Why do American CEOs get paid so much?

People keep buying their companies' products and services so their boards must conclude that the vast majority of people do not care how much the CEO is paid, and the boards therefore give them anything they want plus a golden parachute.

 

Freedom and liberty.

 

Just two words.

How YOU understand them is likely quite different from how I understand them.

That's why we have Debate Forums (And why one-liner rebuttals are worthless ...)

 

Okay. Freedom and liberty to me means a relative minimum of government regulations. What does it mean to you? Are you suggesting there should be government regulations capping someone's earnings?

 

Stoopid reasoning.Really devoid of any factual evidence!

Because they don't know the "facts". America is a nation that Most Watches the BoobTube ( about 4 hours daily, 35.5 hours/week, slightly more than 77 days per year). And TV also helps formulate their political leanings. There is not enough Real News about the economic condition as I have given here.

That, I suggest, is the real truth of the matter. We are hooked on privatized BoobTube TV and because it is private-enterprise owned it has a vested-interest in not relating the factual economic circumstances of the country today ...

NB: Or course, admittedly, I am no expert on the content of American TV. I live in France ...

 

Yes, above a certain level, income should be capped. Freedom does not necessarily mean being "free" to exploit a market-economy towards maximizing income.

I see no reason whatsoever that millions and millions of dollars should encased by one person, or one family because taxation allows it. And, upon death, then graciously given to family members (who never worked a day to earn it)!

Were that money taxed and returned to the government, anybody/everybody could have both a very low-cost National Health Care system and Free Post-secondary Education (at a state school). The former assures Americans' lifespan (which nowadays has a nasty tendency for reduction) and allows you the personal knowhow-capacity to find a job equivalent to your talents.

Now, just what the hell is wrong with both of those government provided services? Come on! Tell me ... !

 

Easy... a strong belief in individual freedom and private property rights. Yes, that is what is wrong with it.

 

I've got to agree. Television is the worst thing that ever happened to mankind, with the possible exceptions of polio and Ebola.

 

Television can be good or bad, it all depends upon how we employ it.

In the US it is purely a commercial entity. In Europe, that too is the case - but there is room for subjects that provoke a reflection. On ourselves, on history, on whatever.

I mean the broadness of thought (and thus thinking) is very large if provoked properly - which television programs can do if conceived properly.

If not, it's usual stuff (and we see a lot of it here in France but in French). The plots/subjects and acting are ever so banal.

Still, American films have been and still are a French favorite - because it shows a way of life that they perhaps would like to lead (one of self-dependence) but do not have the collective courage to do so. (So, they expect the state to do everything for them, which it cannot of course ... )

Even the difference between two countries of the same language (England and America) there are different sets of prevalent values. And most Yanks that I know who have lived in the UK seem to think that English values are both different and better.

All people like to make a lot of money, but in the US that ambition seems to be the equivalent of a religion. The rich are idolized.

And speaking of religion - we Yanks are at about 47% who go to church on Sunday, whilst the Brits are only at 20%*. Make of that factual evidence what you will ...

*From here.

 

it started in the tech boom of the 80's and 90's, but now that boom is over and the CEO's do not want to go back to normal pay, they prefer to keep those outrageous salaries and ship American jobs overseas instead

 

first reality tv.... then reality tv star Presidents - sad!

 

We spend $2.7 trillion dollars every single year on public health care and education in the United States, more than the per capita levels in France. Yet you're still complaining that it's not enough.

 

It's not so much serving on another firm's board that is the problem, as executive compensation unrelated to executive performance. Corporate governance rules should specify that bonuses, stock options, etc. should only be given to the extent that the firm outperforms the sector average. And performance should be measured by net profit (not EBITDA) or total market capitalization, not stock price.

 

Why do American CEOs get paid so much?

Because Americans have no problem spending $600 for a pair of True Religion jeans, $800 for the next new iPhone, $13 for a beer at a MLB game and $80,000 for a new SUV which they drive for Uber @ $.60 a mile. So basically American CEO's get paid so much because the majority of Americans are ignorant.

 

OK, fair enough.

Are you going to be the one to force all the celebrities and athletes and others that they have to accept draconian pay cuts too?

