It's their money, they are free to spend it as they and the stock holders wish to. Government on the other hand provides no such choice, they confiscate money and fetter it away as they please answering to no one as to how it is spent/wasted.
The gross disparity of CEO pay to rank and file employee to not exist until the 1980's, prior to that it was only 15 to 20 times what an average employee made.
To be historically exact, yes you are right. The point being that, with Reckless Ronnie's great reduction of upper-income taxation in the 1980s (see here) the Net After-tax Income has become ridiculous. Today the difference looks like this: The only reason that ratio spiked downwards in 2008 is because of the Great Recession. But, it did not take long to recover; That bottom-line above in the graphic explains how it happened, so, please everybody, let's not deny the fact that Net Income after Tax disparity is still at an all-time high in America! Why should we get angry? Because of all the BS about "America being the fairest country on earth" and the real fact that such is "not necessarily so ..."
http://www.verisi.com/resources/us-ceo-compensation.htm Not as different across the globe as the OP might imply.
The problem that exists SINCE THE REAGAN ADMINISTRATION is that CEO'sExecutives AND BOARDS OF DIRECTORS can now authorize the company to BORROW MONEY TO BUY BACK THEIR COMPANY SHARES REDUCING THE FLOAT AND INCREASING SHARE VALUE.They have reduced the value of the company by borrowing money and paying interest on it,they real value of the company has been reduced while the share price has gone up.The executives and any board members who are paid in shares can cash in before the **** hits the fan.There was a valid LEGAL reason why before the Reagan years it was ILLEGAL FOR COMPANY"S TO BUY BACK THEIR OWN SHARES!!!!And it was called CORRUPTION!!!
UNFAIR ESTATE TAXATION! The manipulation of the then existing lax-law by the Reckless Ronnie began the "movement" that spawned immense riches that are being stockpiled by the Immensely Rich in America*: Note that the biggest drop of Federal Tax Rates come under Reckless Ronnie in 1980 upon entering the White House! They have never since be readjusted to the higher rate, which should be the case since higher income is the only bonafide reason for higher income taxation! Whyzzat? Because progressive income taxation should be the norm and not the comparative value of total income-tax remuneration. Why? Because the fact that the ultra-rich pay so much in income taxation is because the EARN SO MUCH and thus deserve to pay much higher taxation. Why? Because the purpose of any economy should be that progressive income be possible but not lead to astronomical amounts of money that are obtained by a select few-percentage of families? Which becomes net after-death income to family individuals who do not deserve it in any way, since it was unfairly obtained to begin with! Ridiculously high Wealth that becomes ridiculously high Net Worth because of insufficiently high taxation! It should be taxed a precisely very high confiscatory rates - and inheritors should not be allowed to benefit from the "windfall" of insufficiently low death-taxation. See here: The down and dirty on the new tax rules and estate planning - excerpt: This above "boondoggle" is why Donald Dork's kids are going to reap-in the larger part of his current Net Worth - which is hideously unfair. That ill-obtained monetary-gain should be returned from where it came; that is, the general public by means of subsidizing both National Healthcare and free Post-secondary Education for all! And were that to happen, the Greatly Rich would not live well enough their lives without transfering, in turn, ill-got gains from previous generations. Public Policy that emphasized betterment of all is prefered to extreme betterment of the comparative few who don't really need it! *This very same factor is the that which provoked the Russians to revolt against the Upper-classes in post-WW1 Russia. Can't happen in America? Pray tell me why not!
Because they manage HUGE assets and accumulated capital amounts and the decisions they make can cost millions even billions for the owners of those assets and that capital and there are very few capable of doing that job. It's not complicated.
<sigh> That explanation might have been credible if the empirical evidence did not show an INVERSE relationship between CEO pay and corporate financial performance.
Doesn't change the why as I noted. Much of that has to do with HOW CEO's are now paid because of taxes on high salaries, a attempt by the Democrats to lower CEO compensations to make it "fair" so CEO's are compensated with stock options and incentives which some studies say create that inverse effect. I say get rid of that and pay them straight salaries and bonuses.
In other words, Democrats what to suck away from the producers, their rightfully earned income, so they can buy votes from the moochers.
With out leaders of a business, the business would likely not exist. The better the CEO, the more earnings for the business. More employees.
