crash is rather entwined with a lot of people. Banks don't crash without a bigger ipmact.

Re:Because

[Copid]

How would you draw that up on an a balance sheet? Right now, the books balance nicely: I put $100 in a savings account. That's a $100 liability for the bank plus a $100 asset that hey can do stuff with. Both entries work out. They loan out $90. Now it's a $100 liability to me, $10 in the vault, and a $90 asset in the form of a debt payable to them. All balanced. Are you suggesting that it should be $190 in liabilities now? How would that even work?

I own a pile of bonds as investments right now. Am I totally underwater with liabilities because they haven't been paid back?

Pay Out of Whack

[techmage]

As with all things, once you know you have access to the cookie jar, you can get what you want. The CEOs all get these great payouts because the board of directors agrees to it. Why? Because then the CEO can give them nice big Director fee checks. So the CEO gets the cookies and shares them with his friends. As long as the stock goes up, the stockholders will look the other way too. "It is all the cost of doing business," they will say. Everyone but the workers and customers win.

Re:Pay Out of Whack

[mrchaotica]

As long as the stock goes up, the stockholders will look the other way too. "It is all the cost of doing business," they will say.

The other problem is that the stockholders mostly aren't people. Instead, they're large mutual funds managed by a single person who is in the CEO/director good ol' boys club too.

Is that a rhetorical question?

[Zooperman]

In before the flame war.

Yes

[Anonymous Coward]

Yes ..... regarding financial industry people.
CEOs .... YES but it gets extremely stupid with high market cap companies.

FWIW: I think brain surgeons and the like should have the highest salaries. Anyone that makes more than a brain surgeon should get taxed severely.

ELOP

[Billly Gates]

One word ELOP.

See what happens when one bad CEO comes into a great innovating company like Nokia?

Another word JOBS.

Even if you hate Apple look what happened to Apple since 1997 when Steve Jobs came back who is considered one of the best CEOs? CEO's get paid a lot because they have a HUGE impact on stock price and company performance. You can argue how unfair it is until you are blue in the face. Fact of tthe matter they are worth every penny and have a huge pull that the average slashdot reader and I can only dream of in terms of benefits and compensation from our jobs.

Bankers on the otherhand is tricky. Bankers get paid like they were before deregulation. That is they were once paid only on interest grown. Not principal plus interest accured like today saying yeah I earned that 6 million today and need 10% of that NOW! ... in reality the customer put down 5.99 million and you made $10,000 but claim it was really 6 million in assets. This was because of the way paperwork used to handled prio to the mid 1980s.

So yes many are worth every penny but something should be done but wont because that is evil socialism that we can't allow etc. Politicians need that money to fool stupid voters with fancy commercials every 2 years.

Re:ELOP

[mbone]

Another word JOBS.

Even if you hate Apple look what happened to Apple since 1997 when Steve Jobs came back who is considered one of the best CEOs? CEO's get paid a lot because they have a HUGE impact on stock price and company performance.

Steve Jobs had a salary of $ 1 per year. He shared in the success of the company because he owned a good chunk of it.

That, I have no problem with.

Re:ELOP

[tomhath]

The point is that the CEO (Jobs) made Apple what it is. Doesn't matter how he was compensated.

Re:ELOP

[camperdave]

Elop* isn't a word. Perhaps you left off the trailing E on Elope?

*Elop is sometimes used as a short form of the genus name Elopidae (Pacific ladyfish), like pachy might be used as a diminutive of pachyderm.

Re:ELOP

[gl4ss]

it is a word now, so fucked was his performance.

and by the way, the words you cited were also made up.

Re:ELOP

[geekoid]

"CEO's get paid a lot because they have a HUGE impact on stock price and company performance."
Steve Balmer got huge bonuses, how as MS stock been the last 10 years?

" Fact of tthe matter they are worth every penny"
there have been many studies that say other wise. Mostly becasue what they do could be done by just about anyone in the seat.

Steve Jobs is an exception. Very few CEO's have that kind of charisma, drive, vision, and attention to detail.

Re:ELOP

[Enigma2175]

Steve Jobs had a salary of $ 1 per year. He shared in the success of the company because he owned a good chunk of it.

That, I have no problem with.

Yes, but that salary structure wasn't because of some nebulous "belief in the company" it was structured that way to avoid taxes and for public relations purposes. link

Re:ELOP

[Actually, I do RTFA]

Another word JOBS.

I'm fine with Steve Jobs-esqe CEOs getting paid bank. But, there are probably 3 in the world, not even 500 for the Fortune 500.

Come to think of it, I'd rather Wozniak get paid bank.

Re:ELOP

[Anonymous Coward]

If Steve Jobs gets the credit for Apple's success, if he was such a genius, then why did he have to crawl back to Apple instead of crushing them with Next Computer? Clearly, there are too many simpletons in the world who can't answer this rhetorical question themselves, so let me spell it out - he had help. Lots of it. Apple is a brand, and so is Steve, and they are popular brands. Let's not get so gushy about a favorite tech icon that that we start making up rationalizations about executive compensation that credit one man for the work of many many thousands of people - none of whom received compensation in proportion to their contribution, because Steve sucked it all up.

Re:ELOP

[wiredlogic]

It's a nice little fantasy to think of the $1 CEO as a brave soul who is willing to risk all for their dog food but the reality is that it's a tax avoidance scheme that only wealthy people can indulge in.

Re:ELOP

[Princeofcups]

Steve Jobs had a salary of $ 1 per year. He shared in the success of the company because he owned a good chunk of it.

That, I have no problem with.

Until you understand that the $1 a year is one of the most egregious tax dodges today. You pay tax on salary, not on "capital gains." You then borrow against your stocks if you need cash.

Re:ELOP

[dryeo]

I'm old enough to remember when Jobs pretty well killed Apple with his ideas that users didn't need colour or expandability and they were going to go 32 bit even if memory is too expensive to make it really work.
How much is timing? Jobs didn't do very well with NeXT but did luck out with getting in on the ground floor of the smart phone revolution with a good product.

Re:ELOP

[shutdown -p now]

You have to pay that debt at some point. The only reason why it works as a tax dodge is because, once you die, your relatives will inherit the stocks, but don't have to pay any tax on the value they've gained since they were acquired (which, in case of Jobs, was most of their value). That is a tax loophole and we should just close it, it's fairly obvious how.

Re:ELOP

[Anonymous Coward]

In a discussion on CEO compensation, I think it does matter.

Re:ELOP

[david_thornley]

Did Elop really suffer from trashing Nokia? There's a widespread belief that he served his corporate masters well.

And, yes, Jobs. Probably the most effective CEO in modern times. And, as such, a really poor example.

If all CEOs were like Jobs, I wouldn't mind their extremely high pay. Hint: They aren't, and I've seen far too many paid extremely well, run the company into the ground, and walk away with the cash.

Re:ELOP

[Billly Gates]

Steve balmer is a great example.

He was fired due to poor performance and investors would have fired him years earlier if Bill and him did not own almost 50% of the stock.

The parachute was there as he would not have accepted the job without nor would any good CEO. Steve Jobs is rare which is why he was worth billions when he died.

Millions is pocket change to a company that has 10's of billions in assets. It is the cost of doing business. You and I do not get that because there is hardly anything at stake if we mess up or gain if they hire us. We are easily replaceable

Re:ELOP

[Whorhay]

That is valid as long as the CEO is receiving stock options or something. It is possible though that Jobs wasn't receiving any stock as payment either given that he already was a part owner as a result of being one of the founders of Apple to begin with.

Re:ELOP

[Anonymous Coward]

You pay tax on salary, not on "capital gains." You then borrow against your stocks if you need cash.

How the fuck it this at +5? Capital gains are taxed, albeit at a different rate (sort of, short term - ie. 1 year maturity - capital gains are generally taxed at the normal income tax rates). Ever looked at a form 1040? Notice the line under income that says 'Capital Gains'? How can someone possibly be this ignorant and get a +5 mod?

Oh you just meant they're taxed less and wanted to be hyperbolic? Fine let's do it your way and tax long-term capital gains as income. You can go ahead and explain to grandma why she's getting taxed more for being responsible and saving for her retirement.

The amount of misinformation in the ENTIRE COMMENTS FOR THIS ARTICLE is much, much greater than I would expect from a site supposedly meant for intelligent people.

Re:ELOP

[Anonymous Coward]

CEO's get paid a lot because they have a HUGE impact on stock price and company performance.

Yes, but the problem is that they get paid a lot regardless of whether that impact is positive or negative.

Re:ELOP

[Anonymous Coward]

Which only works if your stocks are going up... and not spiralling downwards.

Because they can be, like heather

[EngineeringStudent]

They make that money - because they can.
http://www.imdb.com/title/tt00...

Pay is exactly where it should be

[Anonymous Coward]

The pay in these industries is exactly where it should be, and that is the amount driven by the market. If you want to look at professions in which pay is artificially higher than it should be, look no further than the 6 figure windshield installers in Detroit, or pretty much any public school district.

Re:Pay is exactly where it should be

[Anonymous Coward]

obvious troll is obvious.

Re:Pay is exactly where it should be

[barakn]

I'm trying to figure out why you think paying a teacher $28,000 a year to work 10-hour days is "artificially higher than it should be," and I can only conclude that you are a dimwitted, sheep-shanking idiot.

Re:Pay is exactly where it should be

[Anonymous Coward]

The market forces don't exist for the financial sector. You can't just up and decide to start a bank, thanks to an incredible gauntlet of regulations that literally takes hundreds of man hours a month sent merely to comply. These CEOs form a cabal literally skimming from the top of these pre-existing money making machines, confident that there is no way a new competitor without the overhead of overpaid executives can ever form.

At least tech CEOs have built something from the ground up.

Re:Pay is exactly where it should be

[qwijibo]

I don't think the school comment was about teachers - it was more likely referring to the increasing sizes of school district administration staff making 6 figures and contributing basically nothing to the education process.

Re:Pay is exactly where it should be

[Billly Gates]

I don't think the school comment was about teachers - it was more likely referring to the increasing sizes of school district administration staff making 6 figures and contributing basically nothing to the education process.

As someone who used to work for school districts I am here to tell you they are directors. In Russia and other countries they are called just that in Russian.

A bad admin can run good teachers out and have A HUGE IMPACT in student attendance, discipline, and test scores. It is up to the principal to expel students or follow good paperwork and keep the bad students in so they can claim less suspensions etc. This is one example where fights go up but the paperwork looks best, or you kick out the students and risk your job but your schools grade goes up.

This is was just one example and school teachers much prefer THE SECOND option so they can teach. A good teacher with 3 years experience and go elsewhere otherwise.

So yes 6 figures for a school admin is appropriate compensation as they can make or great hundreds to thousands of student lives!

Re:Pay is exactly where it should be

[Anonymous Coward]

You're talking about a single administrator, but that's not the problem the parent was discussing. Many school systems at all levels have an increasingly bloated administration that cost the system money but stop contributing as they grow. A particularly egregious example is the University of California system that has more administrators than professors.

The problem is...

[Anonymous Coward]

... historical.

Societies of the past did not have billions of people. No one accounted for the population size (hence customer base) massive effect on concentrating wealth. A sane society would recognize the scalability flaw and have a maximum pay to stop the inefficient accumulation of money at the top.

The larger question is...

[fahrbot-bot]

... how much money does someone really need? I'm not against Capitalism, but seriously, does one person really need $100 million, or even $20 million as an (semi?) annual salary or bonus? Does a CEO need 500 times (recent figures) the average salary of his/her own employees - you know, the people doing the actual work?

Re:The larger question is...

[Anonymous Coward]

When you run a society based on what people want and are willing to work for themselves, you end up with South Korea. When you run a society based on what people need, you get North Korea. Take your pick.

Re:The larger question is...

[Anonymous Coward]

At that level it's not about needing it or wanting it, it's about keeping score.

Re:The larger question is...

[Tony Isaac]

It's not about how much money someone needs. It's about how much money someone is worth to a company.

CEOs are much harder to replace than tellers. And the loss of a CEO is much more detrimental to a bank than the loss of a teller. This is what makes CEOs worth more than tellers (to a bank) and why it makes sense for banks to pay CEOs much more.

Are some CEO's overpaid? Yes, of course. But should CEOs make less money just because tellers make less money? No.

Re:The larger question is...

[Anonymous Coward]

Actually almost anyone, can do a CEO's Job given that much money.

on the other hand should companies Start with Layoff, or should they start with cutting pay from the big salary winners?

Re:The larger question is...

[tompaulco]

I don't "Need" $200 million, but I would really be pissed if someone offered me that as a salary and some dumb law said that they can't pay me that much.

Re:The larger question is...

[Anonymous Coward]

Sounds like the a problem with the way (most) companies work.

Sure, some people will always be more vital than others, but I do think when a handful of people are that much more important than others, you are putting all (or at least a lot of) your eggs in one basket, a single point of failure, a faux pas in many well designed systems IMNSHO

Also consider that the same argument applies to government: bad low level front line workers is nothing compared to a dysfunctional Congress. Somehow I doubt people will accept we let politicians get away with screwing the country over while still getting generous benefits (including high level private sector jobs waiting for them when they leave office)

Re:The larger question is...

[dave562]

Are CEOs really that hard to replace though?

Even if you look at a bell curve distribution of intelligence and ability, there are still plenty of people who are capable of leading projects, making rational decisions and thinking strategically. Granted, I am only at the top levels of middle management, but I have worked with enough executives at this point to realize that they spend most of their time selling shit, and networking with their colleagues. The only reason that CEOs are hard to replace, IMHO, is because of those connections. There is a small group of individuals who have formed what more or less amounts to a cartel, and they will only deal with each other. They sit on each others boards, graduate from the same schools, belong to the same country clubs, and have decided that their shit doesn't stink and that everyone else should toe their line.

They are smart people, have no doubt about it. But they are not so much more superior in terms of intelligence or skills or abilities than plenty of other people out there who are working for them.

Re:The larger question is...

[Tony Isaac]

How hard are CEOs to replace? Consider this:

How well is Tim Cook doing replacing Steve Jobs?
How well did Steve Ballmer do replacing Bill Gates?
How did Léo Apotheker do replacing HP's Mark Hurd?

Yes, a great CEO is extremely hard to replace. I've seen this on a smaller scale as well, smaller companies whose founders retired and turned over the reins to investors...the result is usually not pretty.

Re:The larger question is...

[NoImNotNineVolt]

That's funny. Personally, I'd be relieved. Relieved that society has some sense of morality, proportionality, rationality, or justice. You know, the same way I'd be relieved if someone offered me $200 million to kill someone and some "dumb law" said that they can't pay me to do that.

Re:The larger question is...

[dave562]

How many of those failures are due to CEO, and how many of them are due to the replacements coming after the company already peaked? Arguably, Apple peaked with Jobs because he wrung all of the innovation out of the project line. Less arguably, Microsoft definitely peaked with Windows. Everything after that was down hill. Not to defend Ballmer because the guy was miserable failure, but there was no way that even a clone of Bill Gates could have kept generating the revenue that Gates did.

Timing is everything. Jobs and Gates were in the right place, at the right time, with the right idea. Those conditions rarely come together more than once for any given company, no matter who is leading it. By the time a company has grown to the scale where it has a CEO and share holders, it has given up a lot of the flexibility and ability to innovate and take the kinds of risks that made it successful in the first place. Look at Facebook. They are trying to stay relevant through M&A now. Social networking has peaked. Now the major players are quickly absorbing the outgrowths in an attempt to stay on top.

Re:The larger question is...

[WrongMonkey]

And I'm pissed off that some dumb law prevents me from selling crack. How dare the government interfere with my profitable enterprise?

Re:The larger question is...

[Billly Gates]

... how much money does someone really need? I'm not against Capitalism, but seriously, does one person really need $100 million, or even $20 million as an (semi?) annual salary or bonus? Does a CEO need 500 times (recent figures) the average salary of his/her own employees - you know, the people doing the actual work?

Absolutely!

A CEO of Nokia lost billions, the former CEO of Apple made 100x investment amount and changed the world. Tell me what contribution you or I did that even was 1/500 what these guys did?

I am not into CEO worship but speak the cold truth. Most CEO's do not make $20,000,000. Only a sliver of the very best and top bankers who have proven to make 10x that to their employers.

If you and I could bring that value from our ideas or skills you would be paid that too. Life can be a bumber and it sounds unfair. In actuality it really is if all you value is money. But it is the truth when it comes to economic power.

Re:The larger question is...

[Anonymous Coward]

The fantasy of being in this situation is what holds society back. You're not ever going to face that "tragedy".

To have a few hundred people pissed off because they had their compensation packages capped at $100 million instead of $200 million is such a small price to pay for enhanced stability that it shouldn't even enter into the conversation that a few CEOs might be inconvenienced by it.

In a company of 100,000 employees, that's an extra $1000 bonus for every single one of them saved. Even better if companies were required to distribute a multiple of CEO's compensation to all employees on an annual basis separate from their regular salary and bonus structure.

Re:The larger question is...

[fahrbot-bot]

Most CEO's do not make $20,000,000. Only a sliver of the very best and top bankers who have proven to make 10x that to their employers.

While certainly not "most", I'm having trouble defining Jamie Dimon as "the very best":

Fined Billions, JPMorgan Chase Will Give Dimon a Raise
http://dealbook.nytimes.com/20...

Sure, he got his pay docked by 1/2 to $11.5M for the bank's bad behavior - while he was at the helm - but then gets a a raise to (reportedly) $20M because, "Mr. Dimon should be rewarded for his stewardship of the bank during such a difficult period." -- a difficult period in which, again, he was at the helm.

Nothing but a boys club, patting each other on the back for screwing over the little people and the regulators...

Re:The larger question is...

[Magius_AR]

Are CEOs really that hard to replace though?

CEOs are often valued for their contacts/rolodex, not their skills.

Re:The larger question is...

[Anonymous Coward]

No one will ever offer *you* $200 million.

Re:The larger question is...

[Anonymous Coward]

No, the larger question is what do people get out of the whole thing, and that is power. And the thing is, power is always held by a small set of people. In the way distant past these were tribal chieftains, now they're CEOs. And if you look at history, it has always been like this, a small group of people holding power over a larger group.

So framed by that, the whole income question is essentially a power struggle, pitting pawns of one group against pawns of another. In the end, all that *could* happen if the "have nots" *win*, you'd have a few new "haves" and a whole lot of unhappy people because they're mostly in the same position they are now. There's still an income disparity, still social injustice, effectively you have done is forced yourself to fight for the new establishment b/c if you don't you'll have to admit your ideology is useless.

Re:The larger question is...

[Anonymous Coward]

Egoists need all the money there is. You know what? I find those kinds of people repulsive, but if they actually perform better because of it and they're worth it then that's just how things go. The thing is, their income has nothing to do with their performance's impact on the company.

Re:The larger question is...

[Anonymous Coward]

Translation: I am a PR repair person for the financial industry, and my job is to re-install faith into the general citizenry that financial executives actually deserve what they get away with, regardless of the growing mountain of evidence to the contrary.

Re:The larger question is...

[AK Marc]

Aside from Lee Iacocca, I don't think there was a competent automotive CEO in the past 50 years. Most of us would have out performed any of them. That's the general level of mediocrity that CEOs are thought of, not the handful of successful ones, but the hundreds of losers that squeeze the quarter and kill the year.

