Don't listen to me, check out an article by Gretchen Morgenson in the New York Times, or better yet listen directly to what the guy she interviews, former DuPont CEO Edgar Woolard Jr., says on the topic.
Woolard debunks several myths about why the CEOs of so many American companies are paid outrageously insane amounts of money (one would want to use the word "immoral," but I'll refrain). According to Woolard, the idea that the skyrocketing of top executive salaries is driven by competition is, and I quote, "bull." In reality, it is the result of a perverse game played by compensation committees and the outside consultants they hire -- the latter making a handsome profit out of convincing committee members that, unless they offer a salary in the upper quartile of the current range, they may be sending the message to both CEO and shareholders that the executive is about to be canned (remember, he is in fact being hired!).
Woolard also claims that -- contrary to popular belief among shareholders -- compensation committees aren't at all independent entities in the process, but entirely dependent on the whims of both CEOs and external consultants. Most obviously, Woolard also points out that the very idea that companies need to pay their top executives huge sums because, after all, the CEOs bring in large profits for shareholders is so absurd in the face of the evidence that it is hard to believe it is so widespread.
Then again, the idea of creationism is equally absurd and just as widespread. I wonder what that says about our society.
Rationally Speaking: an archived blog about science & philosophy, by Massimo Pigliucci
Friday, October 28, 2005
Why high executive pay is "bull."
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"Then again, the idea of creationism is equally absurd and just as widespread. I wonder what that says about our society."
ReplyDeleteThat you (as part of society) believe creationism has something directly to do with materialism?
Origins theories that eventually focus one's ideals around another life, (after death) hardly should make the usual adherents feel like robbing everyone blind in this one, M.
Leastwise, your views on "four-bucks" are not so off-the-wall. The coffee is not that great and is so over-priced, I came to the conclusion long ago, people really must be there mainly for the [warm] gathering sort of social experience.
apologies for this last comment being out of thread /and waaaay off topic.
cal
Cal, I cannot make sense of your post. It's probably my fault, since English is not my first language; nevertheless, I'm sure you can do better intelligibilitywise.
ReplyDeleteCal, I had the impression you understood Massimo's last sentence as linking creationism and the high salaries. Was that what you meant? Os is "robbing everyone blind" some idiomatic expression I don't know? (as I said before, English is not my first language either)
ReplyDeleteI myself interpreted Massimo's last remark as: if you can have one absurd idea like creationism, you can easily have other absurd ideas too (like the justification of CEO's high salaries). But that doesn't mean there is any cause-effect relationship between the two ideas. Was that it?
Anyway, I think there are even worse cases of "bull" payment around, Massimo. Think sportspeople...
J
Dick Brown took the company that I work for and in just a few short years ran it into the ground... took our stock down almost to junk status. For this he was paid millions per year and then given something in the range of $55 million to go away. I was left thinking, "Hell, I could have done the same bad job for a tenth the cost." They could have given me the job and saved the company a ton of money. Mr. Brown certainly wasn't paid in relation to the "value" that he brought to the company.
ReplyDelete