BFD! The best kind of top-management I have ever seen was in Yugoslavia (when that existed). All private companies were obliged to have at least three-representatives of the employee-unions on the Board of Directors! What happened? Nothing unusual. The mostly-private companies were run in a manner that was fair-and-equitable to employees who all shared in any financial benefit! How does that relate to the US? It doesn't! Because the US is a financial "free-for-all" with low taxation on upper-income. Which is why most Net-of-tax Income (aka "Wealth"] is generated at the top because taxation there has been minimized! But that's what prompts dynamic evolution! (Some will say.) Well, no. Very, very generous profits are a consequence of and not an instigator of profit-making "new-ideas" in the capitalist-system of the US. (Mind you, I have nothing against capitalism per-se. Just how it works in America when a country decides upper-income taxation should be drastically reduced.) PS: For an excellent review of America's Tax History, well written by a professor of "History of Industry and Technology, at Rutgers University go here. An excerpt:
No, it's because capital gains are taxed less than earned income. I can see generous salaries for highly competent people who perform well. I can see bonuses based on company performance better than the sector average. But stock options just encourage stock price manipulation at the expense of productivity. That's why we see so much profit going into stock buyback schemes rather than productive investment.
No it is because companies can't write off salaries over $1,000,000 and so they give stock options. Take away those surcharges. And it doesn't matter what you see it's what the owners see and any such manipulation would be a violation of SEC laws. Stock buybacks are not scheme's, they are normal business practice in managing a public company and it's assets and the value of those assets, you issue stocks, you buyback stocks for a variety of business decisions.
This public larceny is based upon only two facts. Executive salaries are way out because of Market Consolidation over the past half century. It would not have happened that way had the Federal government antitrust division had its eyes wide-open instead of wide-shut. And, under Donald Dork, it will be required to remain with its eyes-shut ...
Not to mention greed. Some companies still get permission to give out millions in bonuses even after filing for bankruptcy.
Isn't it amazing the population of America that doesn't even consider that fact as a "Good criteria for debate in political party elections"? After all, this "Market Consolidation" (aka in the 19th century as a "trust") was made illegal by a good number of laws. From WikiPedia here: United States antitrust law But, since getting-one-helluva-lotta-money has become the raison d'etre on Wall Street, well then all steam ahead! And we poor suckers are left to pay the cost of diminished competition (meaning higher prices for goods/services) that helps two, three or four dominant companies to "share" the bounty of limited market-competition! Have we as nation forgot that this matter of Market Consolidation by means of "buy-outs" was settled by Congress and Presidents at the end of the 19th and beginning of the 20th century? (Just follow the link given above to see how.) Somebody please warn the US Attorney General's office .. !
YOU CAN'T TAKE IT WITH YOU WHEN YOU GO And, so what!?! I'm a private person and see no reason whatsoever that upper income taxation rates in the US should be so lax. You may wish to think it is a "just reward" for being so-smart (or lucky or both, doesn't matter). I wont discount "luck" in the business equation, but neither will I accept the horrendous incomes being made having ridiculously reduced upper-income taxation since JFK first brought them down from 90% to 70%. Then Reckless Ronnie plunged them to 30%! (Why do you think the rich build statues to him?) We should limit also the ability to transfer ownership from parents to children in anticipation of death-inheritance. We all work for what we earn, and nobody-but-nobody should benefit from a windfall to get filthy-rich. From the NYT, here: Tax the Rich? Here’s How to Do It (Sensibly) - excerpt: I could go on, but the full-text is very lonnnnnnnggggg. The article is linked above. Go for it sucker! Because, like me, if you've put up with this nonsense taxation, you really are a damn fool ... ! PS: Ya caint take-it with ya when ya go, honeychile ... !
Garbage. They give stock options because capital gains are taxed at a lower rate than earned income. You mean the ones whose enforcement is up to revolving-door Wall St. hacks? GARBAGE. Stock buybacks were essentially unheard of before kiting the stock price became a way for CEOs to shovel company money into their own pockets.
Not garbage years ago the tax laws were chance and "excessive" executive salaries cannot be deducted as an expense. And the left at the time was DEMANDING that executive not get high salaries but be paid on performance. Thus the whole stock options as pay. Why is the left complaining about it now? And stock issuances and stock buybacks are SOP for larger corporations as is fitting for their financial positions.