"Too much" is an opinion

[jbmartin6]

From what I have observed, pay rates generally are in line with how hard the company believes it is to replace the person. They feel it is pretty hard to find a suitable new CEO, so the pay rates go way up since the prospect has a lot of leverage. There's no inherent reason why this number should be linked to company performance any more than what the company will pay for water is. Now, bear in mind I am not saying this is how it should be, just observing that this is what happens.

Re:"Too much" is an opinion

[AK Marc]

They feel it is pretty hard to find a suitable new CEO, so the pay rates go way up since the prospect has a lot of leverage.

Yeah, like the place I worked where the CEO quit, and I applied (from ops manager). The ended up offering the CEO position to the mail boy. It just happens that mail boy was related to the founder of the company. The board's emotions play a bigger part in selection than competency.

You get, what you negotiate

[mi]

"Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

The even bigger question is, why is this any of our business? As long as it is not the taxpayers footing the bill, count your own money...

Re:You get, what you negotiate

[mi]

Because we are (or at least, most of us are) investing in these companies?

Then raise your concerns in a shareholders' meeting -- not in newspapers.

Re:You get, what you negotiate

[Anonymous Coward]

Investing is voluntary, it's not the same as taxing.

Don't like it pull your money out.

Re:You get, what you negotiate

[SeaFox]

"Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

The even bigger question is, why is this any of our business? As long as it is not the taxpayers footing the bill, count your own money...

Taxpayers are footing the bill. Or did you miss the recent media attention about all the people who work at Wal-Mart, McDonald's etc and have to get food stamps and other government assistance to make ends meet. This isn't the rhetorical lazy bum leeching off welfare or unemployment benefits, there are people being good citizens and actually working.

Re:You get, what you negotiate

[g01d4]

why is this any of our business?

It could be one's business if you care about the society you live in and you believe these salaries are symptomatic of a progressively increasing income inequality. Large income inequality has not been shown to be healthy for a society.

Re:You get, what you negotiate

[Manfre]

CEO pay and bonuses is often at the expense of worker salary. This results in taxpayers subsidizing the lower worker salaries with food stamps and other financial assistance.

Re:You get, what you negotiate

[Anonymous Coward]

Because we are (or at least, most of us are) investing in these companies?

Then raise your concerns in a shareholders' meeting -- not in newspapers.

Because newspapers should only be used by conservatrolls like you? Herp a derp, maybe a company with a $200B market cap and millions of investors is worth scrutinizing in the media? Nope, lets get back to arguing about The President's birth certificate, thats a good use of newspaper pages. Fuck.

Re:You get, what you negotiate

[Attila Dimedici]

Well, that is an interesting theory. The problem is that income inequality gets worse under politicians who "do" something about it (such as our current President) and gets better under politicians who consider it not to be the government's problem to fix. You might want to ask yourself why that is.

Re:You get, what you negotiate

[Anonymous Coward]

My thought is that this is a meta conversation about what we want to embody as a society. All societies place limits and prohibitions on things for various reasons like fairness and living in peace with one another. We strive to create systems that work well for everyone (for the most part).

With the current perception that there is a war on the middle class and that the "rich" are taking out more than their appropriate share by gaming the system I don't see why we wouldn't discuss the meta. Is this working? Can we do better? Now picking on one person's salary isn't fair but I don't believe that is the heart of this conversation.

Re:You get, what you negotiate

[Anonymous Coward]

have to get food stamps and other government assistance

"Have to" or are just now able to get both, $300 Nike shoes and food, instead of just shoes.

Re:You get, what you negotiate

[simplu]

"Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

The even bigger question is, why is this any of our business? As long as it is not the taxpayers footing the bill, count your own money...

It is our business only when the government "save" the bank with our money.

Re:You get, what you negotiate

[mi]

Taxpayers are footing the bill. Or did you miss the recent media attention about all the people who work at Wal-Mart, McDonald's etc and have to get food stamps and other government assistance to make ends meet

We — the taxpayers — chose to give those losers their foodstamps (by electing the foodstamp President — twice). It was stupid of us, but it does not give us any right to control, how much people are paid. Nothing to see here, move along — it is not your money.

This isn't the rhetorical lazy bum leeching off welfare or unemployment benefits, there are people being good citizens and actually working.

Working and leeching aren't mutually exclusive. Any recipient of foodstamps (or any other public charity) is leeching. But this is off-topic.

Re:You get, what you negotiate

[Anonymous Coward]

This is government subsidizing labor. It does lower labor costs for employers, but those savings are passed on to the customer in the form of lower prices and volume is driven up in a competitive market such as fast food and most others, meaning more jobs. From my point of view policy that drives up volume of low cost goods and promotes employment is good policy. Whether the employers make more money at the end of the day or not is pretty much irrelevant. Just look at McDonald's executive compensation and dividends to share holders compared to total labor costs and you will most likely see that the majority of the money they take in goes to paying their workers. In most businesses labor is the largest cost. By the way, corporate tax rates are actually very high and deficit spending that debases the currency is a hidden tax on the rich, not to mention that individual income taxes are progressive. Government takes about 1/3 of any profit generated by these policies that help the working poor, which means they darn well hope it increases profits so that it can pay for itself in increased revenue. It is exactly the rich who are paying for those food stamps, who do you think pays the majority of taxes? I have no idea what you have to complain about or why your comment is considered super insightful. The alternative here is fewer jobs, higher prices and lower standards of living disproportionately effecting the poor. Making money is what gives capitol incentive to participate in the economy and create those jobs. If we deny them that the capitol will be moved out of these uses that provide jobs to where it is allowed to see a return. Also, tax payers aren't taking any risks here. In other news, people on the internet are outraged that the sky is blue and water is wet and that, when dropped, objects fall at ever increasing speed until they hit the ground, sometimes quite hard.

Re:You get, what you negotiate

[mi]

Large income inequality has not been shown to be healthy for a society.

It has not. What has been shown to be unhealthy, is the government meddling — with the best intentions (especially with those!) — with the markets. Including the labor market.

Re:You get, what you negotiate

[mi]

This results in taxpayers subsidizing the lower worker salaries

Only because the taxpayers choose to do that — help the low-paid — as is our right. But this choosing does not entitle us to control the salaries. Not at all.

Re:You get, what you negotiate

[Anonymous Coward]

Given that you provided no evidence for your assertion it's likely that you already know it's false.

We've been growing the income gap for over 40 years, accelerated greatly by Reagan and Bush I, people I think you would imply as those "who consider it not to be the government's problem to fix". Shitty governing of that sort is why it's a problem and also part of why it's the government's problem to fix. The other reason it's the government's problem to fix is that if it doesn't, the government and most of society will eventually collapse resulting in mass violence. I don't care what political philosophy you subscribe to, but if it's one to be taken seriously it does not want that outcome.

Regardless, even if Obama was making every effort possible to correct the gap (he's not, ACA is a flimsy stopgap, but it helps a little), it'll take decades of concerted effort to bring things back in line.

The stupidest fucking thing is, the gap hurts the rich as well, ultimately. The economy would grow much quicker and there would be much more wealth to go around (for them as well!) if the "99%" had more money to spend. As is, people are cutting back on luxury items (like healthy food) and commodities which is causing businesses to fail, further harming growth. Soon we will be in a deflationary spiral when the majority of people won't have enough money to pay for the essential things. This will hurt *everyone*.

Captcha: Luxury

Re:You get, what you negotiate

[mi]

All societies place limits and prohibitions on things for various reasons like fairness and living in peace with one another. We strive to create systems that work well for everyone (for the most part).

Something is very wrong, when a "society" (thank you, BTW, for not using the word "community") sees fit to insert itself into relationships between consenting adults.

Whether these relationships are between investors and the CEOs they pick to run their companies, or between lovers exchanging less common sexual favors with each other — none of it is the society's business.

Re:You get, what you negotiate

[Anonymous Coward]

If you think taxes are the only way the plutocrats take your money, you are truly a simpleton.

Re:You get, what you negotiate

[mi]

It is our business only when the government "save" the bank with our money.

No. We don't get any more power in exchange for such "saving", than is negotiated with the company being "saved".

(And we shouldn't have "saved" anybody to begin with.)

Re:You get, what you negotiate

[Princeofcups]

Taxpayers are footing the bill. Or did you miss the recent media attention about all the people who work at Wal-Mart, McDonald's etc and have to get food stamps and other government assistance to make ends meet. This isn't the rhetorical lazy bum leeching off welfare or unemployment benefits, there are people being good citizens and actually working.

Three of the Walmart exec/founders are in the top 10 richest people in the world. Walmart is a blight and an embarrassment for all of America.

Re:You get, what you negotiate

[mi]

Fuck

Please, don't hate.

Re:You get, what you negotiate

[mi]

Three of the Walmart exec/founders are in the top 10 richest people in the world. Walmart is a blight and an embarrassment for all of America.

That's the most mysterious leap of "logic" I've seen in a while... I'd expect, having even one exec/founder among the top 10 richest people in the world would be a source of (well-justified) pride, rather than embarrassment...

You must be the kind, who measures work in tiredness...

Re:You get, what you negotiate

[Anonymous Coward]

...the people who work at Wal-Mart, McDonald's etc and have to get food stamps and other government assistance...

Another example of corporate welfare. These companies are leaching off the tax payers by not paying the true cost of labor.

Re:You get, what you negotiate

[mi]

Can you express yourself in a polite debate without the "emperor's special clothes" kind of argument?

(Please, don't hate.)

Re:You get, what you negotiate

[NoImNotNineVolt]

Similarly, if all the wealth in the country except yours was to be confiscated by a single individual, why would that be any of your business? Count your own money, after all...

You see, the distribution of wealth in a society has far-reaching effects. High levels of wealth concentration can result in things like the French Revolution or Zimbabwe, which affects entire countries. You seem to be suggesting that the gutting of the middle class only affects the middle class, which is hilarious.

Re:You get, what you negotiate

[NoImNotNineVolt]

I should've hopped through the full thread before posting my previous response. I didn't know you were an irrational partisan.

I didn't know dismantling SNAP and other social welfare programs was part of Mitt's platform. He really didn't do well advertising that part, so maybe that's why he lost.

I'm fascinated by your ideas. Clearly the solution is to make sure that people working full-time at McDonalds and Walmart can't afford to eat. That's the society we all dream of living in. Maybe one day we'll all wise up and just take all these worthless poor people, haul them off to the gas chambers, and replace them with robots.

Re:You get, what you negotiate

[NoImNotNineVolt]

The Walton family needs to be stabbed many, many times.

Every person that takes their own life without at least attempting to bring these assholes with them is incredibly selfish.

Re:You get, what you negotiate

[mpe]

The even bigger question is, why is this any of our business? As long as it is not the taxpayers footing the bill, count your own money...

In the case of banks that may well be the case...

Re:You get, what you negotiate

[Anonymous Coward]

Nothing to see here, move along — it is not your money.

Just because a guy in a suit can lobby another guy in a suit to write a law that makes money that I've earned his and pocket it, doesn't actually make it his money. All money that he gets that is in excess of the money that he actually brought for the company (personally - I'm sick and tired of this bullshit where CEOs lay claim to the entire success of the company, when it's the workers that actually produce value) is not his money.

Re:You get, what you negotiate

[mi]

Similarly, if all the wealth in the country except yours was to be confiscated by a single individual

Wealth confiscation — as well as murder and other crimes — are a valid concern of everyone. Salary is not.

You see, the distribution of wealth in a society has far-reaching effects

Irrelevant.

High levels of wealth concentration can result in things like the French Revolution

French Revolution was caused not by "wealth concentration", but by the government being bankrupt and by its trying to get out of it by high taxes. Nice try, though...

or Zimbabwe

Troubles in Zimbabwe started from the top — the "revolutionary" leader decided to instill "justice" by confiscations. An even nicer try to shout down a right-leaning opponent by offering leftists' misdeeds as examples.

You seem to be suggesting that the gutting of the middle class only affects the middle class, which is hilarious.

All I said was, what non-governmental enterprises pay their employees (from CEOs to janitors) is — ought to be — between the said employers and employees. How do you infer "gutting middle class" from that is beyond me...

Re:You get, what you negotiate

[mi]

Only because we — the people — chose to give them money. Foolishly, I might add.

And, perhaps even more foolishly, we made no requirements about limiting the executive salaries until the monies are paid back.But most of the banks have, actually, paid back years ago (unlike automakers) — so the question is moot.

Re:You get, what you negotiate

[AlphaWolf_HK]

The thing is, you can't win with these people. They also complain about CEO's who fix their pay at one penny per year and instead take most of their pay in stock. That DOES fix your salary to the performance of your company, in fact their may is made or broken on it. These people complain saying "oh they just do that to avoid taxes". /rolleyes

The pareto rule very much applies here: Very roughly 20% of the global workforce does 80% of the work. Likewise it isn't very shocking when 20% of them make 80% of the money. It has always been this way, it always will be this way, I don't get the stupid need for socialist policies that try to fight the way things naturally occur. All they end up doing is wrecking economies when the entrepreneurs can't realize any big reward from a big risk. Which by the way, entrepreneurship is the main reason the US economy does so well compared to the rest of the world; it's very strong here.

Re:You get, what you negotiate

[Anonymous Coward]

If you're working a full-time job or enough part-time jobs to add up to over 40 hours a week and you still need food stamps because your employer refuses to pay you enough to live on, you're not the one leeching. Oh, but you're poor, so obviously you're the drain on society, not the billionaires.

Re:You get, what you negotiate

[SeaFox]

We — the taxpayers — chose to give those losers their foodstamps (by electing the foodstamp President — twice)

Are you aware a food stamp program of some sort has been operating in this country since 1939?
Are you seriously going to hold a single man responsible for a program that has run for over 70 years?

You have any idea how much shit has happened since then? We've had so many congressional changing-of-the-hands back and forth between the Democrats and the Republicans there is ZERO way either of them can point at the other and say "it's their fault." They have BOTH had plenty of opportunities to change/end the Food Stamp program if it's really the blight you make it out to be.

Re:You get, what you negotiate

[NoImNotNineVolt]

Ugh.

"Aristotle was the first to state that inequality triggers a revolution and that was certainly the case during the French Revolution, when onerous taxes on the lower and middle classes enhanced the lives of the wealthiest aristocrats." - Forbes blogger

So, researchers have noticed that when wealth distribution gets skewed enough, the poor bust out their trusty old pitchforks and torches. And the USA is getting frighteningly close to that point. Perhaps you're right that how rich the rich get should be no of our business. However, reality suggests that at some point, we make it our business, right or wrong. And then heads start rolling. If you think that since today's aristocracy is composed of CEOs instead of nobles they will be safe from the rioting masses, you haven't done a good job convincing me. If you think the average starving person will forgive the Walton family for hoarding billions of dollars simply because they "earned it" by failing to pay their workers a living wage, you have an amusing understanding of human nature. The average starving person sees no distinction between such "earning" and onerous taxation, as they both have the effect of pillaging society's coffers for the satisfaction of personal greed.

Also, to describe Mugabe as a "leftist" makes about as much sense as talking about "far-right" Somalia. I don't remember the left advocating for rigging elections, prosecuting gays, the abandonment of education, criminalization of inflation, or printing of money like it was newspapers. If you think his land redistribution programs (which would only be leftist if confiscated land was distributed equitably, and not disproportionately to Mugabe loyalists) are what define his reign, you haven't been paying attention.

Re:You get, what you negotiate

[Whorhay]

The point is that Walmart is not a company that is just scraping by. It is a hugely profitable company. Someone did the math awhile back and found that they could double the wages of their work force and it wouldn't affect their profits in a noticeable way. Instead Walmart keeps wages low, and over hires so that employees can't even count on a regular 40 hours. As a result their employees have to rely on government welfare programs to survive. So everyone else in the US that pays payroll taxes is footing part of the bill for Walmarts extreme greed, whether or not we shop at their stores.

Basic Logic Fail

[Anonymous Coward]

So, in summary, bankers are not grossly overpaid because other people in unrelated industries also have ludicrously high salaries. Nope, nothing wrong with that argument.

In other news, theft is okay because other people steal too.

Perhaps...

[Anonymous Coward]

Perhaps if Google and Apple had done the same damage to the economy as bankers did a few years ago and had to be rescued with 700 billion dollars (from a government that argues that a few billion in homeless shelters is wasteful expending) people would be pissed at them too.

Re:Perhaps...

[Anonymous Coward]

Blame the politicians who changed the banking rules back in the mid-1990's, not the bankers who followed those rules.

Re:Perhaps...

[Anonymous Coward]

If the bankers collectively can't work towards the benefit of society without laws that explicitly force them to, then they don't deserve a single dollar of the bailout money they received.

Of course they are.

[Max Threshold]

Some jobs are harder than others, and deserve to be rewarded more than others. But absolutely nobody "earns" more than a small multiple of minimum wage, and this should be enforced with a progressive tax structure based on an algorithm in which the only variable is the minimum wage. At today's minimum wage, astronauts, brain surgeons, and the President of the United States should be making about $60K a year, and it should only go down from there.

Re:Of course they are.

[SuricouRaven]

There is a set of jobs where the laws and supply of demand don't apply. For a simpler example, take professional footballers - there's been a lot of fuss about the huge pay some of those earn too.

The top clups want to employ, oh, about 500 footballers (Just a quick guess). They want the best. The very best. The top five hundred in the world, and they will compete with each other to pay the most to get them.

In most industries, supply and demand would kick in at that point: Pay would rise, which would motivate more people to go into football as a career, which would bring the pay down again. It'd still be high (It's a skilled job) but not obscenly so. But that doesn't happen - because it doesn't matter if a million or ten million or half the world population all go into football as a career: The top 500 is still just 500 players. The top club recruitment pool hasn't grown, it's just gotten harder to get into. So the obscene pay continues.

Re:Of course they are.

[Capt.DrumkenBum]

Some jobs are harder than others, and deserve to be rewarded more than others.

So, shit shovelers and IT professionals should make the most money? Works for me. :)

Re:Of course they are.

[ElementOfDestruction]

Get the fuck out of here with that. $60k for brain surgeon vs. $15k for the most replaceable of employees? The type of stress, the training, the degree of skill that it requires to become those positions? Settle down. I would venture to say that at today's minimum wage, astronauts, brain surgeons, and the President of the United States are all getting paid a reasonable amount. This article is about the uber-elite; not sure why you're trying to make an enemy out of upper-middle-class careers.

Re:Of course they are.

[Billly Gates]

$10 - $15 an hour is more from what I read historically.

Still doesn't get you much except in very rural areas.

But 60k a year is ludicrous. Some people who are valuable to society and have to work hard and invest to get to where they are need that extra cash otherwise no risk taking or hard work would be done. Soviet Union is a classic example. People worked because they were forced and hated it. Not because they had bigger dreams in mind.

Re:Of course they are.

[Anonymous Coward]

You, sir, have my vote!

Re:Of course they are.

[Anonymous Coward]

That is some sad cognitive dissonance you've got going on there. "People worked because they were forced and hated it" is EXACTLY the paradigm we live in now, sans a "higher tier" of society that we all supposedly collectively reward for doing what essentially amounts to nothing, productively. Think of others, not just yourself. But that's what capitalism is all about isn't it?

Re:Of course they are.

[swillden]

At today's minimum wage, astronauts, brain surgeons, and the President of the United States should be making about $60K a year, and it should only go down from there.

Heh. Make that the law and you'll see all highly skilled labor leaving the country. There's a LOT more than 4X difference between what a neurosurgeon and a fry cook contribute to society.

Re:Of course they are.

[Billly Gates]

There are many who say it doesn't take a genius to click an icon and answer a call so why pay more than $13/hr? IT IS SOOO easy etc.

