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Working harder doesn't mean you get paid more. The ceo being paid a lot doesn't imply they have to have worked harder to obtain it. The board determined the c

by chii 4y ago

Working harder doesn't mean you get paid more. The ceo being paid a lot doesn't imply they have to have worked harder to obtain it. The board determined the ceo pay , and the board represent the shareholders, who ultimately are the final arbiters of the value being generated by the ceo.

Gibbon1 4y ago
> and the board represent the shareholders The board represents only some shareholders.
- moistly 4y ago
  And the board often delegates compensation decisions to a third party. Said third party is incentivized to rationalize a higher compensation for the executive class, because that best ensures that they’ll be hired to do so again in the future.
  - formerkrogemp 4y ago
    And the auditors are paid by the company that they audit.. For risk of material misstatement, not fraud. A fraudulent company can still pay an auditor a significant sum, and the auditor won't look for fraud, only material misstatement. It's the "audit expectations gap."
  - Gibbon1 4y ago
    Yeah friend worked for an executive compensation firm for a while. It was all about justifying increasing the CEO's compensation to match what other companies were paying. There is also the problem of the incestuous you scratch my back I scratch yours nature of board membership.
    - chii 4y ago
      > justifying increasing the CEO's compensation to match what other companies were paying. which is what market rate means right? If a good CEO is poached to a competitor, the company will lose out.
klyrs 4y ago
Most boards I've looked at are composed of people with C-level titles. While members of the board might not have a direct conflict of interest for a particular CEO, most have an interest in normalizing extreme CEO salaries.
meatsauce 4y ago
Let's be honest; most CEOs work smarter and lead these large companies to immense profitability. They, as leaders, are entitled to (in essence) a commission - a reward for the work they've done, the leadership, the right decisions, and pivoting necessary to realize opportunities. The "worker" doesn't and in many cases, can not do any of what I described. They are paid for a job at a fair market rate. To compare the two is to do two things. 1) display a willing ignorance of the dynamics and 2) telegraph a tired political whine.

by chii 4y ago

Gibbon1 4y ago

> and the board represent the shareholders The board represents only some shareholders.

moistly 4y ago
And the board often delegates compensation decisions to a third party. Said third party is incentivized to rationalize a higher compensation for the executive class, because that best ensures that they’ll be hired to do so again in the future.
- formerkrogemp 4y ago
  And the auditors are paid by the company that they audit.. For risk of material misstatement, not fraud. A fraudulent company can still pay an auditor a significant sum, and the auditor won't look for fraud, only material misstatement. It's the "audit expectations gap."
- Gibbon1 4y ago
  Yeah friend worked for an executive compensation firm for a while. It was all about justifying increasing the CEO's compensation to match what other companies were paying. There is also the problem of the incestuous you scratch my back I scratch yours nature of board membership.
  - chii 4y ago
    > justifying increasing the CEO's compensation to match what other companies were paying. which is what market rate means right? If a good CEO is poached to a competitor, the company will lose out.

klyrs 4y ago

Most boards I've looked at are composed of people with C-level titles. While members of the board might not have a direct conflict of interest for a particular CEO, most have an interest in normalizing extreme CEO salaries.

meatsauce 4y ago

Let's be honest; most CEOs work smarter and lead these large companies to immense profitability. They, as leaders, are entitled to (in essence) a commission - a reward for the work they've done, the leadership, the right decisions, and pivoting necessary to realize opportunities. The "worker" doesn't and in many cases, can not do any of what I described. They are paid for a job at a fair market rate. To compare the two is to do two things. 1) display a willing ignorance of the dynamics and 2) telegraph a tired political whine.