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Old 02-22-2014, 01:47 AM
 
Location: SoCal
1,515 posts, read 3,175,356 times
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Why do American CEOs in general make a much higher income than the rest of the workers in companies?

Why is the income gap so significant in USA?

2013 was a year where corporate profits where at all times high. Where as the income of the low to middle class remains stagnant?

Why is this? What's the government doing to address this issue?
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Old 02-22-2014, 02:00 AM
 
24,760 posts, read 26,839,776 times
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Quote:
Originally Posted by yowps3 View Post
Why do American CEOs in general make a much higher income than the rest of the workers in companies?

Why is the income gap so significant in USA?

2013 was a year where corporate profits where at all times high. Where as the income of the low to middle class remains stagnant?

Why is this? What's the government doing to address this issue?
They make a lot because they all sit on each others' boards of directors. There is no free market in CEO pay. The government isn't doing anything about it. The big corporations have both political parties bought and paid for. The lines have become so blurry between the private sector and the public, you can't tell the difference any more....It's the same here as it is in China. At the top it's all about Cronyism.
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Old 02-22-2014, 02:10 AM
 
24,511 posts, read 34,167,001 times
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Quote:
Originally Posted by yowps3 View Post
Why do American CEOs in general make a much higher income than the rest of the workers in companies?
Because they know how to make money for other people. An average person has their hands full making money for themselves. Being able to do it for others is a valued skillset.
Quote:
Originally Posted by yowps3 View Post

Why is the income gap so significant in USA?
Because the skill gap is so significant.
Quote:
Originally Posted by yowps3 View Post

2013 was a year where corporate profits were at all times high. Where as the income of the low to middle class remains stagnant?
2013 was also the year of the highest median 401k balance in history. While the income of the middle class remained stagnant, their net worth is at an all-time high. Also, salaries of upper class were stagnant as well.
Quote:
Originally Posted by yowps3 View Post

Why is this? What's the government doing to address this issue?
The government offers opportunities for people to better themselves via education and training. What else do you expect them to do?
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Old 02-22-2014, 06:58 AM
 
9,336 posts, read 11,177,326 times
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Quote:
Originally Posted by yowps3 View Post
Why do American CEOs in general make a much higher income than the rest of the workers in companies?

Why is the income gap so significant in USA?

2013 was a year where corporate profits where at all times high. Where as the income of the low to middle class remains stagnant?

Why is this? What's the government doing to address this issue?
Why do some high school quarterbacks flip burgers while others get million dollar signing bonuses in the NFL?

Why do some guys drive cabs while others make millions driving race cars? Both are drivers right?

Skill set, drive, education are just a few reasons......BTW having a great CEO can make the whole company wealthy, look at Microsoft! There are janitors that made a million dollars on the stock alone.......
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Old 02-22-2014, 08:02 AM
 
28,906 posts, read 45,254,652 times
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A good CEO is a force of nature.

And don't kid yourself. A Japanese CEO makes equivalent wealth. Only the cronyism over there is such that they make money in different ways besides a paycheck.
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Old 02-22-2014, 08:07 AM
 
5,068 posts, read 3,340,796 times
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Quote:
Originally Posted by mysticaltyger View Post
They make a lot because they all sit on each others' boards of directors. There is no free market in CEO pay. The government isn't doing anything about it. The big corporations have both political parties bought and paid for. The lines have become so blurry between the private sector and the public, you can't tell the difference any more....It's the same here as it is in China. At the top it's all about Cronyism.
^^ That pretty much.



Courtesy of the University of Santa Cruz. Called corporate interlock. Citigroup above is shown with links to 25 other companies in 2005 with either employees on their boards or they share directors.

I'm trying to remember where it is, but the board of directors of the big companies boils down to either 300 or 500 people roughly. Closed door system. Notice how some CEOs bounce around companies when they shouldn't be managing a dairy queen?
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Old 02-22-2014, 08:31 AM
 
Location: Currently living in Reddit
5,655 posts, read 5,470,890 times
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Quote:
Originally Posted by NJBest View Post
Because the skill gap is so significant.
30+ years as an executive and consultant working with F1000 companies tells me otherwise.

There are plenty of people with the skill to make money for others, and 99.999% of the ideas on how to do so come from below the CEO.

IMO, what separates the CEO from the others isn't a "skill gap". It's both the ability to lead and to be ruthless when required.

Not everyone has an ability/willingness to make difficult choices between possible options and outcomes that often include decisions that will harm others (e.g. layoffs of qualified people for cheaper workers) and/or are borderline unethical (e.g. stealing/copying others' work/buying competitors only to put them out of business), but CEOs can live with those decisions. In virtually all cases, others with greater specialized skills have done all the footwork and analysis. The CEO merely needs to decide and sell the decision.