Sadly they then say how they are an exception and not really a cost center because I do such and such.

Re:Of course they are.

[Max Threshold]

Because the upper middle class is both beneficiary of and political buffer for the uber-elite. If the tax structure made them the new upper class, their wealth and power would actually increase despite their nominal decrease in pay. Their resistance to this is both self-destructive and harmful to the rest of us. If they can't be made to see that, then they should be thrown under the bus.

Re:Of course they are.

[Max Threshold]

The only reason anyone "needs" more than $60K a year is because of their proximity to even larger concentrations of wealth. To the extent that wages "trickle down", so do prices.

Re:Of course they are.

[Billly Gates]

Or society is willing to pay for it.

If you are going to die you are willing to pay a premium to fix that right? Hence, a doctor gets a high compensation that your Starbucks Batrista this morning doesn't deserve.

It is impossible to retire and live a comfortable with just 60k. You can't buy a house in modern cities, save for retirement, pay for child's education, get a new car, etc. So you need to provide that level of service and people decide what it is worth. If you do not have work or little then it is too high. If you have people knocking your door down with offers then it is too low etc.

Re:Of course they are.

[geekoid]

" People worked because they were forced and hated it. "
And that's different in the US how? Hell, in the former USSR if you didn't work you still got shelter and meals, albeit possible in a prison.
In the US if you don't work you die on the street.

Most people in the US and USSR didn't work becasue they lied what they did.

In the former USSR if you had a talent or an interest, you could work in that area.

The former USSR fell because of their rampant military spending. Communism was NOT why they didn't succeed.

Yes yes, some bad things happened. Not as bad or as often as the media of the era would have you believe. No I would not want to live under stalinism.

Re:Of course they are.

[geekoid]

If the money paid to top athletes was cut in half, nothing would change. The same people would be there competing and doing the same thing.

What else are those 500 going to do? Rocket surgery?

Same with CEOs

Re:Of course they are.

[Capt.DrumkenBum]

Like I told one of my clients when I walked into their office, sat down and fixed their problem in under 5 minutes. Then presented them with a bill for $250. They are not paying for me to click a mouse a few times and type for a minute or two. They are paying for the 20+ years experience that tells me where to click, and what to type.

They are also paying because I had already told them this would happen, and provided them detailed instructions on how to prevent it. If they had done what I told them, I would not have had to come out at all. (I think of it as the "stupidity charge") I didn't mention this part, it doesn't pay to piss off clients too much.

Re:Of course they are.

[nabsltd]

But 60k a year is ludicrous

Not really, since the OP was essentially talking about the effective wage after taxes. You can live quite nicely any place in the US for $60K take-home. Sure, you can't have the very best of everything, but it's way more than a living wage.

Although I don't like that the OP seems to be talking about a hard cap, this sort of thing would go a long way towards making the gap between top and bottom much more reasonable. There still should be a gap, as that makes people strive to improve, but the problem with people who have tens (or hundreds) of millions per year of discretionary spending is that it causes many things to become impossible for poorer people to ever consider buying. For example, real estate, goods, and services near any place that has become popular with the "wealthy" is no longer available to average people. As an example, see Park City, UT, where the median income is over $65K, yet the average (mean) was only around $45K, and 10% are under the poverty line.

Re:Of course they are.

[tompaulco]

At today's minimum wage, astronauts, brain surgeons, and the President of the United States should be making about $60K a year, and it should only go down from there.

Well, that would at least be an effective way of making sure that nobody ever put forth the investment necessary to become an astronaut, brain surgeon or President of the United States.

Re:Of course they are.

[Anonymous Coward]

WTF!!!!! If you didn't work you got a class D ration card that afforded so little you would literally starve to death over the course of several agonizing months.

In the former USSR if you had a talent or an interest that was tough shit, you were told what area you would work in based on your aptitude scores and where the perceived need was by central planners.

The former USSR fell because it became impossible to manage. Central planning wasn't working and everyone had given up on it including the people trying to do the planning.

Many very bad things happened frequently and recently. Overwhelmingly more mildly bad things constantly. Whatever disgust you feel for your own country is nothing compared to what people felt toward communism. Everything was a lie, not a clever and entertaining lie either like we get with advertising, but a bald faced obnoxious and odious lie that filled the heart with hate and despair. In the US poor people own cars. How can you possibly say it is no different? Don't whitewash history. We will no sooner forget than repeat the past.

Re:Of course they are.

[shutdown -p now]

The upper middle class is not a beneficiary of the uber-elite, and policies that target one are completely useless if you're trying to solve a problem with the other. Case in point: higher income tax bracket. It will affect the upper middle class, yes, while the 1%-ers will laugh all the way to the bank, as most of their income is from capital gains. OTOH, if you jack the capital gains tax significantly and then redistribute the gains, it will solve the 1% problem, but will not significantly affect the upper middle class (though it will affect it enough that they will grumble).

Re:Of course they are.

[AlphaWolf_HK]

Entrepreneurship drives economies bigger than anything else. That in itself is driven by people putting in big risks to reap big rewards. Notice how in countries who have tax systems similar to what you describe, the economies suck balls. Why? Because big risk can never pay off. This is why Google, Facebook, Apple, Microsoft, Intel, Motorola, HP, AMD, Nvidia, and many MANY other high tech firms are in the US.

If they were located elsewhere, other countries would feel the need to cut their balls off, because they share sentiments similar to yours. If every economy worked like the one you fantasize about, we'd all be equally poor.

Re:Of course they are.

[RightSaidFred99]

By tax structure you mean confiscation, right? Taking money in a fair, even a reasonably progressive, manner to provide government services and a reasonable social safety net is called "taxation" and I have no issue with it.

What you are describing is simply redistributive confiscation. Good luck with that, asshole.

Bailout

[andy1307]

Remember when the economy went south and google got bailed out by the government for purchasing bad assets?

Ownership, leadership, management

[mbone]

DavidHumus notes "Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

Because ownership has been replaced by control, and leadership has been replaced by management.

probably so...

[emagery]

Pay should reflect the good a person has done... a tech CEO could potentially have invented something that has changed the face of the world for the better, and I am happy for them to have benefitted from that (this applies less or potentially not at all to later CEOs who simply take the position as given them by money-only boards of directors and/or shareholders.) Bankers, though... it's a real stretch of the imagination to see them has having done anything other than a modest good at their broadest, and thus should incur only modest pay to match that.

Re:probably so...

[SuricouRaven]

The financial industry doesn't achieve anything good directly. Their utility comes from what they allow other industries and individuals to do.

Re:probably so...

[krups gusto]

but what about "financial innovation?"

Re:probably so...

[Anonymous Coward]

This could be said of almost any industry.

Yes they are...

[Anonymous Coward]

..but the real (more important) question is can anything be done about it? the answer is NO, at least NOT without complete global agreement, which is something that all nations have never really done.

The problem is if you try to artificially curb their salaries/bonuses they will just get up and move to some other nation where they don't.
Also for politicians it is political suicide to propose such salary/bonus caps because "Who is your daddy?"

There was an vote in Switzerland a while back to do this, (1:12 - CEO cannot be paid more than 12 times the lowest salary) it didn't get voted in because of the fear that the multinationals would leave the country.

Re:Yes they are...

[ebno-10db]

The problem is if you try to artificially curb their salaries/bonuses they will just get up and move to some other nation where they don't.

You mean they're going to move to CEO fantasy land? In the US a CEO of a large company earns about 400x as much as an average employee. The runner up is the UK, at 45x. The rest of the developed world, like Western Europe (sans UK), Canada, Japan, Australia, etc. varies between 10x and 20x. Let American CEO's leave, because they're obviously not globally competitive.

Yes, but with a caveat

[brunes69]

CEO pay in general is too high I agree.

But I find it easier to stomach Silicon Valley CEO pay for a reason - they are producing an actual product whereas investment banks do not - they actually harm the economy, they don't help it.

http://en.wikipedia.org/wiki/F...
http://www.huffingtonpost.com/...

Furthermore, most Silicon Valley CEOs are either founders of the companies or were involved from an early phase. They put a lot of blood and sweat into these companies over the years. They are not just MBAs flown in for a couple of years to later on bail with golden parachutes when things get rough.

http://en.wikipedia.org/wiki/F...

because ceos arent paid for their work.

[nimbius]

a CEO arguably isnt an employee anymore. the position of CEO is no different than the badge on an expensive luxury sedan or the star on your christmas tree. A CEO's competitive salary is directly proportional to the level of success you wish to project to the markets at large. the CEO, much like the badge, exists to be stroked and admired for its performance and implied success. And once you come to invest in it, rarely do you accept negative criticism. Heres an example: Ed Lampert, the CEO of Sears and KMart, nearly bankrupted both companies on numerous occasions. he was arguably the worst CEO on the face of the planet, with the exception of maybe Albert J. Dunlap who was nicknamed "the chainsaw." (or hell, lex luthor) Both CEO's were paid in excess of 2 million dollars per year. Now you might say, "but lampert insists his new salary is only a dollar a year!" and while this might be true, Sears fully insists he is available to earn up to 4.5 million dollars in bonuses a year (cited in a 2013 AP Article.)

so yes, if you consider the CEO a real employee (let alone a real person) just like you and me, then she/he is stratospherically overpaid.

Re:because ceos arent paid for their work.

[Billly Gates]

How is that different from our work?

It is a badge based on reputation when you hand your resume and command a salary right? HR seems to only care how long you did something who employment gaps. Not whether a similar job you had with great recommendations proves your skills to handle this one.

2.5 million is not a lot and being paid 1 dollar a year seems appropriate. He failed and didn't get paid.

Stock is not money.

[eggstasy]

You have no guarantee of deriving any value from a payment made in stock. As per TFA Schmidt's stock vests in 4 years. In 4 years, he might not even be alive. Google's stock value could drop 1000% (dot com bust, anyone?). And you can certainly not sell immense amounts of stock in one go, or you'll drive the price down.

Re:Stock is not money.

[geekoid]

So what? what did he do that made him worth the number of shared he got?

Re:Stock is not money.

[Anonymous Coward]

Google's stock value could drop 1000%

Clearly we all need to take your financial course. I'll sell the participants some put options at -200% as a hedge!

Re:Stock is not money.

[eggstasy]

He made something that a lot of people like. If you make something that a billion people like, and charge them a dollar each, you become a billionaire. Accepting a fixed salary at zero risk is entirely your choice.

Profits should go to stock holders

[cyberspittle]

When we have wolves guarding the sheep, what do you expect. The stockholders should get priority to all profits.

NOT CEO

[Outtascope]

Executive chairman. And the idiot can't even do simple math to divide his is unvested equity allocation over 4 years before compairing it to the lowly yearly income of the average CEO. That article is a load of horseshit. Sure, one could argue that he makes too much. But Schmidt didn't bankrupt my dad. So there's that.

The answer is greed

[Anonymous Coward]

No one needs $50,000,000+ a year as a salary.
No one needs 1 TB of porn on his computer either.

Yet here we are.

Re:The answer is greed

[Anonymous Coward]

No one needs $50,000,000+ a year as a salary. No one needs 1 TB of porn on his computer either.

Yet here we are.

What's this "we", white man? You got a pervy mouse in your pocket?

Re:The answer is greed

[mythosaz]

I have way more than 1TB, you insensitive clod.

Perspective:Inside Cisco's eavesdropping apparatus

[Anonymous Coward]

Perspective: Inside Cisco's eavesdropping apparatus

April 21, 2003 4:00 AM PDT

http://news.cnet.com/2010-1071...

By Declan McCullagh

"Cisco Systems has created a more efficient and targeted way for police and intelligence agencies to eavesdrop on people whose Internet service provider uses their company's routers.

The company recently published a proposal that describes how it plans to embed "lawful interception" capability into its products. Among the highlights: Eavesdropping "must be undetectable," and multiple police agencies conducting simultaneous wiretaps must not learn of one another. If an Internet provider uses encryption to preserve its customers' privacy and has access to the encryption keys, it must turn over the intercepted communications to police in a descrambled form.

Cisco's decision to begin offering "lawful interception" capability as an option to its customers could turn out to be either good or bad news for privacy.

Because Cisco's routers currently aren't designed to target an individual, it's easy for an Internet service provider (ISP) to comply with a police request today by turning over all the traffic that flows through a router or switch. Cisco's "lawful interception" capability thus might help limit the amount of data that gets scooped up in the process.

On the other hand, the argument that it hinders privacy goes like this: By making wiretapping more efficient, Cisco will permit governments in other countries--where court oversight of police eavesdropping is even more limited than in the United States--snoop on far more communications than they could have otherwise.

Marc Rotenberg, head of the Electronic Privacy Information Center, says: "I don't see why the technical community should hardwire surveillance standards and not also hardwire accountability standards like audit logs and public reporting. The laws that permit 'lawful interception' typically incorporate both components--the (interception) authority and the means of oversight--but the (Cisco) implementation seems to have only the surveillance component. That is no guarantee that the authority will be used in a 'lawful' manner."

U.S. history provides many examples of government and police agencies conducting illegal wiretaps. The FBI unlawfully spied on Eleanor Roosevelt, Martin Luther King Jr., feminists, gay rights leaders and Catholic priests. During its dark days, the bureau used secret files and hidden microphones to blackmail the Kennedy brothers, sway the Supreme Court and influence presidential elections. Cisco's Internet draft may be titled "lawful interception," but there's no guarantee that the capability will always be used legally.

Still, if you don't like Cisco's decision, remember that they're not the ones doing the snooping. Cisco is responding to its customers' requests, and if they don't, other hardware vendors will.

Cisco's Internet draft may be titled "lawful interception," but there's no guarantee that the capability will always be used legally.

If you're looking for someone to blame, consider Attorney General John Ashcroft, who asked for and received sweeping surveillance powers in the USA Patriot Act, along with your elected representatives in Congress, who gave those powers to him with virtually no debate.

I talked with Fred Baker, a Cisco fellow and former chairman of the Internet Engineering Task Force (IETF), about his work on the "lawful interception" draft.

Q: Why did Cisco decide to build "lawful interception" into its products? What prompted this?
A: Cisco's customers, no

Control of information

[EmperorOfCanada]

Quite simply the CEO controls the bulk of the information flowing to and from any groups such as the board of directors, the shareholders, the "executive compensation committee". etc.

Basically you have two factoids at play: One is that the CEO and those immediately surrounding them often even control such things as the candidates for board of directors election and those on the executive compensation committee. So there you have quite a bit of bias. Then after that you have literally nobody above the CEO. In theory board of directors answer to the shareholders and the CEO answers to the board but if the shareholders don't pick who is nominated for the board and the board is owned by the CEO then the CEO pay is limited to just how greedy he thinks he can be; not limited by other factors such as actually deserving his pay.

So when you are being so foolish as to try and find a correlation between CEO pay and their performance then you are wasting your time. The only correlation should be between their pay and a combination of their level of narcissism and their level of psychopathy.

What this quite simply calls for is that shareholders need to have vastly more influence on who is nominated to a corporate board. Another thing that this screams for is a relationship between the typical pay within a company and the top executive pay. Quite simply the higher this ratio then the higher the taxes should be on the top executives. This way you can exploit the greed of the top executives in that they will rationalize paying the typical employee much more so as to lower their personal tax burden.

No...

[Anonymous Coward]

Else they would make less money.

If you don't agree, buy some stock in a particular company and use your voting rights to express your concerns.

Sizable chunk of change

[Anonymous Coward]

I know one thing for sure: Mr. Schmidt wouldn't care to play the Powerball.

They deliver different things

[Xordin]

Google has had a huge positive influence on people's lives the last decade. Search, Android, Maps... wow. They took a lot of real risk and made the right choices.

Banks are basically part of government. I'm not quite sure what JP Morgan does, but I don't think they made many people's lives better. They also don't take any real risk (they're government backed, after all) and ... they did not make quite the right choices.

The numbers are too large, but I do not doubt that Google's number should be larger.

Corruption

[Flammon]

Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?

Corruption. It's really that simple and when it comes to big banks, the fascistic kind comes to mind.

Insanely

[whitroth]

Not quite 20 years ago, I heard Robert Reich on the radio ask one simple queswtion: what does a CEO do, or bring to the table, that the guy under him - the president, or whatever - does not? Education? Experience? (If you say "vision", I'm going to shove your idiot smartphone down your throat.)

In that case, why is he worth 10 times what the other guy makes?

Don't give me "but the company make so much..." Consider Jamie Dimon, of BoA, who spent bilions and billions of dollars to settle lawsuits from the DoJ (without, of course, ever admitting culpability), and he got a *massive* raise.

Either he knew what was going on with the subprime crap, in which case he should be not just fired, but defenestrated, or he didn't, in which case he should be fired, and sued for all his pay back.

No. A good part of it are the tax laws, and the massive use of bonuses (which are treated differently than salary raises) and stock options. As a major US newspaper noted in the late nineties, "who's going to say that CEO's aren't downsizing until the stock market stops rewarding them for doing so", never mind what destruction it wreaks to the company (since they'll move on soon enough - look up Frank "scumbag" Lorenzo and Eastern Airlines).

And what, pray tell, do any of them do that's worth 10, 20, 50 times what the President of the United States gets paid ($400,000/yr, no stock options, no bonuses)?

                    mark

Re:Insanely

[geekoid]

Vision is a legitimate answer. A strong vision of what they want a company to be is needed.
Now, very few CEOs actually have a vision, or a plan to make their vision come to fruition, but that's a different issue.

Re:Insanely

[NoImNotNineVolt]

Find me one person on this fucking planet that couldn't muster up some kind of "strong vision" when offered tens of millions of dollars.

I don't have an MBA, but I can be a bucket of LSD for any company that offers that kind of salary.

Re:Insanely

[Anonymous Coward]

Jamie Dimon is from JP Morgan.

I don't disagree with any of the rest of your post.

Insurance Cost

[Anonymous Coward]

The really bad thing is that the general public has to pay if one of the banksters doesn't do his work carefully, and these are the costs I do not want to pay.

No, The bigger question is...

[Sigmon]

Why is it any of my business what corporation X pays their executives - save that I am a stock-holder of that company.

Re:No, The bigger question is...

[geekoid]

Because the motivation for bonus impacts you, even you you aren't a share holder.

When a company makes a move that is a long time loss, and will cause financial instability in an entire market, but garners a 100 million dollar bonus to a CEO based on the immediate shorter returns it's a bad thing.

How does this happen?

[paiute]

Who sets the executive compensation?
Who hires the ones who set this compensation?

Creation versus leeching

[linear a]

Because the finance system has grown into a gigantic leech that pulls resources from the rest of the economy? The capital creation and management part seems to have become rather a sideshow for Wall Street. Because tech companies create new things that people want?

Re:Creation versus leeching

[geekoid]

Like windows 8!

Re:Creation versus leeching

[linear a]

Millions and millions of tech support jobs created! Bonus, psychological counseling and suicide hotline job opening are up too!

YES

[Anonymous Coward]

And the bastards like to outsource their IT department too! Outsourcing to the max 70%(out) 30%(in) in going to bite them in the ass. They have no clue how many times we clean up what the outsourced team breaks. We haven't complained because it's going to be our dead man code. Our ethics are too high to write dead man code, but we will not inform upper management how many times we have cleaned up the outsourced team's mistakes. This way if we are all gone shit will hit the fan, and it will be ethical. Right now the writing is on the wall. 97% SLA when we were outsourced 30%.. now we are at 70% and the SLA compliance is free falling.