• George Lucas, $5.4 billion. ...
• Steven Spielberg, $3.7 billion. ...
• Oprah Winfrey, $2.8 billion. ...
• Michael Jordan, $1.7 billion. ...
• Kylie Jenner, $900 million (tie) ...
• Jay-Z, $900 million (tie) ...
• David Copperfield, $875 million. ...
• Diddy, $825 million.

I always find it funny that people will scream at how somebody who runs a multi-billion dollar corporation is getting paid "excessively", yet think nothing if some celebrity makes even more money. They will scream when some CEO makes 7 figures and say they are "stealing from the poor". Yet they completely ignore the athletes that make 8 and even 9 figure incomes.

So fine, cap their income. But you have then got to cap the income of everybody, not just CEOs.

Congratulations, you just re-invented the Soviet Union.

 

Nah. The Japanese are also quite willing to pay a lot for things -- PERMISSION to have a phone is about $1K; not phone service, not a phone, just PERMISSION to have a phone -- yet Japanese CEOs are paid an order of magnitude less than American ones. The difference is between a society that talks about people being created equal vs one that actually thinks they are.

 

That permission is a govt fee, just like Singapore's $40,000 vehicle permission fee. Companies don't get that money. My son worked at the U.S. Embassy in Singapore and told me that Americans are so lucky.

 

Irrelevant. The point is that Japan is also full of expensive stuff, but their CEOs are paid an order of magnitude less than American ones. Which refutes the claim that high American CEO pay is dependent on American luxury purchases.

 

It is?

Last year, the CEO of Sony made $3.7 million. This is down however from the $4.9 million the previous CEO made.

Until a few years ago, the CEO of Nintendo was making on average $4 million a year, but due to declining sales and profit this has since declined to $1.4 million.

The CEO of Toyota last year made just under $9.4 million dollars. The CEO of Japan banking firm SoftBank made $16.8 million dollars.

It is a very different business and economic model in Japan than in the US. They tend to operate on a much lower cost per item and profit per item model than the US does, and they also tend to reinvest their profits into other hard capitol assets more then US companies do. That is also why they tend to be much more heavily impacted by things like economic slumps than most US companies. A few bad years to a major US company and they can generally weather through it. In Japan, that can bring many companies to the brink of collapse.

But they also tend to be much more widely balanced, with a major corporation (Mitsubishi) being spread over a great many individual companies which may share the same company name are all independently operated. Mitsubishi Automotive really is a separate company from Mitsubishi Shipbuilding and Mitsubishi Heavy Equipment. This is very different from the US, where all the various assets of GM or Chrysler fall under the control of the Corporate Parent CEO.

They also tie much less into stock price than they do corporate performance itself. In the US this was largely done decades ago as the all-consuming push for stock price became the dominant concern for investors. That is a far cry from even the 70's and early 80's, where we often saw things like 2 for 1 stock splits (or higher) done in a push to keep stock prices lower.

I still remember the frenzy around IBM stock in 1979 when it's value was starting to go through the roof. That was when they had their biggest split ever, a 4 for 1 split. So for each share of IBM stock somebody held prior to 1 June 1979, they now held 4 shares.

I honestly believe that the US should encourage companies to return to the stock market model of the early 1980's and earlier. Where instead of encouraging higher stock prices, they should be kept lower through splits, and encourage actual cash dividend payments. I know when I was growing up our vacations were paid from the dividends of Litton stock my father held as an employee.

Apple Stock is still sky-high, but the dividend amount is only .77 per share. That means if you hold $2,000 worth of Apple stock, your dividend is only $7.70. A far cry from 1985, when my dad made a $2.00 dividend on every share of Litton stock he held. And that was in 1985 money, today that would be $4.76 per share counting for inflation.

 

Yes. Obviously.

OK, so they are making TWO orders of magnitude less than American CEOs. My bad.

 

It is not shared equally nor are the responsibilities equal in fact they are HUGELY out of wack as in the CEO's being thousands of times higher than the median wage worker.

 

Very good explaination. The fact is the general public has no idea what a CEO does or what they are hired to do and what they are paid to do. They are paid to properly manage and protect the assets of the stockholders and develop and successfully implement a growth strategy to increase the value and profitability of the corporation. And yes even in an economic slowdown where I requires even more business skills to protect those assets.

 

It’s their companies and they should reap most of the rewards

 

What's the value of the company without workers? Have a think as that might offer you some help...

 

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