The successful CEO is not the best athlete in any given sport (although if s/he is, it's often sales). S/he is more like the decathalon athlete, more than competent in some, but merely able in others, always looking for an edge, even if unpopular with the public (but popular with shareholders).

The higher pay is earned because it's a far higher burden on conscience than others are willing to accept. The buck stops at the CEO's office.

As Jack Nicholson's character noted in The Departed, "Heavy lies the crown."
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Old 02-22-2014, 11:38 AM
 
Location: Kalamalka Lake, B.C.
2,981 posts, read 3,772,628 times
Reputation: 3789
Default Real money made by those in charge

Quote:
Originally Posted by yowps3 View Post
Why do American CEOs in general make a much higher income than the rest of the workers in companies?

Why is the income gap so significant in USA?

2013 was a year where corporate profits where at all times high. Where as the income of the low to middle class remains stagnant?

Why is this? What's the government doing to address this issue?
Here's a forward thinking book on someone who knows these guys personally, and it
was written in the nineties:

Kennedy: The End of Shareholder Value

Last edited by thedwightguy; 02-22-2014 at 11:40 AM.. Reason: word economy
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Old 02-22-2014, 11:55 AM
 
5,469 posts, read 6,142,305 times
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Quote:
Originally Posted by mysticaltyger View Post
They make a lot because they all sit on each others' boards of directors. There is no free market in CEO pay. The government isn't doing anything about it. The big corporations have both political parties bought and paid for. The lines have become so blurry between the private sector and the public, you can't tell the difference any more....It's the same here as it is in China. At the top it's all about Cronyism.
This^^^.

You and I borrowed a TRILLION Dollars after Hank Paulson said it was a 'must' or we would have to turn out the lights on Monday.

That money didn't go into your pocket, not mine. It went to the cronies that run the show in Washington, and Corporate America,. Goldman Sachs to be specific. Hank Paulson's firm to be even more specific.

Those that 'have', take. They have complete disdain for the little guy that grows the food, builds the highways and takes out the garbage. It is a mentality that most people cannot fathom, but it is widely accepted as the 'way business is done' in Washington and Corporate America. The average person has no idea how corrupt Washington and Corporate America actually is, and when we are thrown a bone of a billion dollar program, or a hundred million dollar support scheme, we all think we are 'getting our share'.

BS. For every Billion we get, Corporate Chieftains get multiples of that.....and they actually feel they are entitled to it, and 'worth' it. How much did JP Morgan pay (did they ever actually pay anything?) in fines recently? $20 BILLIION or so? And the CEO not only still has his job, but he got paid MILLIONS!

Is there anything wrong with that picture? Go swipe a $100 phone from your employer, and see how long YOU are employed!
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Old 02-22-2014, 01:12 PM
 
Location: Michigan
2,198 posts, read 2,153,275 times
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A good CEO (e.g. Steve Jobs) can be worth a massive salary, but the idea that CEOs and high-paid executives in general deserve the money they make because of being more intelligent, hard working, and capable than everyone else is largely untrue. Many of them erode shareholder value, make bad acquisitions, bad hires, run companies into the ground, break laws, and leave with hundreds of millions of dollars for doing it.

Here's a recent example:

Marissa Mayer hired Henrique De Castro as COO for Yahoo.

Quote:
From the moment De Castro was hired, people warned that he was a big mistake for Yahoo.
Yet, Mayer plowed ahead, hiring De Castro, likely because when she started at Yahoo she had a blind spot for how the ad industry really works.
When Mayer hired De Castro, one source told us, "[Henrique] is very smart, but he has a difficult personality; both his teams and his clients dislike him ... He has no experience whatsoever running any kind of a real ad salesforce, let alone a 1,000+ team selling experiential media into brand buyers."
De Castro spent a whopping 15 months at Yahoo! before being fired and at best, their ad business treaded water.

Quote:
His time at Yahoo yielded little in the way of results, as far as we can tell. Yahoo's ad business remained stagnant, and De Castro was clashing with Mayer and her top executives.
Why Marissa Mayer Hired Henrique De Castro - Business Insider

You know what his compensation was for being incompetent at his job for 15 months? $109 million. It's completely obscene. There are probably thousands of people who could have done as well or better than he did for $1 million per year.

It also makes one wonder how competent a CEO Marissa Meyer is considering that every tech writer making 5 figures or low 6 figures seemed to know it was a terrible hire and yet the 9-figure CEO didn't.
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