Someone thinks they're worth it

[randomErr]

If the market couldn't bare it they wouldn't get paid that much. If you don;t like I would say invest in alternative technology and services or create your own.

And the largest question is...

[Anonymous Coward]

How are you going to reduce the amount of money another person has without employing coercion (meaning theft, fraud, or physical force) against that person? If you resort to coercion, that makes you the aggressor, and the CEO the victim -- the exact opposite of the picture you're trying to paint.

Disclaimer: I make about $32,000 a year, which is well below the national average salary, so my opinion on this must be driven by something other than personal gain (unlike you).

Re:And the largest question is...

[ebno-10db]

I make about $32,000 a year, which is well below the national average salary, so my opinion on this must be driven by something other than personal gain

TL;DR
Thank you sir, may I have another.

Re:And the largest question is...

[Anonymous Coward]

If you didn't read it, then how did you manage to quote it?

Big,Old, Money

[JimSadler]

In banking certain executives are sought out due to their position in life. For example if you are from family with great wealth and have numerous contacts with other very wealthy people and an impeccable background you will be highly paid. It is the type of thing at which a person can pick up a phone and make two or three calls and put together a multimillion dollar investment pool for a project. If such an individual sees a hot deal and is willing to put a few million of his own money in the pool it is easy to get his social contacts to do the same. Implied in that situation is that the executive must have leisure time and spend that time in the same resorts, yacht clubs, golf clubs etc.. His kids will be in the same exclusive private schools as their children. In order to be in this position he actually must live a very wealthy lifestyle so that his contacts remain frequent and firm. It is the classic case of money being drawn to money. It excludes normal people.

Bonuses should be tied

[geekoid]

to a percentage of income and applied at everyone at the company. CEO get a 500% bonus? everyone gets a 500% bonus.

Negotiation

[Aero77]

'Deserve' and 'Fairness' are imaginary concepts. People get paid what they negotiate. Business people understand this and this is why they get such 'unfair' compensation that they clearly don't 'deserve'. If you want to paid what you want, instead of what you 'deserve' or what is 'fair', learn to negotiate or get an agent to negotiate on your behalf.

Re:Negotiation

[nbauman]

So if we tax them 50% of their income after the first $100,000, there's nothing unfair about that.

Re:Negotiation

[Aero77]

Oh yeah? you and who's army of lobbyists?

Mod parent up

[Anonymous Coward]

Cronyism

minimum..

[h8sg8s]

How about minimum wage for professional athletes and actors? Sound crazy? So does trying to cap CEO pay. The market works, but many who are unwilling or unable to participate in it are unhappy with it. Human condition and all that..

What is a person worth?

[PhilHibbs]

Linking pay strictly to company performance in an absolute way isn't rational. Let's approach it from the perspective of "what would happen with or without this person". If the right CEO would make the difference between a company earning $12B and $13B, then that person is worth a billion. If a CEO makes the difference between a company earning $17B and $17.1B, then they are only worth $100M. The company itself may be a bigger company, but if it's a company that is easy to run and pretty much rakes in the money by itself with no real effort, then the CEO is not really worth spending a huge amount on if there is not much scope for building up the company to be even bigger. Of course this is a simplified and exaggerated set of circumstances, but the principle is: does this person make a big difference to the company's bottom line? They are worth a portion of the difference that they make, not an absolute fraction of the company's profits.

Finance is a valuable activity

[sjbe]

Bankers earn a profit by moving other peoples' money around and taking some off the top.

True, and the reason they can make money at this is because it is a VERY valuable activity to society. Far more valuable than the bit they keep for themselves most of the time. If you need evidence of how valuable it is, merely look at our recent financial crisis when the flow of money froze up.

There are plenty of jobs that don't involve making things but nevertheless are very valuable. Don't confuse the value of the activity with the behavior of the parties involved.

One of those jobs is necessary for us to progress.

Think so? Try building a company without access to banking or financial services. You won't get very far. Anyone who thinks banking and financial services aren't necessary for progress doesn't understand finance. It's like saying your car doesn't need oil. Technically true for a little while but it won't work very well or for very long.

Re:Finance is a valuable activity

[Anonymous Coward]

That's a completely circular argument. Of course, in our version of Capitalism, finance is an "endeavor" that is "crucial", because we make it so. Take away the money (and the quasi-zero sum game attached to it), and to no surprise, the factories/raw materials/technological progress ARE STILL THERE. Money is NOT a universal law to be upheld. It's a tool, and at that, a ridiculously outmoded tool. Start thinking.

Re:Finance is a valuable activity

[amicusNYCL]

I'm sorry, but I don't see a reason why I should necessarily need the services of a banker to run my company.

If we're talking reality, then in this reality the bankers have paid the lawyers and the lawmakers to make sure that all of them are needed for everything. But just because that's the way it is, doesn't mean that's the way it has to be. The American financial system is not necessary in and of itself (proof: the world got along fine before there was an American financial system), all of the necessity in the system has been created by the people in the system. We need to bring back Glass-Steagall and take a step back from the cliff.

Re:Finance is a valuable activity

[Actually, I do RTFA]

. Far more valuable than the bit they keep for themselves most of the time.

That's very true, except for the fact that it's totally false. From an investors point of view, the fees from certain types of financial institutions outstrip their supposed returns. Not, returns relative to index funds, or returns relative to inflation, but nominal returns. And not for "bad mutual funds" but for things like "the entire hedge fund industry from conception til now".

If you need evidence of how valuable it is, merely look at our recent financial crisis when the flow of money froze up.

So, these overcompensated people were so bad at their jobs that they practically destroyed the world market? Maybe, if we assumed that these jobs weren't super-important things a rare few could manipulate, we would have avoiding concentrating billions of dollars of investment power in a few people, so there would be more common, bust less ghastly, failures?

Try building a company without access to banking or financial services.

Being able to borrow money: important. Being able to have reliable accounting: important. However, access to Goldman: meaningless most of the time.

Re:Finance is a valuable activity

[epine]

If you need evidence of how valuable it is, merely look at our recent financial crisis when the flow of money froze up.

That's just about the dumbest thing I've ever heard.

I guess you don't recall the August 1981 strike air-traffic controllers strike. Most of those wealthy bankers could be replaced by people being paid 10% as much, and after a few years we'd hardly notice the difference, except perhaps that the new lot wouldn't be nearly so adept at screwing the system over.

I guess if you were running NASA you'd pay a billion dollars per o-ring, because--gosh--look at what happens if it won't deform, and the size of the bill if we need to replace the dumb thing. Ten thousand parts at a billion dollars each sure adds up. When you think about it, with each o-ring protecting the safety of a ten-trillion dollar shuttle, a mere billion dollars per ring is a screaming deal, wouldn't you say?

Finance wasn't rocket science until the inmates figured out that astrobucks are a good living. It doesn't need to be rocket science any more than an o-ring needs to cost a billion dollars.

The controllers had Washington by the balls. Big mistake. The bankers have Washington by the carotid artery. We can therefore infer from this that bankers do more important, more productive, more difficult work. Or we can infer that bankers are better at pouring over Grey's Anatomy if it serves their personal interests.

Re:Finance is a valuable activity

[jfengel]

The activity is indeed valuable, but that's not the same as saying that they are entitled to as much compensation as they are making.

They're entitled to it in the sense that they've managed to gull stockholders into giving it to them, but that money "belongs" to the stockholders in the bank, who are underwriting the banker's paycheck but have little say in negotiating his salary. Is there some other person who could do just as well at a third the price? Or a hundredth of it?

The financial crisis proves that the job is indeed very important, but it also suggests that a lot of them aren't very good at it. Several major banks failed; more would have failed if the US government hadn't stepped in to save their butts. If they earned their money, it was in convincing the government that they should do that, saying out of the left sides of their mouths that the banking industry was too important to allow to fail, while using the right sides to convince people that it wasn't actually their fault and that banking sector is well run if only it weren't for those dastardly (Chinese, poor people, regulators, etc.)

In the end their compensation is indeed a tiny sip of the gusher of money that flows through their hands, and it wouldn't fix the problem to turn that sip into a sniff. It does, however, imply that they aren't being hired to protect the long-term health of either the bank itself or the economy, but instead engaging in a lot of back-slapping and hand-shaking to use other people's money. If it were a better measure of their relative skill compared to other bankers, rather than merely taking credit for the rising tide that lifted all the ships (and their heavily-leveraged ship higher than most), I wouldn't mind that their salaries were so high. But they don't seem to have gotten there through any meritocracy, and their incompetence puts the entire country in jeopardy from time to time.

Re:Finance is a valuable activity

[jafac]

Banking and financial services are clearly necessary for progress.

But the winner-take-all profit skimming model certainly isn't necessary. We could be just as prosperous and successful with a national banking model that treats this function as a utility, rather than an easy method for entitled white-collar crime.

Re:Finance is a valuable activity

[deKernel]

Well, I would suggest that you actually own and run your own company for a period of time to just find out. Here, I will give you one example: say you need to pay your employees but you don't have the cash on hand. Guess what, like many companies, you take a loan out for a short period until your cash flow balances out from your receivables finally arriving.

Re:Finance is a valuable activity

[Anonymous Coward]

Creating a demand for a service and providing said service is not exactly "necessary for progress". It's just a less obvious protection racket.

Re:Finance is a valuable activity

[Tom]

If you need evidence of how valuable it is, merely look at our recent financial crisis when the flow of money froze up.

You mean the crisis caused by bankers?

We should seperate two different kinds of bankers here. The bankers who handle your savings account and give out loans - definitely useful, yes.

The Wall Street investment bankers? Much less sure about them.

Re:Finance is a valuable activity

[Anonymous Coward]

The activity is indeed valuable, but that's not the same as saying that they are entitled to as much compensation as they are making.

They're entitled to it in the sense that they've managed to gull stockholders into giving it to them, but that money "belongs" to the stockholders in the bank, who are underwriting the banker's paycheck but have little say in negotiating his salary. Is there some other person who could do just as well at a third the price? Or a hundredth of it?

Just for fun, I decided to play with a few numbers. First, let us assume they are paid $10 million salary (evidently on the low side for some of them). Now let us postulate that they are working 365 days a year. After all, they are ambitious, type-A personalities, right? That works out to over $27k per day. Let us further assume they are putting in 18 hour days, every day. They are ambitious type-A personalities, remember? That works out to over $1500 per hour.

Question: can anyone think of ANYTHING that they do on the job that should be compensated at $1500 PER HOUR?!? The only thing I could think of that would justify that kind of payout would require extreme risk of severe injury or death. Somehow, I doubt that even the suicide bombers could demand that kind of payout. So, what is it these guys actually do that they can demand (and get) that kind of salary? For some reason, no one has ever dared ask this question. Why is that?

Re:Finance is a valuable activity

[complete loony]

Banks make money primarily from interest on loans. They have a financial incentive to encourage the rest of society to borrow ever increasing amounts. That extra credit will flow around the economy and convince us that we're doing better than we were last year.

In an asset bubble, where the exact same asset is being exchanged for larger and larger amounts. Where each successive buyer has to borrow more and more money from a bank in order to win the auction. Who is the ultimately responsible for pushing up the price? The buyer? The seller? Or the bank manager greedily thinking of all the extra interest he will get?

Increasing credit so that people can speculate on asset prices is exactly what caused the financial crisis. We as a society had become dependant on that continuous increase in credit to keep our illusion of wealth alive. So when the inevitable finally happened and bank managers ran out or greater fools willing to borrow more, the economy collapsed.

There may be some need for banks to fund entrepreneurs, but they haven't been doing that at all. No, the current banking sector is a parasite, that has gradually convinced us to give them all of our disposable income. They don't make anything, they survive by sucking money from the productive sectors of society. They have taken the place of feudal Lords, gradually convincing the rest of us to pay them rent just so we can have a roof over our heads.

Re:Finance is a valuable activity

[khallow]

I'm sorry, but I don't see a reason why I should necessarily need the services of a banker to run my company.

Ignorance is common trait of man throughout history and its primary symptom is the inability to see and understand.

Re:Finance is a valuable activity

[HiThere]

Bankers provide a useful and valuable service. But they are only one amoung many providers of useful and valuable services. The only reason they recieve disproportionate compensation is because they are the ones that decide what if fair compensation. That kind of decision, while necessary, does not merit the kind of compensation that is provided.

The only reasonable solution that I see is a law regulating what the maximum income someone can earn during a year as a factor of the income of the poorest individual. 5,000 would be my rough estimate of what that should be. If the poorest individual earns $1,000/year, then the income cap from all sources, including interest, rents, etc. should be $5,000,000. And I'm dubious about allowing "legitimate business expenses" to be offset from the income, because such a concept has been so often flagrantly abused. Perhaps allow some fraction of the expenses to be deducted from the calculated income, but in no case should the offset be allowed to amount to more than half the calculated income...and even that I'm dubious about. If the expenses are that heavy, let the source of the income be set up as a separate company, and firewalled against the income of the individual. And monitor the accounting agencies strictly, with penalties that are actually applied.

Re:Finance is a valuable activity

[Copid]

True, financial services are really critical, but they are still clearly extracting far more value than they should be in a lot of cases. Much of what the finance industry does is intermediation--they're middle men. In a normal, healthy, functioning market, those services should become fairly commoditized and the price of those services should drop. The fact that huge profits are being made year after year is an indicator that something is wrong with that mechanism.

Re:Finance is a valuable activity

[Anonymous Coward]

Hi there Big Bank shill! Are your corporate overlords shaking in their boots or something?

Re:Finance is a valuable activity

[sjbe]

In a normal, healthy, functioning market, those services should become fairly commoditized and the price of those services should drop.

Most banking and financial services ARE commoditized. Remember that for the most part bankers sell an undifferentiated product and they don't make a whole lot of money per transaction. However, the transaction volume is enormous and thus banks can make some pretty big profits at the end of the day ala Walmart.

The places where big margin profits are made is in markets where there are information asymmetries and/or where transaction volume is relatively low. The elimination of Glass-Steagall was an enormous mistake because it immediately created a conflict of interest for banks. Hopefully the Voelker rule will restore some of the sanity though that remains to be seen.

The fact that huge profits are being made year after year is an indicator that something is wrong with that mechanism.

Huge profits from a huge bank should not be shocking and by themselves are not sufficient evidence of something being broken. What we need to worry about is the margins they are making.

Re:Finance is a valuable activity

[Anonymous Coward]

The American financial system is not necessary in and of itself (proof: the world got along fine before there was an American financial system), all of the necessity in the system has been created by the people in the system.

There is some truth in what you say, but you are also ignoring centuries of history, which provides many lessons concerning the importance of finance to societies. Go read up on the role of finance in helping to create the prosperity of the Italian city states during the Middle Ages, or the role of finance in making the British Empire possible. It was developments in finance that allowed to British to fight many very expensive wars with France, and win. Then there was the role of finance in making the industrial revolution possible. Finance also played a critical role in the development of the United States as a nation, paying for railways, canals, industrialization, and lots of other stuff. We have a big government today paying for lots of stuff through taxes, but that hasn't always been the case, and having a bit government creates its own set of problems for a society.

The lesson is: reasonably sophisticated finance plays a critical role in the modern world. The trick is to recognize when things have gotten out of hand.

Re:Finance is a valuable activity

[LunaticTippy]

An interesting counterexample is the Colorado cannabis industry. No bank will do business with them so they are forced to operate on a cash basis. They largely accept only cash, pay for all expenses in cash, and have been such an explosive growth industry it has created thousands of good jobs and rich business owners.

Re:Finance is a valuable activity

[Anonymous Coward]

And why don't you have the cash on hand?

Re:Finance is a valuable activity

[Anonymous Coward]

The banks rely on the public being ignorant about the workings of finance so that they can continue to dupe them out of their hard earned money. In fact, they work to further complicate/obfuscate the system so that even fewer can understand that what they are really doing amounts mainly to fraud.

Re:Finance is a valuable activity

[khallow]

The banks rely on the public being ignorant about the workings of finance

The ignorant part of the public doesn't run successful businesses.

Re:Finance is a valuable activity

[sjames]

And since then, we have been paying them outrageous bonuses and giving them free loans from the fed in exchange for them NOT providing any of that value.

Re:Finance is a valuable activity

[raind]

Is it finance when:

"Today, banks like Morgan Stanley, JPMorgan Chase and Goldman Sachs own oil tankers, run airports and control huge quantities of coal, natural gas, heating oil, electric power and precious metals. They likewise can now be found exerting direct control over the supply of a whole galaxy of raw materials crucial to world industry and to society in general, including everything from food products to metals like zinc, copper, tin, nickel and, most infamously thanks to a recent high-profile scandal, aluminum. And they're doing it not just here but abroad as well: In Denmark, thousands took to the streets in protest in recent weeks, vampire-squid banners in hand, when news came out that Goldman Sachs was about to buy a 19 percent stake in Dong Energy, a national electric provider. The furor inspired mass resignations of ministers from the government's ruling coalition, as the Danish public wondered how an American investment bank could possibly hold so much influence over the state energy grid." ?

Re:Finance is a valuable activity

[stenvar]

I'm sorry, but I don't see a reason why I should necessarily need the services of a banker to run my company.

Bankers give you access to capital for expansion, and they also give you access to markets for mitigating risk.

If we're talking reality, then in this reality the bankers have paid the lawyers and the lawmakers to make sure that all of them are needed for everything.

Bankers have manipulated laws to achieve monopolies and high barriers to entry. But a lot of those regulations come in the guise of consumer protection.

proof: the world got along fine before there was an American financial system

How historically illiterate and ignorant can you be? Have you looked at European history? At European banking? At the connection between banks, monarchies, war, and famine in Europe?

We need to bring back Glass-Steagall and take a step back from the cliff.

We need something. But if we write another Glass-Steagall, banks are going to use that to make themselves even more powerful and entrenched. One thing is certain: whatever legislation we need, the current administration is too incompetent and corrupt to deliver anything with teeth.

Re:Finance is a valuable activity

[amicusNYCL]

One thing is certain: whatever legislation we need, the current administration is too incompetent and corrupt to deliver anything with teeth.

I don't think that situation is going to change unless we completely clean out Congress and elect all new people, with term limits for all members of Congress. It would also really help if corporate donations to politicians were illegal, and that all personal donations to politicians were public. There's far too much money in the system for anything to work like it should.

A new Congress... talk about wishful thinking.

Re:Finance is a valuable activity

[stenvar]

I don't think that situation is going to change no matter what, really.

If you remove money from the system, other forms of power and influence peddling just take their place.

Re:Finance is a valuable activity

[amicusNYCL]

I think a solution is possible, although it would be extremely difficult to get Congress to pass rules limiting their power and the influence that others can have over them. I wrote up some ideas about it here:

http://newamericandeal.blogspo...

Re:Finance is a valuable activity

[stenvar]

Each of the points you list sound like they are good, but they really don't work well in practice when they have been tried (and they have been tried).

What works well is to limit the power of the federal government and return much more power to state and local governments.

Google has a two-tier stock scheme

[Animats]

Google has two kinds of stock, A shares and B shares. A shares get one vote. B shares get 10 votes. The founders have all the B shares. Facebook has a similar setup.

The NYSE used to prohibit multiple kinds of stock for listed stocks, back when the NYSE had more clout. (The exception was Ford, which was grandfathered in. Ford has a two-tier stock scheme that has kept the Ford family in control for a century. That's why Ford didn't go bankrupt when GM and Chrysler did. A bankrupcy would erase that deal.) But the NYSE caved a few years ago. Now it's common with tech issuers.

The obligatory:

[notknown86]

Hate beta? soylentnews.org is the solution.

