Wealth Envy
If you've been paying attention to the news at all over the last week, you have probably seen the stories reporting that the "typical" CEO is making between 10.5 and 13 million (depending on which news report and which numbers they choose to use) and the inevitable attempt to appeal to the wealth envy of the Brian37's of the world. We are supposed to be outraged because they make roughly 300 times what the "average" worker makes. Over the last month, Brian has been right about exactly one thing, I love numbers. Numbers don't lie and you can learn a lot from them. You can however, use numbers to mislead people who are uninformed. So let's look at the numbers they use every year to gin up some wealth envy.
First of all, your boss probably doesn't make anywhere near 300 times your wage. Unless you actually work for a fortune 500 company, your CEO isn't even in the ballpark, and unless you work for one of the top 100 revenue producing Fortune 500 companies or so your CEO makes less than 300 times average. Sure, these companies hire a lot of people, but you are talking the top 100 companies out of some 5,000 that are traded in the stock market. The top 2%. With another 10,000 companies that are publicly traded you are at the top 0.6% of companies. That isn't even accounting for the myriad of private companies that exist.
In other words, you are talking about a very small elite group who have convinced the shareholders that they are the best in the world at what they do. There is a huge gap between the top and bottom even of the Fortune 500. The bottom of the Fortune 500 CEO's make a little over a million. The actual median pay for CEO's accounting for all publicly known salaries is around $800,000. That means half of CEOs make less than $800k, or roughly 20 times the average salary (as calculated by the AFLCIO. The bulk of the rest of CEO's come in between $800,000 and $2 million. If you work in corporate America, odds are your CEO is making 20-40 times the average salary, if you work for most companies your head honcho probably makes under $400k. I'm not saying that it isn't a lot of money, but it makes a lot less sensational headline, which is why liberal outlets focuse on the top 100 and less liberal outlets focus on the top 300.
It is a blatant lie that the "typical" CEO makes $10.5 million. That is like looking at all the big Hollywood names and concluding that the "typical" actor/actress makes $20 million a movie. Obviously, the vast majority of people in acting don't make anywhere near that kind of money and if you go out to Hollywood, it would be unreasonable to expect that kind of money. That is the money you could make, if you are the top few percent of your field. If you were interested in becoming a CEO and wanted to know what kind of money you could expect to negotiate for, something in the $800k range is realistic and would be an impressive career. Expecting to make $10 million+ is the equivalent of the Hollywood wannabee going out expecting to be the next big superstar. It is possible, but the reality is that few will ever achieve it.
Second, CEO's don't actually get paid that much. All these pay packages that are reported include restricted stock. Restricted stock is an agreement by the company to issue stock to the CEO with limitations. Generally these limitations prevent the CEO from selling the stock, may include provisions for revoking the stock if specified goals are not reached and might not be voting shares until a certain period of time has passed. So when you hear about a CEO getting 20, 30 or 40 million or whatever, they are not getting that in cash. It is a lot like a sports contract, where they could get that much money if they win, but won't if they lose. Boards do this for a variety of reasons. The largest is because it is a golden leash. It ensures that the CEO has a huge vested interest in the success of the stock price by giving them skin in the game at minimal cost to the investors. The CEO who got $40 million last year, could have all that money taken away if the company tanks. It is potential future money, not money in the hand today.
Which brings up my third point, CEO's at the top ARE overpaid. (Read that again Brian, I said CEO's at the top ARE OVERPAID). And they are overpaid for a very simple reason, CEO's aren't rich. Sure, they are rich compared to me and you, but they are not the richest people in the world. With the exception of a few like Larry Ellison who still are CEO's of companies they started, CEO's report to boards that are made up of people wealthier than they are. It is the people who own substantial amounts of voting stock that are the uber rich. They don't make more than a few bucks off their salary, they make their money buying and selling companies. Their main concern is that the stock price of the companies they own goes up. So when negotiation time comes, they really want whatever CEO they think is best for the stock price. High cash salaries come out of the bottom line, while issuing new shares of stock has a very indirect effect. For example, when a CEO gets a few million shares of stock, it might be 1/10th of 1% or less of the total pool of stock, which has virtually no effect on the stock price. It is maybe a penny a share. So while the millions of dollars means alot to the CEO, to the board making the decision it is like deciding to leave the waitress an extra penny. When one party puts greater value on an item than the other, the advantage in negotiation is biased their direction and they are likely to get a better deal than they might be willing to settle for.
