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I, For One, Don’t Believe Most CEOs are Overpaid

Posted by on October 8, 2014

A topic that gets a lot of press these days is the compensation packages awarded to some CEOs. Many people take umbrage to the size of these packages, for a variety of reasons including “disproportionate to rank and file,” “nobody is worth that much,” “(the company) could have used the same amount of money to fix (something).”

Some of the objections are based purely on emotional response, some on a passion for social causes, some on envy, some on a lack of understanding of what the positions requires of a person.

For many reasons, I don’t think most CEOs are overpaid, and I base my opinion on my own personal experience of having run companies. Oh, not the kind where the pay range was seven figures + annually, but all companies have pretty much the same group of challenges, albeit on a different scale.

For most people in the workforce, they have one person they have to please or impress on the job – their boss or immediate supervisor.

The CEO of a large company has a constituency of many “bosses’ s/he has to satisfy simultaneously, which may include:

  • The board of directors
  • Shareholders
  • Banks and other creditors
  • Wall Street
  • Vendors and suppliers
  • Employees and/or unions
  • Regulatory agencies and statutes, if applicable
  • Customers

That list is not in any particular order, I, like most CEOs I suspect, would have a hard time prioritizing the list, as they each have to be the most important group at one time or another.

Each of these groups, in turn, has little interest or understanding of the demands any other group in the list puts on the company or execs in its C suite.

To be a successful CEO, one has to learn to juggle the needs of each of these groups and deal with their unique challenges on a timely basis.

So what you say?

Well, almost all of us have a choice and the ability to accomplish anything we want in life, as long as we realize in order to take one path, generally we will have to sacrifice some things on the alternate path.

The head honcho of a large company, multinational, public or private is going to have to make a lot of sacrifices to please all of the groups, and probably at the top of the list is a successful home life.

There will be more times than not that some issue from one of the groups on the list is going to cause the C level exec to miss a milestone event with his family, something that can’t be ‘made up’ or smoothed over with presents instead of presence.

Don’t think it’s a big deal? Ask any successful CEO what his/her biggest regret in life is.

I do, however, object to giant exit packages for CEOs who have failed, but I guess that’s part of the culture today.

Is it right that successful CEOs receive salaries that surpass XX multiples of the rank and file wages?

Hard to say. While I have empathy for families that are having a hard time making ends meet, and I’ve certainly been in that position myself; we all have free will and the choice to do anything with our lives that we want to; it’s not like someone goes to work at McDonalds or WalMart and wakes up one day and says “WTF? I didn’t know they were going to pay me that!”

I’m reminded of my youth – my father was a contractor with unionized labor, and from time to time, some trade would go on strike. The logic expressed was always something along the lines of “electricians (or whomever), get paid such and such, and we only get XX per hour.”

In my infinite wisdom and brilliance as a 12 year old working for a buck an hour, I’d pipe up and say “so go be an electrician.”

America was built by generations of dreamers, not whiners.

 

 

 

 

 

 

 

 

 

 

 

CEO Pay

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