You stay out of my cookie jar

[Anonymous Coward]

Nobody takes my cookies from me

CEO pay IS based on performance

[Sponge Bath]

If a company succeeds, CEO pay increases because their super human abilities are solely responsible for corporate performance. If a company fails, CEO pay increases because their super human abilities limited the damage from incompetent workers and are needed to liquidate the company in an orderly fashion.

Re:CEO pay IS based on performance

[Anonymous Coward]

And regardless of whether a CEO does well or does poorly, CEO pay increases because the median salary of a CEO increases and you have to properly compensate your CEO in order to retain your CEO and then, later, attract a new one after the old one nearly destroyed your business.

Possible solution?

[bradley13]

The problem has always been the "old boys network" where top executives take turns sitting on each others' Boards of Directors, approving each others' salaries. These nitwits are so disconnected from the lives of their workers that they probably sincerely believe they are worth such ridiculous salaries.

Starting this year, here in Switzerland, the shareholders must vote on the executive compensation package at the annual shareholders' meeting. This vote is binding: if they vote against (outrageous) compensation, then it won't get paid. I believe this will have a long-term effect, not only because of the vote, but also because it requires spelling out executive compensation in plain terms that the shareholders can understand.

I expect a number of Swiss companies will have a sudden urge to rethink things, before the next annual meetings take place...

Re:Possible solution?

[david_thornley]

Nice idea. Here in the US, stock is primarily owned by mutual funds and the like, and the votes of people like me are insignificant. Any suggestions on how to deal with that?

Re:Possible solution?

[Anonymous Coward]

Most of this liberal rabble ranting and raving about this are idiotic and their comments ridiculous, but you are correct and this is the right solution. Requires very little government intervention and no confiscation which is what a lot of these dolts seem to want to solve (lol) "income inequality", the new political buzzword of the vile left.

good joke

[Anonymous Coward]

"Apple wouldn't have so much money to spread around to their official employees"
you made it sound as if average joe in apple is getting paid better because chinese labour is so cheap. it was a good joke, I actually laughed out loud.

Even if it would be so, how about chinese workers get compensated well for the hard work they are doing? I have worked in the factory while I was studying. While it was low on the skill requirements, it was insane on the mental requirements. I swear, if I haven't changed to programming, I would have killed myself after a few years.

Seriously

[Anonymous Coward]

Our government is lending banks money for essentially zero interest. They are then turning around with that money and buying Federal debt and getting 2 or 3% on the money. Banks are some of the biggest contributors to the Democratic party these days.

Don Henley

[ThatsNotPudding]

"Because any man with a briefcase can steal more money than any man with a gun."

This is absurd...

[Anonymous Coward]

Wow... this thread is so full of staggering misinformation....

no.

[Anonymous Coward]

subjectively? maybe. objectively? no. here's why:

these companies are swimming in money. it's up to them to decide what to do with it. it would be interesting if they spread it out more, saved more, invested more, etc., but that's not what they decided to do. as an aside, we (yes, you too) indirectly decide how much they get paid. it's our money that's pouring into these companies.

an analogy: do we spend too much money on gadgets and technology? "fuck you," might be a common response, because it's my money. if i want to live in a shack and buy a new smartphone every 6 months, that's up to me.

the astute reader might recognize one "industry" that pays and spends more money than they have. i would argue they they're overpaid, objectively. can you guess what it is?

The bigger question...

[jenningsthecat]

DavidHumus notes "Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

No, the bigger question is "Why is CEO pay so entirely disconnected from the value of said CEOs to society as a whole?"

Really, do these people contribute 200, 500, or 1,000 times more to society, (or even to their companies), than the average employee? I'd be willing to bet that, in many cases, CEOs make lesser contributions on all fronts than do regular workers making WAY less money. Sure, CEOs often have greater responsibilities, as well as significant skills and talents. But are they really worth that much in the grand scheme of things?

Re:The bigger question...

[TheSync]

"Why is CEO pay so entirely disconnected from the value of said CEOs to society as a whole?"

This study notes that "that CEO wealth has been strongly tied to firm performance since the 1930s, and that relationship strengthened considerably after the mid-1980s."

It is possible that paying a CEO a lot of money to make them wealthy is part of making them be effective CEOs. Rich people command respect and attention from most people. Rich people like other rich people. Being rich may allow for CEOs to make the business connections with other rich CEOs. Being rich may allow for rich CEOs to command respect from those they manage.

Anthropologically, it is similar to the concept of the Big Man. You see this not only with CEOs, but also with gang leaders who end up reaping significant pay as a key element to maintain their status as a leader.

Re:The bigger question...

[RightSaidFred99]

Alas for your dear socialist heart, people are not paid based on their contributions to (lol) "society". They are paid based on market value.

It should be the newspapers

[Anonymous Coward]

Because we are (or at least, most of us are) investing in these companies?

Then raise your concerns in a shareholders' meeting -- not in newspapers.

Have you ever been to a shareholder's meeting? Are you naive enough to think that the CEOs answer to the shareholders?

IF you can actually get a chance to speak, you just get dismissed by them. The only people who have ANY chance are the big institutional investors or someone that has significant holdings - and they don't care because they are part of the good ole boys network. Corporate governance is shit. The only option for a small investor is to not buy the company's stock or sell. But the thing is, most folks have shitty mutual funds (they're all shit) in their 401K/IRAs that invest in these companies.

The Fortune 500 is filled with complete shit. The only reason why the stock market did as well as it did was because of all the money the Fed has been printing.

And what has been REALLY disturbing is how many companies are doing share buybacks - buying back stock in their companies just to boost stock price and enriching the CEOs. Share buybacks are NEVER done because management thinks their company is a good investment - they say that to justify lining their own pockets.

No sir, we NEED this in the news to inform people how the financial markets are screwing them with the help of CEOs.

What I don't get is

[kjshark]

what do these guys do for $20 million that they wouldn't do for $10 million ?

Re:What I don't get is

[RightSaidFred99]

They work at company X instead of company Y, that's what. Competition - go look it up.

Re:What I don't get is

[kjshark]

Certainly the supply of people who want to work for $20 million far outweighs the demand. There doesn't seem to be any correlation between CEO income and performance, so it's a buyers market. So the question's a little more complicated then your reply would indicate.

Re:What I don't get is

[Copid]

I'm trying to find it, but there was a neat piece of reserach from a couple of years ago that surveyed executive compentation policies for various large corporations. As I recall, more than half of the companies had explicit policies that the CEO must be paid a salary above the median for comparable corporations. The good news is that this Lake Wobegon problem is probably self-limiting, given enough time.

EXCEPT

[Anonymous Coward]

Under this administration the media is practically silent. Well except during 'occupy wall street'..

Plenty of big paydays on wall street in the mean time..

How much of the FEDs printing is going directly to wall street in the form of bonds and other securities to date? A whole lot more than a Tech CEO's salary..

Bankers parasitic?

[Anonymous Coward]

Perhaps because bankers create nothing and live like a parasite off the work of others? just a thought...

Fair v. Equitable: Who cares?

[Anonymous Coward]

With most jobs you have the option to accept or decline whatever they pay you. I don't mean to get all Ayn Randy here, but really, what does limiting someone else's income do to improve your life? I applaud anyone who can get the most of out their employer as long as it's not at my cost. My view of work is that it's my job to get the most money for the least amount of work and it's my boss's job to get the most work for the least amount of money.

That being said, I think most CEOs are overpaid. You get to a company of a certain size and it pretty much steers itself. Look at Microsoft and Ballmer. How long did it take the board to realize he was bad at his job? Long because a company is made up of people who do their work very well and keep the whole shebang moving. The only time I think a CEO really has an impact on a company is when it's in trouble and that's generally the only time the board really look at who they're hiring.

All Executive Pay Is Excessive

[CycleFreak]

Take GE for example.

If you take the top-10 highest paid executives at GE and cut their compensation by 50%, none of them would be making less than $5M/year. And most would still be over $10M/year. However, the 50% cut of only 10 people would allow GE to hire more than 1,000 people at $75,000/yr.

Performance at the executive level would be unchanged. But GE as a company could certainly do some amazing things with those extra 1,000 people

Pro sports misconception. Pay not that great.

[raymorris]

Also, those pro sports salaries in the headlines create some misconceptions. You see a headline about a $30 million contract and think pro athletes are fabulously wealthy. In reality, that $30 million is the maximum that the best player is eligible to earn over three years, which is half of their career.

Taking the NFL as an example, players work very hard for several years trying to get into the pros. For the few who make it, the average salary is $1.9 million, but the average career is only six years. That's $5.4 million for their career. A lot of tech workers will make a lot more than that in their career. Especially so if they worked as hard during high school and college as the kids who become pro athletes do, waking up two hours early to work out (or study) and then staying after school for practice, etc.

It's a good job, don't get me wrong, but it's not as obscenely lucrative as a glance at the headlines might make it appear. Hollywood, on the other hand, is incredibly lucrative for the very top talent, if they stay on top for many years. If 20 million people are entertained enough by having you on a show that it's worth 5 cents per week for them, that's $1 million per week of entertainment value.

Re:Pro sports misconception. Pay not that great.

[SuricouRaven]

I'm British. I mean football, not handegg.

Same thing on movie stars, yes. There's only so much room in public awareness for so many superstars. The lack of a self-limiting mechanism on pay has another effect in both cases: A great many aspiring athletes and actors who just don't have the talent to make it into the top leagues, and a surplus of athletes and actors further down the ability scale. Most of whome eventually realise their dreams of stardom are unrealistic and try to move into a new career, but only after wasting many years of training.

Re:Pro sports misconception. Pay not that great.

[Khashishi]

So, NFL players and tech workers have similar compensation... if you place no value on time. Once the football player's career is over, he can retire early if he chooses. How is that not great compensation?

Your right is wasn't luck

[Anonymous Coward]

CEOs got where they are because they knew the right people - well, I guess that IS luck. They were a member of the lucky sperm club.

If Zuckerberg was at Iowa State instead of Harvard, he would still be a poor nobody. And no, it didn't take him 10 years to get rich. It took him less than 3 years.

CEOs do not contribute that much to most companies. Even the great Steve Jobs didn't contribute as much as he has been given credit for.

CEOs get the pay they get because they are part of the "good old boy network". Hard work and brains gets you to middle management; after that it's who you know. There isn't a CEO alive who got where he is by hard work and brains - that's the myth they tell us little people into fooling us into busting our asses for crumbs with dreams of making it big too.

And when you consider the most CEOs are incompetent (they last on average 18 months before they're fired with their millions of dollars in severance), it's proof that the free market is broken: it's fixed and the game is against the little people.

There are two options

[Overzeetop]

There are two ways to think of this - as a problem devoid of human emotion, "you are worth whatever people think your worth," or as one which accepts that, as a human trading time for money there is a limit to the value you have when compared to others working on the same team/company.

If you agree with the former, we can eliminate any form of social welfare or assistance. If you are poor and get sick, you die. If you don't work, you don't get any food, even if you are disabled. Insurance can (or should) not exist - you pay your way, and if fate frowns on you, tough shit. Minimum wage should never exist.

As soon as you move off that emotionally-void stance, you land at some form of wage shaving or wage inflation, on the presumption that every human life is valuable in some way or to some degree. It can be implemented as a minimum wage, a salary cap, a progressive tax, a soup kitchen, a church homeless shelter, non-profit or reduced cost medical care, an estate tax - you name it. A multiplier is just a different way to look at preventing one human being from being recognized as being infinitely more valuable than another. You're really just negotiating the line once you step out of the capitalist theoretical circle and believe (as every single religion in the world, and nearly every human believes about the other humans in his or her monkeyspace).

If you're concerned about the poor MBa who is working his fingers to the bone 70 hours a week, you need not fret - simply set the threshold at an acceptable level to you. Minimum wage is $7.25/hr in the US, or $15100/yr. I'll grant you an MBa from an ivy league school at $100k/yr for 6 years, $72,000 in interest to get that degree, and 6 years of lost wages at double the federal minimum wage. We'll presume, for the sake of argument, that with such lofty qualifications, razor sharp intellect, and 70hr/wk work ethic that you will be hired straight away. We'll take the bottom of the 99th percentile (aka "1%er") as a benchmark for a comfortable lifestyle *plus* pay off all that hard-earned money you spent on the MBa in just 3 years. So $762,000/3 years and $250,000/yr to "live".

That gives us multiplier of 33, which seems like enough to assuage your problems with a "cap" - AND, all you need to do to make more money is to raise the salary of your lowest paid workers. Double your lowest paid worker to $15 an hour (hey, that's almost 150% of the poverty level for the US!!), and you can bang out that million dollar salary - that'll cover those tuition bills and still leave you a few nickels for your brilliance! Oh, and the pain and suffering of your stressful job - can't forget that - as you take the corporate jet top your next meeting!

Re:There are two options

[Billly Gates]

There are two ways to think of this - as a problem devoid of human emotion, "you are worth whatever people think your worth," or as one which accepts that, as a human trading time for money there is a limit to the value you have when compared to others working on the same team/company.

If you agree with the former, we can eliminate any form of social welfare or assistance. If you are poor and get sick, you die. If you don't work, you don't get any food, even if you are disabled. Insurance can (or should) not exist - you pay your way, and if fate frowns on you, tough shit. Minimum wage should never exist.

As soon as you move off that emotionally-void stance, you land at some form of wage shaving or wage inflation, on the presumption that every human life is valuable in some way or to some degree. It can be implemented as a minimum wage, a salary cap, a progressive tax, a soup kitchen, a church homeless shelter, non-profit or reduced cost medical care, an estate tax - you name it. A multiplier is just a different way to look at preventing one human being from being recognized as being infinitely more valuable than another. You're really just negotiating the line once you step out of the capitalist theoretical circle and believe (as every single religion in the world, and nearly every human believes about the other humans in his or her monkeyspace).

If you're concerned about the poor MBa who is working his fingers to the bone 70 hours a week, you need not fret - simply set the threshold at an acceptable level to you. Minimum wage is $7.25/hr in the US, or $15100/yr. I'll grant you an MBa from an ivy league school at $100k/yr for 6 years, $72,000 in interest to get that degree, and 6 years of lost wages at double the federal minimum wage. We'll presume, for the sake of argument, that with such lofty qualifications, razor sharp intellect, and 70hr/wk work ethic that you will be hired straight away. We'll take the bottom of the 99th percentile (aka "1%er") as a benchmark for a comfortable lifestyle *plus* pay off all that hard-earned money you spent on the MBa in just 3 years. So $762,000/3 years and $250,000/yr to "live".

That gives us multiplier of 33, which seems like enough to assuage your problems with a "cap" - AND, all you need to do to make more money is to raise the salary of your lowest paid workers. Double your lowest paid worker to $15 an hour (hey, that's almost 150% of the poverty level for the US!!), and you can bang out that million dollar salary - that'll cover those tuition bills and still leave you a few nickels for your brilliance! Oh, and the pain and suffering of your stressful job - can't forget that - as you take the corporate jet top your next meeting!

Ok devils advocate again here.

Let's see doubling minimum wage to Walmart consumers? Not ONE WAS WILLING to donate 15% for a 15 hour paycheck strictly for the workers.

  You can argue all you want to you are blue in the face. If Walmart or your own fictitious company did just what you advocated your customers will go to Target or to a competitor.

Suffering is a problem yes. But how do you deal with it? Yes human dignity is worth something, but not all humans are equal otherwise these people in that link would donate to the workers who got that TV off that high ladder for them.

Re:There are two options

[Anonymous Coward]

Let's see doubling minimum wage to Walmart consumers? Not ONE WAS WILLING to donate 15% for a 15 hour paycheck strictly for the workers.

I know you're playing devil's advocate, but that's a strawman. The suggestion isn't demanding a raise for workers, only that the CEO's raise is tied to the workers.

I suspect if you asked those people if they're willing to pay 15% for a paycheck strictly for the CEO, they'd reject it even stronger.

The idea is that if the workers can't get a raise, neither should the CEO. The saved money doesn't have to go back to the workers. They can for example be reinvested in the company. Or heck, how about companies pay more dividends? I know giving money to workers so they can buy things is taboo, but how about giving money back to shareholders so they can buy things?

My Question is Different

[Bob9113]

DavidHumus notes "Maybe the bigger question is why is CEO pay so entirely disconnected from company performance?"

My question, if we're considering how we as a society should respond, is how changes in CEO pay and tax rates correlate to changes in the long-run GDP growth rate. If we're paying more and getting more, I'm all for it. If we're paying more and getting less, I'm opposed. If we decrease the high income tax rate, and lower the highest income tax bracket, and GDP growth rate increases, it is the right decision for society. If we do that and the GDP growth rate stays the same or falls, we are wasting money.

The nice thing is that we have good records going back to 1917, and from about 1950 to present we have both a steady change in tax policy (reducing the top income tax rate and lowering the top income tax bracket) and no major external shocks to the economy other than the OPEC crisis and attendant massive increase in the price of energy in the early 1970s. We can actually come up with a pretty solid estimate of this simple question: Are we getting our money's worth?

It's really the same question a restaurant owner asks himself when deciding how much to pay a dishwasher -- if I pay less, will I still get sufficiently clean dishes? If I pay more, will the dishes be enough cleaner to justify the expense? As a society we need to apply the same standard at the top brackets: to pay as little as we can while still getting the GDP performance we desire. Paying more than that is wasting money. Paying less than that is leaving GDP growth on the table. That is what we as a society care about, when it comes to allocating GDP -- maximizing the ROI.

Re:My Question is Different

[Rinikusu]

Thank you, Mr. Dewey, for further enlightening everyone that we are just replaceable cogs in the machines of industry. Wear it out and replace it when done.

Re:My Question is Different

[satuon]

His point is that the goal of a business is to create a product, not to pay salaries. Paying salaries is a means to an end - creating product.

And if businessmen have it so good, if they've struck such a gold mine, then just quit working for them, and start your own business.

Re:My Question is Different

[NoImNotNineVolt]

Well, considering that things were relatively great in the 50s, and nowadays we have threats of government shutdowns and debt defaults, I say returning to a top marginal rate in the 80%-90% range would be a better deal.

But that would hurt the job creators, and we just can't have that.

Re:My Question is Different

[david_thornley]

What does the GDP, or GDP per capita, matter? For a society, I'm much more interested in how it is distributed. What's happened to median incomes? Incomes at quartile or quintile boundaries?

Re:My Question is Different

[Fned]

"His point is that the goal of a business is to create a product, not to pay salaries."

Actually, on a broad scale, it's both. If enough businesses find ways to create products without paying salaries, before long they all go out of business.

Customers are the real "job creators."

Re:My Question is Different

[Anonymous Coward]

if we decrease the high income tax rate, and lower the highest income tax bracket, and GDP growth rate increases, it is the right decision for society.

it would be the right decision for some of society but not necessarily for all society. If the gains all go to the few (maybe at the expense of many) then society may not be better off. GDP alone may not be the only consideration.

Re:My Question is Different

[satuon]

The customers would be other business owners in that case.

The real issue

[Trailer Trash]

The real issue is the disconnect between company performance and executive pay. We're seeing a lot now of people who run a company into the ground and end up with a golden parachute, anyway. It's doubly insulting when people who make literally 1/1000th the CEO's pay end up with nothing.

My belief is that the real problem is that we're disconnected from the companies that we own. I own stock in a bunch of companies. Through mutual funds. In my Roth IRA. I can't show up at their annual meeting and vote because I don't directly own them.