Which brings up my final point, there is no reason to flip out over CEO pay- you aren't paying it. For the most part, it isn't taken from the company funds that could otherwise be allocated to other employees, expanding or anything else- which is why it is absurd to compare it to wage worker incomes which do come directly from the bottom line. It doesn't come out of revenue, so the consumers aren't paying for it. So who pays? Well whoever in the future decides they want to buy stock in the company and the current owners of stock in the company (through a lower percentage of ownership). Until someone physically purchases that stock, the CEO doesn't have the money, only potential money in what people might be willing to pay him/her for the stock. The people making the decision are the ones who are paying by giving away their ownership in the corporation. Maybe it is a foolish purchase, but these are the same people who buy $100 million mansions which are often foolish purchases in my opinion.
If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X
- Login to post comments
- Login to post comments
My last CEO, the company was making around 60 million a year, got paid around 6 million a year with incentives. If we had a good year he got bonuses, if we had a bad year he got base pay. Either way I find CEO's worthless and not worth their pay.
My only real problem is in the final paragraph, where you claim we don't pay the wages. But indirectly we do. We pay higher prices for services and objects so that the company can afford the salary. We get reduced services and sometimes even dangerously insecure services so the company can afford the wages. I might not contribute much by myself to the ceo of walmart by shopping there, but I certainly contribute.
Beyond that, I'd say most business owners aren't getting much more than their employees, and that they have to either work very hard or pay out fairly handsomely to even do that well.
It is and has always been the very top that is the problem. While they might not get as much as is on paper, they still get exponentially more than everyone else. And that doesn't even include perks that the top ceo's are generally entitled to. Like free rides, free meals, sometimes even free lodging and the like. A top tier company doesn't want its ceo living in a slum or driving a 20 year old car. The ceo is a representative of the company. It looks bad. The company wants their ceo living in a mansion, being transported by limo and private jet, because it looks good. It looks like the company is thriving. Laying off 10,000 people looks bad, but having a ceo puttering around in an old car without a suit in his closet who can't afford to take clients to exceptionally expensive restaurants looks much worse. So the company will lay off 10,000 people before it allows its ceo to lose more face than is absolutely necessary. It's much to do about appearances. And little to do with efficiency or effectiveness.
Enlightened Atheist, Gaming God.
It doesn't affect the costs of the company for producing their product or service. The CEO is primarily being paid with equity, which has nothing to do with the company's budget. It is simply an agreement among the owners to share their profits with the CEO. For example, suppose you wanted to start a business, but didn't have money. So I agreed to fund you with a $100,000 investment. The company is worth $100,000 and has $100k in funds to start producing widgets, and I own 100%. Now I don't have money to pay you a salary and we need the 100k for the company, so in exchange for your special skills, I give you 50% ownership, worth $50,000. The only person paying is me. The company still has $100k in the bank and is still worth 100k. The only difference is that next year, I only have rights to 50% of the profits and you have rights to the other half. As far as the company making widgets, nothing changes at all. It is no different at the large scale except the owners are giving away far less than 50%. If the CEOs didn't get the money, it would be included with the dividend payouts.
The perks are included in the salary package. US tax law requires that those perks be taxed as income, which is why many CEOs in the big leagues have salaries of $1 but it actually shows up as a million or two in reports. So when you see tne 10 million figure, those benefits are included.
If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X
That is extraordinarily high and very unusual. Even if the $60 mil is net profit, that puts the company at under a billion in revenue. The average CEO for that size company makes in the 400-500 range. The owners are idiots wasting their money.
Many employees are worthless and not worth their pay. No reason to get upset about it.
If, if a white man puts his arm around me voluntarily, that's brotherhood. But if you - if you hold a gun on him and make him embrace me and pretend to be friendly or brotherly toward me, then that's not brotherhood, that's hypocrisy.- Malcolm X
I worked for a non-profit which was constantly finding ways to waste money. One year they gave away two free round trip tickets to any where in the world as "a grand prize" for a xmas party. Other items were flat screen tv's, appliances, a motorcycle, etc. Giving the CEO 6 mil was nothing compared to the waste of money during the year.
Not upset about any thing. Just voicing my opinion.
i have literally never given a fuck what anybody else makes. and yes, i say that as a marxist. anybody who thinks there's a contradiction there just shouldn't open their mouths about marxism.