In the old days, the board really represented the shareholders and shareholders often had bought the shares. As such, they had a closer stake in the company and the outcomes. The idea of a CEO ruining the company and then being compensated for it would have caused the board to be changed at the next annual meeting.

I'm not sure what the solution is but I believe this disconnect is a big part of the problem.

Re:The real issue

[NoImNotNineVolt]

If you hold individual shares in your Roth IRA, I believe you can vote them.

Most Roth IRAs allow you to buy individual shares. Consider selling your stake in the mutual funds and then buying back your position with individual shares. Save yourself the fund fees, earn your voting rights back. Of course, you're stuck handling your own allocation then, and you'll be responsible for all the trading fees, but such is life! I'm no day trader, and definitely of the buy-and-hold mentality, so for me this has proven to be a worthwhile course of action. Then again, I have no idea what I'm doing. YMMV, IANAL, KTNXBAI.

Re:The real issue

[Trailer Trash]

You're correct. You can even buy real estate with IRAs in some circumstances.

Stock Options.

[Elder Entropist]

The "salary of $1 a year" is pure B.S. for all the CEOs who employ it. They get compensated in stock options worth millions. They get bonuses worth millions. They get jet planes and other perks given to them by the company. As an added benefit and tax dodge, they only have to pay lower capital gains tax rates on the stock options rather than what they would pay if it was a salary. That's why the real figure that should be reported is TOTAL compensation, not salary.

http://management.fortune.cnn....

Those double standards are pretty much justified

[Anonymous Coward]

Since when a tech company fails, it's just that - it fails. Goes bankrupt, employees go and find new jobs, a new tech company emerges, etc.
But banks tend to howl "if we fall, society/monetary system/whatever goes with us" and get bailed out - from taxpayers' money, no less, what do libertarians and laissez-fair advocates say to that? - and their senior staff keep their high wages, get even higher bonuses, and so on.

Disclaimer: I haven't read all comments, so I'm sorry if I'm just repeating another comment.

Re:Fair v. Equitable: Who cares?

[DudeTheMath]

Note that the CEO is trying to get the most out of his (almost always "his") employer, too. Who's his employer? Why, the board, usually full of banking CEOs who love to negotiate their high salaries, bonuses, etc., from their boards. It's largely a big circle jerk.

It is your own fault

[Lawrence_Bird]

The reason why CEO and other officer level pay is so high is because you keep paying them those astronomical sums. Shareholders are ultimatley in control of the board as well as most stock compensation programs. If the shareholders object, it will be changed. And don't say "oh well I don't own stock". You most certainly do.

Beyond the obvious direct or indirect ownership of shares outright or by mutual fund in a personal or retirement account or as a pension fund from your place of work, , as a tax payer you own shares indirectly. How? Through your tax payer contributions to things like police, fire and teacher union pension plans. And if you rent, you are still paying as your rent certainly includes the cost to the landlord of property taxes.

Now whether these salaries are actually bad or undeserved, that is another discussion. I would say to save the hate on the person getting the big bucks. You would do the same thing if you could. Should you begrudge the ball player who negotiates a large contract and then can't meet "expectations"? The team was not forced to sign him. If you demand too high a salary from your employer they too can walk (as can you if it is too low). Same goes for public unions. Officials elected by tax payers agree to the terms of the contract. Is there a gun to their head? Or does it just become easier to say yes and stop fighting inertia?

Re:It is your own fault

[NoImNotNineVolt]

You're right. As shareholders, we should object.

But wait. The mutual funds that I own shares of, they all retain the voting rights for themselves. The police/fire/teachers unions, well, they're not receptive to me when I tell them to sell their shares in company X. Even my local government will not heed my requests to divest themselves from certain companies I find unsavory. For some reason, I don't think it would really be too effective to seek out redress through the courts, since this is all legal.

So, as a "shareholder", how do you suggest that I object?

Re:It is your own fault

[Lawrence_Bird]

As you note, the "right" to vote can pass along, as in mutual funds. Even so, you can still complain to the fund manager that they should not be giving carte blanche to corp boards when they vote shares. Unfortunately they are the worst offenders as the gain - reduced compensation packages - may at best represent a basis point. Is it worth the trouble?

As to local unions, that is a bit harder. Your elected officials have control over the contributions and they can certainly put pressure on the unions to vote their shares with good governance in mind. Its more complicated of course as those unions will have farmed the money out to portfolio managers who may or may not assume the voting rights.

Yes, in a way its a big circle jerk which is why I made the point about throwing up your arms and conceding. Its the easy thing to do. Some of the larger unions, such as TIAA-CREF have actual policy statements on corporate governance and their responsibilities. Of course, saying it and doing it are different things.

The bottom line is people seem to think its "only the rich" who control these decisions. But the average citizens in aggregate have far more power if they can only find a way to use it.

Re:It is your own fault

[NoImNotNineVolt]

The bottom line is people seem to think its "only the rich" who control these decisions. But the average citizens in aggregate have far more power if they can only find a way to use it.

I mean, not really. I can complain to my elected officials to pressure the unions, but my elected official has no obligation to heed my words. Even if I were to convince all the constituents in the district to band together in complaining to our elected officials [unlikely], and said elected officials change their tune, then the unions have no obligation to heed our elected officials' words. And even if all the elected officials in the area are similarly convinced [unlikely], and said unions change their tune, then the fund managers still have no obligation to heed the unions' words.

Mutual fund shareholders have the legal right to vote on their funds' advisers and subadvisers, but apparently the SEC's indiscriminate granting of multi-manager fund voting exemptions to all comers has effectively repealed the right to approve fund advisers. No accountability, no transparency. Even if you "win the lottery" and your efforts get you all the way to the top of the pyramid, you're still powerless.

"It’s a big club and you ain't in it." - Saint Carlin

fuck beta

[Anonymous Coward]

cannot escape this story from beta

The crucial difference

[Anonymous Coward]

When tech companies crash, tax payers aren't expected to bail them out.

hmm

[Anonymous Coward]

both companies still have people that carry out the trash, clean the bathrooms, sweep the floors, change the lightbulbs... and they likely don't pay much different for those positions.

Ahh yes, the progressive tax crowd again.

[Virtucon]

Here we go again with the thinly veiled "They make too much" argument which masks the real intent, to re-introduce more progressive taxation on the wealthy. You see the theory goes that the rich should be taxed more to pay for all those social services and government programs since we all know bureaucrats are much better at distributing wealth than say companies with payrolls. If you start introducing say, 90% tax rates on the super rich, not only do you fatten up the coffers but you also make the unwashed masses happier because they're getting taxed less and create less disposable income for the rich, evening things out. We all want people to be the same, wear the same clothes and drive the same uninspiring cars. We know taxing them at 100% won't work and France's 75% millionaire tax is forcing companies to look elsewhere and the rich to move out of their country. Yeah, popular move. If a guy has a few million in the bank, he'll just move somewhere else. It happened in Maryland a few years ago too, so the rich move. What a bunch dumb shits in Maryland!

So, our Obama has been coming out more and more arguing that executive pay is out of line and to a point I agree. The problem is this retard and his cronies have spent us into a huge hole, can I point out his compensation is too much and he and Congress should not get paid until the economy rebounds? No? Shit, well I tried.

We all know Jamie Dimon is a scumbag and should have been fired for all the shit going on at Chase but since Directors aren't independent and are usually loyal to the CEO/Chairman they'll just hire some retarded bubble-head executive compensation consultant and then say "this is what you get." That means you creep upward because peers get a bump so you should get a bump. It's just like pro athletes. Who here thinks a pitcher is worth $15 million a year, or another player $20 million? They get that money because they have the same peer pressure on pay, shit a guy batting .200 can make a killing in a big market. That's why fans have to spend hundreds of dollars for a couple of seats a few beers and a few hot dogs in big markets. Is anybody yelling about that? No, nobody is.

Shit, nobody yelled recently when the f-wad who left American Airlines, Tom Horton, received a bonus of $20 million for taking his airline into bankruptcy, flushing his existing shareholder equity into the tank and merging it (at the point of a gun by his unions) with another airline and leaving. $20 million to take your company into the Shitter? The judge in the bankruptcy case said "whoa there" but afterward he got his parachute and left... come on.

So yes, there's not a lot of parity when it comes to executive pay vs. the front line staff, many of which make orders of magnitude less. Let's not forget all those benefits though, the "total" compensation in benefits, 401K etc... .... yeah bullshit. The problem is boards of directors need to be independent and compensation consultants need to be kicked to the curb. This also means shareholders need to be aggressive with their proxies and I think that all publicly held companies should have a vote amongst shareholders on approving compensation of anybody with a C in their title. That's right, before the money is spent, ask the shareholders to approve what's being proposed in terms of compensation. Sure, institutional investors will dictate that outcome but they'll be more likely to be conservative vs. boards who seem to spend it like drunken sailors on liberty. That way if the shareholders of Chase are given a Yes/No vote on Dimon's compensation they can truly say "Fuck no" then, maybe he'd get off his ass and actually do something instead of lose money and get fined for violations of law.

Re:Ahh yes, the progressive tax crowd again.

[NoImNotNineVolt]

Thinly veiled? No, people are openly and clearly calling for a return to the progressive taxation that made America what it is today (or, what it was until Reagan started us on this death march). The 80%-90% top marginal rates in the USA didn't drive out the rich in the past, so it's a bit idiotic to proclaim that they will in the future. Also, linking to the WSJ in this context is hilarious. Perhaps it didn't occur to you that they're a mouthpiece for the wealthy and unlikely to offer any impartial commentary on the issue. (I'm a subscriber, but only in a "know thy enemy" sense)

Your point about Obama is valid, to some extent. I agree that the salaries of the millionaires running the show ought to be suspended when the country's going broke. However, to claim that they get paid too much is absurd. They make a tiny fraction of what these CEOs make. If you're upset about Obama's salary, you should be orders of magnitude more upset about corporate executive salaries.

Despite not being a baseball fan, I very much am yelling about the great American pastime becoming something that the ordinary American just can't afford. It's fucking baseball, tickets are supposed to be virtually free.

I find the rest of your post relatively agreeable, but it doesn't make any points in the argument against progressive taxation. Yes, CEOs dodge taxes adeptly. Yes, there's a huge conflict of interest inherent in the way executive salaries are determined. Yes, there's shitloads of other problems. But that doesn't mean that progressive taxation is somehow bad.

There is such a thing as too rich. If Bill Gates had $72T instead of $72B, that would necessarily mean that you and I had no money. Trot out the "it's not a zero sum game" argument as much as you like, but there is a finite amount of wealth in this world (I said finite, not static/constant), and possession of it all by one individual necessarily means that nobody else has any. We're rapidly moving towards just such a scenario, where the poor have no money (but are kept warm and fed by social welfare programs) and the wealthy have it all. Is that what we collectively want?

Re:Ahh yes, the progressive tax crowd again.

[TheSync]

"The 80%-90% top marginal rates in the USA didn't drive out the rich in the past"

Yes, and after the Kennedy tax cuts reduced top marginal rate from 91% to 70%, income tax revenue increased in 1964 and 1965.

So if tax rates are cut, yet revenues went up, how could that be?

Perhaps there was a tremendous amount of tax avoidance by the rich?

Re:Ahh yes, the progressive tax crowd again.

[NoImNotNineVolt]

Perhaps it's possible that taxation serves other purposes besides revenue generation. Perhaps progressive taxation can also be used to prevent stratification of wealth. Perhaps a small decrease in revenues is a fair price to pay to have a society where wealth is equitably distributed. Perhaps the socioeconomic benefits of actually having a middle class are more important than gross federal tax receipts.

Your reasoning baffles me. Perhaps we should make murder legal, because then murderers wouldn't engage in prosecution avoidance. That criminals try to find ways around the law doesn't mean we should just abandon our legal system.

Re:Ahh yes, the progressive tax crowd again.

[Copid]

Probably two reasons. First, the effect you suggest: less tax avoidance. Second, holding all else equal, tax revenues go up every year becuase GDP grows every year. It takes a pretty substantial cut in rates to drop revenues below their previous year value. It's a lot more sensible to look at the trend line and see if you're below or above trend the following year. I wouldn't be surprised if the Kennedy cuts put us above trend, but I don't think that's something that we can generalize.

Re:Ahh yes, the progressive tax crowd again.

[TheSync]

US Federal income tax, $billion:

1960: 62.2
1961: 62.3
1962: 66.1
1963: 69.2
[tax cuts]
1964: 72.2
1965: 74.3
1966: 85.5

Re:Ahh yes, the progressive tax crowd again.

[TheSync]

Your reasoning baffles me.

My reasoning is that effectively there never was a 91% top tax rate. People who entered that tax bracket in the 50's and 60's largely hid their income from that bracket.

Thus it is silly to compare the 91% top tax law of 50 years ago with putting in a 91% top tax rate today. Today we have a tighter tax code with fewer loopholes and also massive computer power and enhanced federal ability to track bank accounts (thanks to the War on Drugs, among other things). Putting in a 91% top tax rate today would be very, very different than it was in the 1950's.

You might be happy that it would be far more effective in collection today, but I would be concerned that it would be far more damaging to the economy today as it would actually be a 91% tax rate, and not just a joke.

Re:Ahh yes, the progressive tax crowd again.

[NoImNotNineVolt]

We're missing the point by focusing on revenues. Sure, obviously taxes are a way to fund the government, and revenues are indeed important.

But tax policy is much more far-reaching than that. I'm not suggesting that bumping up the top marginal rate to 90% is a good idea because it will increase revenues and solve all of our federal budget problems. I am suggesting that turning up the top marginal rate to 90% (not just for income; capital gains tax ought to be progessive as well) will help to slow, stop, or reverse the stratification of wealth that we see today. I'm even going so far as to say that jacking the top marginal rate so high could actually decrease federal tax revenues (whether it's from tax avoidance or from rich people expatriating is irrelevant), but that that's a price worth paying to preserve the existence of the middle class and the socioeconomic mobility that it enables.

Re:Ahh yes, the progressive tax crowd again.

[roccomaglio]

You are conflating the rich with the high income earners. We only tax income. We do not tax assets. If you are rich you make money off the increase of your assets (companies, properties, etc.), but you do not have to pay taxes for their increase in value until you sell the assets. For example, Warren Buffett is only taxed on the money he is paid in salary and stocks he sells, but the great majority of his asset increase is the value of his company increasing. His total effect tax on is asset increase is basically zero. His income is also effectively zero when compared to his asset increase. If he wants to buy something, he can borrow money against his assets and pay no tax for this. He does not care if the income tax is a 100% because it would barely affect the amount of money he is earning. However, those of us that earn a salary will wind up paying even more in taxes. When people talk about the 1% they are talking about the people who have large salaries, not necessarily the rich that control most of the assets in this country. This is a very important distinction.

Re:Ahh yes, the progressive tax crowd again.

[NoImNotNineVolt]

Yes and no. I didn't suggest that a return to the progressive taxation of yore would be the silver bullet that eliminates all our economic woes. I understand that the tax code is designed to let the wealthy skate on by. I'm just saying that the fact that we have an income tax and not a wealth tax is no reason to throw up our hands in defeat. Taxing high earners is one way of limiting their ability to become disproportionately wealthy. It's not foolproof, but it's better than entirely abandoning the idea of taxing the rich, which is what we seem to have done over the last few decades.

That being said, I'm all for forcible redistribution of wealth. If we nationalized the wealth of just the ten richest Americans, it would amount to roughly $1000 for every man, woman, and child in this country. We could do this annually, as an economic stimulus. Not only would it kick-start an economy devoid of spending, but it would also provide some incentive for the wealthy to limit their fortunes to reasonable sizes [by spending] instead of vying for the top spots on the Forbes list.

All executives are

[MitchDev]

All executives are paid WAY too much.

Actually contributing something

[DaChesserCat]

Google actually provides something useful to society; I may not like advertising (which is where they make most of their their money) but, at least, there is SOME utility. And the profits from that subsidize their other activites, which are quite useful.

JPMorgan Chase makes their money skimming a percentage off financial transactions. And gambling (let's face it, that's what 'investing' in the modern stock market really is). And, all too often, rigging the gambling (high-frequency trading, anyone? Mortgage Backed Securities, which they sold KNOWING that the valuation was a flat-out lie?) What's the utility to society?

None. So we get kinda up-in-arms when we see people getting obscene amounts of scratch for such grifting.

The sooner a tech company can automate getting/paying loans (the one useful thing which JPMC does), the better. The sooner tech companies can create the kinds of financial networks which undercut Mastercard, Visa et al. with similar utility and lower rates (less "skim"), the better. At that point, the only thing keeping dinosaurs like JPMC in business will be regulations REQUIRING human interaction on certain transactions, put in place at the urging of JPMC-paid lobbyists (such regs already exist).

That said, not all tech companies provide utility. So being a tech company doesn't mean you're automatically off-the-hook.

It's obvious

[Anonymous Coward]

"Silicon Valley gets a pass on its own compensation excesses"

Mr. Schmidt: smarty pants with ties to academia. The same academia that built the Wall Street system (HFT).

Jamie Dimon: "used car salesmen", ties to crooks (if you want to call traders that)? The same salesmen that exploit the Wall Street System (Hedge Funds, etc...)

See the difference?

And in the end, BOTH are not right.

Pay Fairness

[hackus]

Pay fairness is observing laws, and playing by a set of rules which are equitable.

For example, when you could start your way up from the bottom of a company and over time, through your contributions and hardwork, you could get better pay.

Now, people are not given that chance because they are told, well, you have to pay $200K for a MBA if you want to be in management, and well, we don't care what your contributions are.

Secondly, the people who make these sorts of payouts are criminals and do not play by the same rules you or I have to. Take a look at the LIBOR scandal for example. Did anyone go to jail for stealing trillions of dollars?

No.

Did Bank of America executives after admitting they funded directly, Al Queda and Drug Cartel's for profit by laundering their money ON PURPOSE to subvert the public banking institutions of the Middle East or South America? Did they go to jail?

No.

Your president, your elected parties of Democrats, Republicans and their ilk, who signed away your future and your childrens rights of inheritance to insure they remain debt slaves by confiscation of all your property under Obama Care Act. Are they on trial for this criminal activity?

No.

Are any of these CEO's, who hide billions of their wealth in the Caymen islands, and are allowed to do so if they do as they are told by the banking elite, yet you or I cannot do such things, and are forced by the IRS into penalty clauses for associations with certain individuals the government considers enemies of the state.
Do these people go to jail for breaking the laws and not paying taxes?

No.

Are any of these people over paid?

Employed

[Quila]

I wonder how many people would be currently employed at Apple if not for a CEO named Steve. Would there even be any?

Re:Employed

[Hillgiant]

Steve... Steve.... The name rings a bell. Wasn't he the guy who earned one dollar a year? What a fantastic counter example you have found. Clearly more companies need to follow this philosophy.

Re:Employed

[Quila]

This salary was only token, and he took it because of his love for the company. However, his total compensation was in the billions.

Now take another CEO without such a personal attachment to his company, pulled on board, and pulls off what Steve did. What salary is he worth?

Personally though, I do think all CEOs should be paid a smaller base salary, the bulk of compensation being in direct proportion to the success of the company. However, calculation of that would be complex to account for decisions that could create high short-term profit (and thus high pay) at the expense of long-term health. For example, what Fiorina did to HP.

Re:Employed

[HiThere]

IIRC, he figured to get his income out of stock value. I think it worked.

Re:Employed

[Anonymous Coward]

You're assuming Steve would not have done the same thing anyway. Many of the best and brightest do things because the believe in something or because they enjoy it. If you're doing it for the money, GTFO.

Re:Employed

[shutdown -p now]

Congratulations, you have found one example of CEO that may have earned his pay. Do you think that is sufficient to prove your point?

Re:Employed

[alexander_686]

No. His salary was only $1 – which by the way has one of the highest tax rates. His compensation was in the 100s of millions, mostly via stock options which has one of the lowest tax rates. What I want to know is why I can’t be paid in low tax stock options?

Re:Employed

[PopeRatzo]

I wonder how many people would be currently employed at Apple if not for a CEO named Steve. Would there even be any?

So your proof of the value of CEOs is one of the guys who started Apple?

And if "Steve" is solely responsible for all those Apple employees, why do they still have jobs now that "Steve" is worm food?

If your argument is that someone who starts an incredibly successful business should be rewarded, that's not the same thing as saying that CEOs can't be replaced by someone making considerably less.

Re:Employed

[PopeRatzo]

Yeah, there is a difference between a guy who bets he can make a company successful and the guy who gets a multi-million dollar salary plus stock options to help him avoid paying taxes.

The first is a rarity. The second is business as usual in US corporations.

Today, the average CEO makes $9.7 million annually, up year after year, while worker salaries are on a steady decline.

Two separate economies. That is not sustainable.

Re:Employed

[Quila]

If you're doing it for the money, GTFO.

So, basically, most people should quit their jobs.

Re:Employed

[Anonymous Coward]

9.7 million = dishonest union talking point. That is the average for a CEO of an S&P 500 company. There are hundreds of thousands of CEOs in the US with a median pay less than $200K per BLS.

Please learn to think for yourself instead of parroting the latest BS from the dailykos.

Re:Employed

[PingPongBoy]

No. His salary was only $1 – which by the way has one of the highest tax rates. His compensation was in the 100s of millions, mostly via stock options which has one of the lowest tax rates. What I want to know is why I can’t be paid in low tax stock options?

You don't want to be paid in stock options anyways. The stock isn't something you can liquidate until it appreciates. If you get paid in stock, the company will see all this stock being sold at high volumes in the market so you can pay for your living expenses. The high volumes of stock will probably make people nervous about paying you high amounts per share, and your bosses wouldn't like the share price to be stuck at a low.

So if you actually believe in your employer, buy the stock with your pay. That's not always a good idea either. People should diversify their acquisitions instead of keeping all their wealth in one area. If you are just one minion in a huge company, and you're already leery because you think your CEO is overpaid, why would you trust him enough to boost his stock value by buying more of the company? Most people would invest their hard earned money in a different sector.

Re:Employed

[alexander_686]

As for investing in the company’s stock, my main point is that Job’s tax rate was much lower because he was paid in equity - it does not matter much if it is stock or stock options. Did Jobs expose himself to diversification risk (or more specifically as you mentioned – the lack of.)? Some - but there are ways to minimize that. I think it is unfair that the rich can use techniques like this to have a lower marginal tax rate then ordinary working employees.

Some technical points. You don’t actually have to wait for the stock to appreciate. There are other techniques that can be used. In Jobs case specifically, the board retroactively lowered the strike price of his options when Apple’s shares fell. . Also, when a CEO sells a couple of million of stock it usually has no effect on the market. Relatively speaking it is small change relative to the volume and a modest disposal of assets rarely spooks investors. Once again, case in point, look at Apple’s stock when Jobs sold his stock. Not much.

Re:Employed

[PopeRatzo]

There are hundreds of thousands of CEOs in the US with a median pay less than $200K per BLS.

If you include every single corporation in the United States, including my little mom and pop home business, the average still comes out to more than three quarters of a million dollars.

Re:Employed

[Simon Brooke]

What part of 'also did not take any alternative form of compensation (stock options, bonus, etc.) since 2003' do you not understand?

Steve Jobs reckoned he was rich enough. He was working for fun, not for money. Most good engineers are not especially money motivated. We like making things, and he did that. Well.

Re:Employed

[stenvar]

You're misrepresenting the numbers (as is ThinkProgress, where you probably got the number). The $9.7m is total compensation for CEOs of large public companies. That's not "the average CEO". nor "the average CEO salary" (TP), and it isn't just salary.

As for what people get paid for, CEOs of failing companies often get paid more because (1) it's a crappy job, and (2) it's a big stain on their resume. If you don't pay people a lot of money for that job, you aren't going to get anybody.

Re:layoffs

[tonytally]

We have to be careful when we talk about layoffs. When there are take-overs, the company that buys out another one will often look carefully to find those "at the top" who direct what is going on and make plans; and those "at the bottom," who actually do something. Then they look at those " in the middle" to try to figure out what value they add to the bottom line. The conclusion is, often, that the number of those in the middle seems to grow over time without adding very much. In fact they may be found to add negative value. If they are laid off, the company takes off and becomes profitable once again. (This is well documented) So the people in the middle are not bad people, or not doing their job well; the issue is that they are simply not essential to the main purpose of the company. Which can be a good warning to those in the middle.

yes

[Tom]

The one time where the answer to a headline question isn't an automatic "no".

Yes.

Everyone who is paid more than 1000 times what a regular employee in the same company (and same country - to account for cost-of-living differences) makes is earning too much.

I'm an expert in my field, so I feel comfortable charging 10 times what a newbie could. If I had a big name, 20 times may be appropriate. If I'd be in demand and people would fall over themselves to hire me, maybe 50 or 100 times.

But 1000 times? That's just ridiculous. I don't think there' a sane argument for that, no matter how you skin the cat. The only reason CEOs, bankers, etc. take that much home is because they can. The primary argument why large companies pay their CEOs ridiculous amounts of money is that everyone else does it, too. It's a runaway positive feedback loop.

No one should be making that kind of money

[Anonymous Coward]

No one should be making that kind of money. Once you go over 100 times average worker compensation you have to serioulsy ask yourself why. Excessive Executive compensation is a ripoff of the stockholders, the consumers and the workers. The only reason it happens if that the CEO controls the Board of Directors and therefore controls his compensation.

Woody Guthrie

[NoImNotNineVolt]

As through this world you travel, you'll meet some funny men;
Some will rob you with a six-gun, and some with a fountain pen.

Dimon's a piker

[tsqr]

Jamie Dimon was paid $20 million? Larry Ellison got over $96 mil in 2012, followed closely(?) by Elon Musk at over $78 mil. Hell, even Richard W. Dreiling, CEO of Dollar General Corp (that's right, The Dollar Store chain) was paid over $23 million in 2012. Check out the AFL-CIO's list of the 100 highest paid CEOs in the US -- the lowest guy on that totem pole took in almost $19 million. Lots of those people have nothing to do with banking or tech. Fashion, entertainment, retail clothing, even coffee shop chains are all represented.

12:1 Law Anyone

[Anonymous Coward]

A while back a European country, I believe Sweden, tried to pass a 12:1 law that said the highest paid person in a company can not make more than 12 times what the lowest paid person. After all the excess we've seen in the US, especially in the banking sector which is arguably a giant pyramid scheme which generates more debt than money to pay it back, this may be a best solution at solving this problem.

CEO's pay

[Anonymous Coward]

CEO = License To Steal

Meh

[Nefarious Wheel]

It isn't up to me to decide how much salary they want to vote themselves out of the company's coffers. They're managing their company, it's theirs to manage.

But if you're making $100 Big per year in salary or other considerations, you should bloody well be taxed at 90%. Worked for Eisenhower.

Re:Meh

[cayenne8]

But if you're making $100 Big per year in salary or other considerations, you should bloody well be taxed at 90%.

Why?

What do they owe that much money for? What incentive is there to work to succeed if the govt is to take it all from you?

This type of thing led to a lot of tax exiles from the UK back in the day, hence the Stones Exile on Main Street sessions in France when they had to leave London or basically give up everything they'd earned.

Re:Meh

[tburkhol]

What incentive is there to work to succeed if the govt is to take it all from you?

If the only reason you work is for your salary, then you are a wage slave and will never join the C-level. Those people you work for, they put in their hours because they want to win, and most of them aren't keeping score in dollars. Or not just in dollars. They're keeping score in how many people use "their" brand of computer or how many hotels they control. BoDs use compensation to try to make those rare people adopt the board's brand, but the compensation is not why CEOs are CEOs.

simple...

[Mr_Nitro]

CEO: (10 (or less) *z)*x , worker : z*x, where x is the company positive growth index percentage yearly, and z is the lowest paid worker in the place. Company goes well , everyone gains, and ceo and managers are not gods.

Tech is all messed up

[asmkm22]

The tech industry is all kinds of messed up when it comes to pay and compensation, especially at the higher levels. It's hard for me to feel bad about using something like adblock when the people behind serving those ads are raking in more money than they could ever possibly need.

Teachers make more than architects

[Anonymous Coward]

You are aware that on an hourly basis teachers make more than architects, right? Their take home is low, but the money stuffed aside for their pension is quite large. Yes, I get they have to grade papers at night. I have to do 2 hours of email a night. And I'm on the road 70 nights a year.

But please, let's stop pretending they are poorly paid.

PS. when a teacher retires, they have a pension worth about $1.5M (that's the pile required to pay out 50% salary for 35 years and awesome health care plan). Many of them can retire at 55 or 60. Not too bad at all.

perhaps

[shiruba3094]

Because technology companies and backs are different.

Way to drink the Kool-aid.

[danaris]

You stated that like a minimum wage is good for the poor.

It is not.

Riiight, because it's great for the poor to be unable to find a job that makes more than $2/hour!

And it's really the super-wealthy who benefit when the people who work at the shops not they, but their maids and housekeepers get food and clothing at, start making enough that they can actually feed their families without government assistance

Dan Aris

Re:Way to drink the Kool-aid.

[Dishevel]

When you price people that are only worth $8/hr out of the market they do not suddenly just make more money. They loose their job to someone capable of working at $12 or $15/hr. Set the minimum wage to $30/hr. See what happens to the people who work at McDonalds. Most of them will be out of work.

I understand that you mean well and want people to be happy, but we have to think clearly before we put restrictions on a market based on what would make me feel like a better human being.

Re:Way to drink the Kool-aid.

[danaris]

When you price people that are only worth $8/hr out of the market they do not suddenly just make more money. They loose their job to someone capable of working at $12 or $15/hr. Set the minimum wage to $30/hr. See what happens to the people who work at McDonalds. Most of them will be out of work.

I understand that you mean well and want people to be happy, but we have to think clearly before we put restrictions on a market based on what would make me feel like a better human being.

Yeah, except that no one I've ever heard is advocating setting the minimum wage to $30/hr. The proposal floated by the president says $10.10/hr. The most radical ones I've heard—the ones that would try to make the minimum wage a living wage, and in line, proportionally, with what the minimum wage was during the country's best times—say to push it up to around $18/hr.

And...I'm really not sure what you mean by "people capable of working at $12 or $15/hr". Do you really think that if the minimum wage was raised to a level that would allow anyone working full-time making it to actually feed, house, and clothe themselves, that suddenly the requirements of every minimum wage job would change to require a significantly higher level of service? That McDonald's and WalMart would suddenly start requiring their cashiers to also be their accountants?

I've heard a lot of arguments against the minimum wage, but this one is one of the more baffling to me, I must admit. It's possible that that's just because I don't quite understand what you're trying to say.

Dan Aris

Re:Way to drink the Kool-aid.

[Dishevel]

The problem here is that you think that every job should be able to support a family. It should not. If all jobs need to put out a living wage where will young people get there first jobs? How will they learn? You are pricing students and first job people out of the market. Every study done on past minimum wage raises will show you the number of jobs it costs. $30/hr costs way more jobs than $10. This is true. But you have McDonalds workers trying to get $15. Hotel staff in LA.

These things cost jobs. Every time. When I grew up it was easy to get a crappy job. They paid little and could afford to hire a person that knew nothing and had not developed any kind of work ethic yet. These were jobs where I learned to work. I got better jobs that paid more over time. I grew out of jobs. We now expect that my first job be able to support me and a wife and a kid. That is beyond stupid to think it will not have negative repercussions on the job market.

You can not think inside a vacuum. You must think like a person that owns a business and what their reactions will be. They will react and it will cost poor people jobs.

We will fix this though. You just increase benefits so that children can continue to be supported by their parents for longer. Allow more welfare and longer unemployment benefits. You raise taxes to pay for it. Most on the rich who cut jobs to make up for it and the rest on those lucky enough to still have jobs. Though because of higher taxes and higher prices the living wage will have to go up again because you will not be able to raise a family on $15/hr.

Of course you think that is just silly. Raising the minimum wage will not cost anyone their job. Prices will not go up. It will not be harder to find a first job. So these things will not increase the need for government help. None of these things will happen because....

Giving poor people more money is good and therefore no bad can come of it.

I am just an uncaring conservative Nazi that wants the rich to get richer and the poor to get poorer. Because that is easy to say and sounds really good.

Re:Way to drink the Kool-aid.

[danaris]

The problem here is that you think that every job should be able to support a family. It should not. If all jobs need to put out a living wage where will young people get there first jobs? How will they learn?

They will learnon minimum wage jobs. At $15/hr. What's wrong with that? Do you think there's some kind of deep injustice being committed when teenagers can make $15/hr? Now, most likely, they won't be working full-time—after all, teenagers have school to go to. So they won't be making as much overall as the 50-year-old working the same job because the company he worked at for 20 years laid him off, so that they could pay their CxOs more.

You are pricing students and first job people out of the market.

But this still doesn't make much sense. If the cheapest you can possibly hire someone is $15/hr, how can anyone be priced out of that? If you need a worker, you will hire one at that wage, whether they're a teenager or not.

Every study done on past minimum wage raises will show you the number of jobs it costs.

Yeah, and it's not nearly as many as the jobs it creates.

Any change—any shock to the system—will cause some short-term pain. Raising the minimum wage could very well cause a fair number of job losses at minimum-wage employers over the first few months after it goes into effect.

But do you know what the best, most clearly proven way to stimulate the economy—and thus create jobs—is? Put more purchasing power in the hands of the poorest.

They will spend that extra ~$300/week immediately, on basic necessities. That money will push up the local economy, and make it that much easier for other business owners in their area to hire another minimum-wage worker. This is basic economics.

The rest of your post sounds, to me, basically like, "Things have always been this way, so I don't see why they should ever be any other way" and "It doesn't matter if people are made poorer, teh evul liberals will give them all my hard-earned money so they can loaf around doing nothing." (To be fair, it sounds like you're exaggerating the latter for effect as much as I am.) SoI'm not even going to bother to respond to it.

I don't think you actually want to make the rich richer and the poor poorer. I just think that, as the title suggests, you've drunk the Kool-aid, and have come to believe the lie that increasing the minimum wage will make the poor worse off. And it is a lie; a despicable one that has been sold to the American people in order to prevent anyone from actually improving the lot of the poor. Because that would mean that the super-rich would not be able to take quite as large a slice of the pie as they can now.

The really, really stupid part is that for a significant percentage of the rich, there's a high probability that they would actually make more money if the poor were doing better. They might have a smaller piece of the pie, but the pie would be enough bigger that it wouldn't matter.

Dan Aris

Re:Way to drink the Kool-aid.

[Dishevel]

You really believe that the rich successful people are too stupid to understand what will and what will not make them money. Good luck with that thought process.

Re:Way to drink the Kool-aid.

[Anonymous Coward]

You really believe that the rich successful people are too stupid to understand what will and what will not make them money.

I think he believes in what America was founded upon, the belief that anybody, regardless of your background or current circumstances, can become rich and successful, that nobody is inherently better than any other.

Though I agree with you comrade. It is a silly thing these Americans believe in. Men are not all created equal. Both equality of opportunity and equality of outcome are naive liberal fantasies. The rich are superior beings than the rest of us rabble. That's why they're rich and we aren't! Your best bet in life is to suck up to the rich and hope they make you their lapdog

Re:Way to drink the Kool-aid.

[danaris]

You really believe that the rich successful people are too stupid to understand what will and what will not make them money. Good luck with that thought process.

I believe that a significant majority of the rich in this country are heavily focused on short-term gains. Often at the expense of potentially much greater long-term gains. That's been a huge part of the problem in the economy for years now.

Dan Aris

Re:Way to drink the Kool-aid.

[Dishevel]

Because the rich are mostly the people who look short term. The poor in this country are looking to the long term and have a better handle on that. Right?

You can not see the fallacy there can you.

Re:Way to drink the Kool-aid.

[danaris]

Because the rich are mostly the people who look short term. The poor in this country are looking to the long term and have a better handle on that. Right?

You can not see the fallacy there can you.

The outlook of the poor in this case is irrelevant. They have no power to actually change things. The rich do. It is the policies of the rich that are being implemented, which results in the poor suffering.

So...no, I don't see the fallacy, because none exists. You're reading things into my post that simply aren't there.

Dan Aris

Re:Way to drink the Kool-aid.

[Dishevel]

I believe that a significant majority of the rich in this country are heavily focused on short-term gains. Often at the expense of potentially much greater long-term gains.

I believe that you are wrong here. This is exactly what I "Read Into" your post.

It seems that in your worldview that the rich are focused short term. It is exactly the ability to put aside short term thinking (I want a new TV, PS4, To eat out 3 times a week, stay in my safe job.) that prevents one from getting rich and doing well. Long term thinking is what makes a majority of those who were not born rich, rich.

They work hard and give up short term benefits to build a business that creates long term wealth for them. They risk and work very long hours. They fail and do it again. These are not stupid people taking the easy way out.

Of course your TV shows and movies and "News Programs" will all tell you that the rich are stupid and lazy and are working against the growth of the economy that they benefit from because of their "Short Sighted" thinking. That if we could just restrict them more and raised taxes more and used that money to even out the disparity that the poor will change the way they do things and become successful.

Opportunity and people who can see it and are willing to work hard and risk greatly to take advantage of it is what creates wealth. Government programs stifle that and move the money created around.

Re:Way to drink the Kool-aid.

[Tom]

When you price people that are only worth $8/hr out of the market they do not suddenly just make more money.

You assume that someone who can make $12 at a different job would go burger flipping instead. That is unlikely to happen.

but we have to think clearly before we put restrictions on a market based on what would make me feel like a better human being.

We also have to stop believing the free market is magical and will solve poverty, world hunger, cure cancer and make the girl next door fall in love with us. There are things a free market is great at solving, and there are things it sucks at. Like any tool, apply it to what it's capable of doing.

It sucks at creating a society, because companies can go bust, but we in general are not ok with letting human beings go bust like that.

Re:Way to drink the Kool-aid.

[Tom]

If all jobs need to put out a living wage where will young people get there first jobs?

Uh, that's a non-sequitor. There was a time in this world when the first job could feed a family. Not brilliantly, probably not a home and a car, but you could make do.

And that was not 1357. When my father finished school, potential employers were standing in line in front of the school building to make offers to him and his friends. That was a regular school in a working class district, and it was common all over Germany at that time. They paid quite well, too, because if they didn't, people would go work to those who would. In those days, the market worked to the advantage of the employees, because demand was higher than supply. We don't live in that world anymore, granted. I'm not saying this is how it absolutely has to be, but your argument that it cannot be like this is obviously false because history proves you wrong.

Every study done on past minimum wage raises will show you the number of jobs it costs.

Funny. I live in a country (Germany) which is currently discussing introducing minimum wage since we don't have it at this time. So the topic is hot and lots of material is being published. All the studies I've read about from other european countries show that everywhere lobbyists argued with job loss, and nowhere did any significant job loss manifest. So please show me the sources that prove them all wrong.