"I have never felt comfortable around people who talk about their feelings for Jesus, or any other deity for that matter, because they are usually none too bright. . . . Or maybe 'stupid' is a better way of saying it; but I have never seen much point in getting heavy with either stupid people or Jesus freaks, just as long as they don't bother me. In a world as weird and cruel as this one we have made for ourselves, I figure anybody who can find peace and personal happiness without ripping off somebody else deserves to be left alone. They will not inherit the earth, but then neither will I. . . . And I have learned to live, as it were, with the idea that I will never find peace and happiness, either. But as long as I know there's a pretty good chance I can get my hands on either one of them every once in a while, I do the best I can between high spots."
--Hunter S. Thompson
No one has "wealth envey" jackass.
You are so fucking self absorbed everything is a crime to you if someone else votes and wants to do things differently.
Now idiot, I like what COSTCO is doing. I like Nick Hanour's thinking. Not wanting as much as the next guy does not make me jealous of someone having more.
The way you talk about ecomics and guns is as delusional as fundies and their doomsday prophacies.
There is no point in having a three branch system of government with checks and balances and protection of dissent and voting, if we just always do what people with wealth want to do. You always sound like Marrie Antoinette.
We as in "we the people" does not mean "me and only my class".
You, "MOMMY MOMMY OTHER PEOPLE EXIST AND I DON'T LIKE IT" fucking crybaby.
"We are a nation of Christians and Muslims, Jews and Hindus -- and nonbelievers."Obama
Check out my poetry here on Rational Responders Like my poetry thread on Facebook under Brian James Rational Poet, @Brianrrs37 on Twitter and my blog at www.brianjamesrationalpoet.blog
wow, you also buy into the marie antoinette urban legend. did you get that out of the same book you got your hypatia quotes from?
"I have never felt comfortable around people who talk about their feelings for Jesus, or any other deity for that matter, because they are usually none too bright. . . . Or maybe 'stupid' is a better way of saying it; but I have never seen much point in getting heavy with either stupid people or Jesus freaks, just as long as they don't bother me. In a world as weird and cruel as this one we have made for ourselves, I figure anybody who can find peace and personal happiness without ripping off somebody else deserves to be left alone. They will not inherit the earth, but then neither will I. . . . And I have learned to live, as it were, with the idea that I will never find peace and happiness, either. But as long as I know there's a pretty good chance I can get my hands on either one of them every once in a while, I do the best I can between high spots."
--Hunter S. Thompson
Ok, I am sorry, yout got me, your avatar lead to economic stability and world peace didn't it?
You got me, I suck the dick of Un and I want to stick all theists in ovens. And Hitchens was not a weathy writer who took advantage of the open market. He loved North Korea so much he equated God to a dictator.
My bad.
"We are a nation of Christians and Muslims, Jews and Hindus -- and nonbelievers."Obama
Check out my poetry here on Rational Responders Like my poetry thread on Facebook under Brian James Rational Poet, @Brianrrs37 on Twitter and my blog at www.brianjamesrationalpoet.blog
Please tell everyone how much you love women.
The only part of that quote I would argue with her is the "point of view", she did not have the benefit of a neutral lab or control group or peer review. But she certainly was wise in calling bullshit bullshit.
Now are you saying you love Marrie Antoinette because she was in her 1% and said fuck you to the poor?"We are a nation of Christians and Muslims, Jews and Hindus -- and nonbelievers."Obama
Check out my poetry here on Rational Responders Like my poetry thread on Facebook under Brian James Rational Poet, @Brianrrs37 on Twitter and my blog at www.brianjamesrationalpoet.blog
The only part of that quote I would argue with her is the "point of view"
the only part of that quote i would argue with is the attribution, because hypatia didn't say it. not a single word of hers survives. i told you that like 2 months ago, and predicted you would ignore it. surprise, surprise.
also marie antoinette never said "let them eat cake." it's a myth. i predict you'll ignore that too.
and my avatar never did anything, btw. it's a fucking avatar. jacktwat.
"I have never felt comfortable around people who talk about their feelings for Jesus, or any other deity for that matter, because they are usually none too bright. . . . Or maybe 'stupid' is a better way of saying it; but I have never seen much point in getting heavy with either stupid people or Jesus freaks, just as long as they don't bother me. In a world as weird and cruel as this one we have made for ourselves, I figure anybody who can find peace and personal happiness without ripping off somebody else deserves to be left alone. They will not inherit the earth, but then neither will I. . . . And I have learned to live, as it were, with the idea that I will never find peace and happiness, either. But as long as I know there's a pretty good chance I can get my hands on either one of them every once in a while, I do the best I can between high spots."
--Hunter S. Thompson