You must think like a person that owns a business and what their reactions will be

I own a small business. Here's how I think: The only person I would hire for 10 bucks an hour is someone to mop the floor or clean the windows. Anything that requires any skill whatsoever is worth the money, and the savings you have in hiring someone for $10 instead of $12 are not worth it (that's about $300 a month - if that amount of money breaks me, I'd better file for bancruptcy).

Sure, if we're talking about hiring 100 people, then it adds up, and I could hire 100 for $12 or 120 for $10. However, I could also hire 80 for $15 and they'll probably be more productive, efficient and motivated and get the work of the 100 done.

Cost by itself is never the only factor you consider in a business decision unless you're a complete imbecile or you're answering Business Economics 101 quiz questions.

Giving poor people more money is good and therefore no bad can come of it.

Of course that's nonsense. However, real-world experience shows that if you have money to give away, one extreme works better than the other. Giving it to the rich does not benefit anyone but them in any appreciable way. The "trickle down effect" has been demonstrated to be so tiny that it's practically non-existent. Money given to the poor, however, will almost completely be spent on consumption, meaning it is cycled back into the economy almost instantly, and most of it into small, local business, i.e. other people that need money, too. "trickle up" is very real.

Nothing is perfect. The poor will probably not spend the money in the way that some armchair economist has determined would be optimal, but at least they will spend it.

Re:Way to drink the Kool-aid.

[Tom]

You really believe that the rich successful people are too stupid to understand what will and what will not make them money. Good luck with that thought process.

I think your mistake lies in one important word in that sentence. Here, I'll highlight it:

You really believe that the rich successful people are too stupid to understand what will and what will not make them money. Good luck with that thought process.

The rich understand to make themselves money. That doesn't mean anyone else or society as a whole profits from them doing so. On the contrary, the money they make is often taken from the rest of us (say, through monopoly rent, tax breaks or the recent financial "crisis").

If you want to improve society as a whole, the rich and their methods are not models to follow, because many of them are unsustainable on a larger scale.

Re:Way to drink the Kool-aid.

[Tom]

Long term thinking is what makes a majority of those who were not born rich, rich.

Even though I agree with you on the basic, this conclusion is wrong. Many people who share all of the traits you list never get rich. People who think long-term, who work hard and long, who take risks.

The reason is that they are focussed on different things than getting rich. Be it social change, creative or artistic endeavours, personal relationships, scientific curiosity - there are many, many ways to spend your time that society does not reward as well as, say, gambling on random fluctuations of artificial derivates of abstract financial key figure accumulators.

It is also a massive lie that the successful are because they failed and tried again and again. That makes for a good story, but it's wrong. It's a function of selection bias. You never hear of those who fail again and again. You hear about one guy who worked his ass off and got out of the ghetto with his 3rd company - but you don't hear about the 500 other guys who also worked their asses off and did everything else that the one guy did except that they missed the one opportunity or didn't get that one deal, or didn't have that right partner or whatever and they never made it and so nobody ever wrote a news story about them.

Opportunity and people who can see it and are willing to work hard and risk greatly to take advantage of it is what creates wealth. Government programs stifle that and move the money created around.

That is utter and total hogwash, sorry. It's the usual "government equals bad and evil" conspiracy theory.

Heck, the very Internet we're using to have this discussion wouldn't exist without the evil government stifling all the invisible commercial projects and moving some money around into military research.

Again, the free market is good for some things and horrible at others. Google "natural monopolies" for an example you usually learn in Economics 101. There are areas where public (government owned and operated) companies are more efficient than private companies, even on paper.

I can tell you why

[WillAffleckUW]

Look, I've been investing since I was 16. I've participated in IPOs, been on boards, invested in startups, and voted on shareholder items and attended many board and annual meetings.

I can tell you what the problem is.

The CEO and senior execs fill the boards with their friends. Their friends and board members are rich jerks who think they should get paid more.

That's the problem.

Other countries permit shareOWNERs to vote on executive pay and compensation and directly vote on individual board members, and don't allow execs to vote for themselves using their shares, their unvested shares, and the shares their extended families own or control.

As a result, execs in the EU and Japan get paid reasonable amounts.

Execs in the US have none of those restrictions, so they all vote to give their friends more money and the shareOWNER vote on pay isn't even BINDING as it is in other countries.

There's the problem.

Are government workers? Politicians?

[hsthompson69]

Honestly, the emotion of envy is easy to foster - but at least banks and technology companies can go out of business. Unaccountable government bureaucrats and politicians who enjoy a 90+% incumbency advantage are like leeches that add no value at all.

And yes, of course there are corporate welfare companies like Solyndra and GM that count more as government than corporation.

CEO Pay - look at actual data

[TheSync]

1) "The ratio of large-company CEO pay to firm market value is roughly similar to its level in the late-1970s and lower than its pre-1960s levels"

2) "Realized compensation was highly related to firm stock performance. In every size group, firms with CEOs in the top quintile of realized pay were in the top performing quintile; firms with CEOs in the bottom quintile of realized pay were in the worst performing quintile."

3) "CEO turnover levels have increased since the late 1990s, so CEOs can expect to be CEOs for less time than in the past. CEO turnover also has become increasingly related to poor firm stock performance"

4) "Consistent with that, top executive pay policies at over 98% of S&P 500 and Russell 3000 companies received majority shareholder support in the Dodd-Frank mandated Say-On-Pay votes in 2011."

Executive Compensation and Corporate Governance in the U.S.: Perceptions, Facts and Challenges

Your rock is now mine

[Anonymous Coward]

I'll hit you over the head with my rock and take yours. Idiot. Meritocracy is the only way fairness can be achieved, It is fair when people are rewarded for the capabilities. It is fair when someone with more competency and capability earns more than someone with less. It is not fair when some idiot with no drive or desire whines about wanting more money for slapping burgers together. Don't like it, change your position by educating yourself, marketing yourself, and getting a decent job. Got a degree 17th century literature? Idiot, you deserve to work as a fry cook.

mind your own business

[samantha]

It is not your business what a company chooses to pay anyone in the company. Not remotely. You are not the salary decision maker so go waste your time some other way.

CEO Pay - why does your opinion matter?

[mwasham]

Unless the organization is funded by taxpayers or you own stock in the company you should mind your own business.

never read a more inaccurate comment

[Anonymous Coward]

Big corporations often lay off employees by the dozens, hundreds, or thousands to save money. They consider it too expensive to keep a handful of people, who might have been top employees but were working on a now-scrapped project. And it takes a lot more than a handful of people to make up some of these CEO's salaries. Wonder what good they could do if they paid a lot less to the CEO and kept on more people that could produce.

Banks shouldn't even have that much money

[intermelt]

Banks should't even have that money. They are fucking us all over. If an institution that has no products or costly services how do they end up with so much money to give to their upper management? Nowadays a national bank could be ran by a few people in a garage. The problem is they are ripping people off. They prey on the lower middle class just like payday loans and high interest credit cards. How does a bank explain that it costs $36 each time I overdraft a bank account. A $1 overdraft can occur and then maybe a few more in the same day. Before you know it you are charged $100's to cover only a few dollars. In the digital world the bank probably never even covered these expenses they are charging you for. Just updating numbers in a database. This should be regulated and eliminated. Not to mention that it should just not happen, the technology is readily available to keep someone from over-drafting, but it seems the banks don't want that. The banks re-order your transactions and make you pay. Again this is all targeting the middle class. The lower class can't even get bank accounts and the upper class just gives the bank monies that can be invested. This isn't beneficial to the upper class as they could just invest the money themselves and make a much greater percentage on their money.

So the bigger question is why do we keep giving the banks our money? They are plenty of alternatives that work and do not cause inconveniences. The lower class tends to use those more than anyone else. We should all be using them! Especially the middle class people. The upperclass should also just skip banks all together. Most investment companies provide checks or debit cards that work with their accounts. Why are we still using the middleman we call banks? Why are we letting them take our money and give it to their incompetent leaders? They provide us with nothing!

No

[tsotha]

You get paid what someone else is willing to pay, no matter what your position is - unless your argument is the process by which the board settles on an offer is somehow corrupt, the CEOs of banks and tech companies get paid exactly the right amount.

No more than entertainers or athletes

[RogueWarrior65]

Professional athletes get paid millions and they don't have to win every game. Actors get paid millions for crappy movies. Musicians get paid millions for churning out lousy music. What's worse is that actors and musicians get paid every time something they worked on get seen or heard even annoying commercials. Asshat directors such as Ang Lee bask in the money and fame while thinking VFX artists are getting paid too much. Lawyers, particularly trial lawyers such as the law ofices of James Suck-a-glove, get paid millions in class action judgements while the class members get coupons for discounts towards purchase of useless product accessories.

My point? If you're going to brow beat one group of people you think are being douchebags while giving another group of equally douchey people a pass, you're being small, petty, very jealous, and inconsistent in your thinking.

Re:No more than entertainers or athletes

[Copid]

Pro atheletes and entertainers aren't paid to make "good" products or to win. They're paid to get viewers. If they do, they're worth the money, regardless of whether the movie was objectively "good" or the game was won. CEOs get paid to run companies well. If a healthy company tanks, by definition, they have failed at their job somewhere along the line unless something really bizarre happened. Top executives are just about the only people who get paid well regardless of their actual measurable value. That's the difference.

The real solution

[hawk]

Executive options were actually a reform, to align the interests of executives with those of stockholders. They worked in one direction (up), but not the other--once the options were "under water", the executives had no reason *not* to "swing for the bleachers", risking whole company.

The solution is to align in *both* directions, so that the executives lose when the company loses, not just wins when winning.

This could be accommodated with a couple of changes in the tax code. Require a large part (majority) of high compensation to be in the form of stock: if your pay for the month is $100k, you get $60k of that as stock at current market prices. We need a (politically unpopular) tweak: this would currently create taxes on $60k. Instead, give the stock at a 0 basis, so there is no tax now, but the entire amount is taxed when sold--and require that the shares be held for a minimum number of years.

At this point, when the shares go down, so do the executives' worths. with options, stock going down merely increases the incentive for risky behavior seeking high gains.

But what do I know--I just have a Ph.D. in economics.

(doc)hawk

Factors in pay

[Anonymous Coward]

In a fair system (heh, right), I've always expected pay to be determined by these factors:

- Experience
- (Personal) investment (time, social life, being on-call, the measure in which the job intrudes upon your personal life)
- Ability
- Responsibility
- The amount of value increases you bring around.

But that's always a pipe dream. Any good is worth what people are willing to pay for it.

Who needs to replace the CEO?

[Anonymous Coward]

You can manage YEARS easily without a CEO.

And you can replace the CEO just as quick as you can replace your worker. But replace ALL your frontline workers and compare the work needed to replace the entire C*O board. Keep in mind how long you can survive without them there whilst looking to fill all those posts.

Jobs didn't invent the iPhone et al.

[Anonymous Coward]

He hired designers and engineers who did the inventing.

Who cares?

[Anonymous Coward]

Freedom means the freedom for private companies to pay stupid amounts of money to their employees. Tax their income and forget about it.

No.

[Anonymous Coward]

It's a deal, the burger flipper agreed, the CEO agreed, don't get mad because they make better deals than you do. Learn to make the better deals and but out of their business. Even if the deals they make are ethically wrong, it makes it legally correct to do as they do, that's why they can pay min wage or less, and take the higher profits for themselves, it's the deals they made to get to the position they're in and the power they hold. and likely none of those people who make the kind of money we're talking about, post on here, i believe these comments are pretty biased, it's hilarious.

It's a non-zero-sum game

[jjo]

Do you honestly believe that the economy is a zero-sum game? If I'm a goldsmith and I decide to make a couple more earrings this week, and I thereby increase my income, am I stealing that income from someone else? Have I not created a non-zero-sum game? With billions of people contributing greater or lesser amounts to the world economy every hour of every day, anyone who considers it to be zero-sum has a warped sense of reality.

Re:It's a non-zero-sum game

[Anonymous Coward]

Are you really that dense?
We use MONEY to transfer wealth in the world today. In the US that money is called the DOLLAR.
The FED has only printed so many DOLLARS. It is a FIXED AMOUNT subject to slow increase as the fed prints enough for managed inflation.

Since the total amount of money in the system is FIXED, for some class of people to take a larger and larger percentage of that fixed amount of money for themselves they literally have to take it away from the rest. They remove it from the system itself.
That defines 'zero sum game'.

The fact is that while our economy is growing, the only people who have been taking additional income is the top 1%. This has been going on for about 20 + years. This completely distorts the marketplace and we end up where we are today. People out of work (unused labor) who WANT TO WORK. Consumers (people who DO have jobs) who want to consume more but can't (falling wages in real terms).. And an entitled class that spends their time pitting us against each other and making dumb comments like 'I know my company went under but I EARNED my bonus'. Or, 'If people don't like how much they get payed at wall mart they should work hard and move up.'.. Yea' move up until they make a time machine and launch themselves into a Walton uterus and get born into the entitled family that outsourced America.

Company creators vs company caretakers

[Shirley Marquez]

The headline is comparing apples and oranges. There are some essential differences.

Most of the tech company people who are making really huge sums of money are business creators; the people who started companies like Microsoft, Apple, Google, Oracle, and so forth. The people making big bucks in financial services are caretakers of already-existing businesses; none of the really big financial services companies was created in the past 50 years.

Second, tech companies create things. Banks manage other people's money and make profits from that.

Third, many of those financial service companies wouldn't exist right now if the US government3 hadn't bailed them out a few years ago.

We can argue that tech CEOs who did not start businesses - people like Marissa Mayer or Satya Nadella - shouldn't be as well paid as they are. But that's really the same question as whether non-founding CEOs of any company are paid too much. I believe that they are, but that wasn't the question asked here.

As for the bank bailout, I think the US government should have imposed harsher restrictions on the banks that took the money. I would have made restrictions on executive compensation a permanent condition of taking the money rather than one that only applied until they paid back the money. It's possible that some of the banks would have chosen to dissolve rather than accept that constraint; if so, good riddance.

Intel so no minimum VPs bonuses

[Anonymous Coward]

I like this move by Intel, but it's not really enough

It depends on the bank.

[GeePee2000]

A well run profitable bank should pay the CEO well. If a bank is fixing the LIBOR rate or knowingly selling inappropriate products to the customer or destroying SMEs in order to asset strip them or randomly adding charges then continuing to pay them vast amounts after these events come to light sends out the wrong signal. You just need to look at the Bob Diamond case at Barclays to see how twisted the system is. On the other hand the tech sector is actually making things. Real wealth creation. Real progress. Real innovation.

What's the product?

[tbg58]

At least Technology companies actually produce things that actually improve human thriving. What do bankers produce?

Its the wrong question

[Bob_Who]

More importantly, what are the INCENTIVES for higher pay. If we pay people for bad results, then that is what we will receive in abundance.

Perverse incentives lead to massive inequalities and social injustices. Its really that simple.

Contributions...

[solidraven]

What has the financial industry REALLY contributed to the planet? Other than a whole bunch of misery due to an artificial broken system.

Re:Fair v. Equitable: Who cares?

[sjames]

I don't mean to get all Ayn Randy here, but really, what does limiting someone else's income do to improve your life?

Perhaps we should ask the CEOs who insist on paying minimum wage, outsourcing, and lobbying to keep the minimum wage from being increased.

Why can't we just run a company like a republic?

[Anonymous Coward]

American's talk so much about "democracy" and voting but we can't actually vote on anything that matters to our lives. We should be electing the "managers" in the companies we work at. Just because someone needs to organize the activities of the group doesn't mean they're better or deserve more compensation. It's just a different job role.

Everyone employee should be granted a minimum ownership stake in companies they work at, kind of like the minimum wage.

A Quote from an Officer at a Corporation

[kajong0007]

I know a guy who recently became an "officer" of a large corporation. He's a lawyer who's climbed his way up the corporate ladder, and his most recent promotion has added him to the group of officers (150 officers out of the 250k employees)

When I asked him what an officer was, he said, "It's a person who gets paid more than they're worth."

This man is a bit of a remorseful capitalist.

Contradiction

[GPS Pilot]

The reason CEOs get paid so much is not because the free market prices them so high. It's because they are on each others' Board of Directors and they all figured out they could overcharge their companies and share the spoils amongst themselves.

This paragraph of yours contains two contradictory ideas. The second sentence implies collusion to fix prices. Where collusion is taking place, there is not a free market. And where there is a free market, collusion does not take place.

Re:Contradiction

[Anonymous Coward]

And where there is a free market, collusion does not take place.

LOL

Meanwhile, I have this bridge I'd love to sell you.

!Subsidized

[GPS Pilot]

he's taking money from each and every taxpayer by having the government subsidize his employees.

Please don't make up your own definition of "subsidy." A subsidy is a payment that allows an unprofitable enterprise to continue operating. Very few companies receive subsidies. Amtrak is one of the rare compaines that does. Amtrak has never paid taxes, because it has never had any profits on which taxes could be assessed. McDonalds has certainly not received subsidies. If a government chooses to create an entitlement program that benefits the low-income employees of company X, it doesn't mean that company X has been subsidized.

Now, those entitlements create a marginally higher standard of living for the employees of company X, which makes them marginally less likely to go on strike or otherwise demand higher wages. That makes for a valid argument against entitlement programs: they shield employers from some of the blowback that goes with paying low wages. Still, companies that make a net positive contribution to the Treasury in no way meet the definition of "subsidized."

I've heard some people make the false claim -- mostly regarding oil companies -- that "a tax reduction is the same thing as a subsidy." No, it's not. To be consistent, these people would also have to claim that "a subsidy reduction is the same thing as a tax."

Amtrak experienced a subsidy reduction a few years ago (it got $1,555 million in FY2010, and $1,475 million in FY2011). Does that mean Amtrak paid tax? No, not by any stretch of the imagination. A subsidy reduction is not a tax, and a tax reduction is not a subsidy.

Re:!Subsidized

[PopeRatzo]

Please don't make up your own definition of "subsidy." A subsidy is a payment that allows an unprofitable enterprise to continue operating.

Let me ask you, would you call it a "subsidy" if a state government allows a company to withhold employees state taxes and then let's the company keep them?

Re:!Subsidized

[GPS Pilot]

Apparently I need to repeat this fact: companies that make a net positive contribution to the Treasury in no way meet the definition of "subsidized."

The situation you describe may be shenanigans, or corruption, or plain old bad policy; but if the company still makes a net positive contribution to the state treasury after keeping those funds, it has not received a subsidy.

Re:!Subsidized

[PopeRatzo]

Apparently I need to repeat this fact: companies that make a net positive contribution to the Treasury in no way meet the definition of "subsidized."

Look up "externalities".

You don't understand free markets at all.

[GPS Pilot]

I guess if you were running NASA you'd pay a billion dollars per o-ring

No, he wouldn't have to pay a billion dollars per O-ring, because many competitors would undercut any vendor who unreasonably asks for a billion dollars per O-ring.

Allowing free markets to develop puts an upper limit on the the prices of goods and services, because lots of competitors -- who will need to undercut each others' prices in order to gain market share -- strive to get into the most lucrative sectors. Financial services are no exception.

Re:You don't understand free markets at all.

[rmdingler]

This is true as long as the markets remain truly free, and government oversight doesn't devolve into corporations writing their own regulations to suppress competition.

Paid for someone else's work

[Anonymous Coward]

Anyone who is paid for the work others do is paid too much.

Jamie Crime-on Re:Insanely

[Anonymous Coward]

Or hanged by the neck until dead after conviction.