This is an infographic that shows the effects of the 2008 crisis on CEO compensation - http://nicolasrapp.com/wp-content/uploads/2009/04/executive_comp.gif. More recently, Warren Buffet criticized Coca Cola's executive compensation plan. Interestingly, despite his company Berkshire Hathaway being the largest shareholder of Coke, Buffet decided to abstain from voting as opposed to voting in opposition to the plan. In total, only about a third of shareholder voted against the compensation plan. I find it interesting that the shareholders are not being more active about opposing these compensation schemes. http://finance.fortune.cnn.com/2014/04/23/buffett-coke-exec-compensation-plan-was-excessive/
I'm usually opposed to government mandated executive pay caps (unless you're getting a government bailout). That said, the pay gap is grotesque, and failing or floundering companies are being a bit dumb to compensate their CEOs so much when they aren't performing. I am surprised that, as Sanjay said, shareholders aren't being more active opposing compensation schemes.
this is a matter of great contention. in a capitalist economy it is hard to justify government's intervention in regulation CEO compensation. however, i would be interested to see how these laws to "tame skyrocketing CEO pay" affect big shot businesses in the U.S
"Between 1950 and 1970 bonuses ranged between 15% and 20% of current compensation, with no obvious trend. Today, the proportions are reversed. Salary is typically a small portion of CEO compensation, normally only 10% to 20% at larger companies."These statistics are crazy. As I was reading the "Road to Recovery", I couldn't help wondering how different the remuneration structure was before bonuses becomes everything. This article gives a partial answer to my question. I still do not understand how companies would benefit from increasing the pay for CEOs without limits.
I agree that the gap is "grotesque" and that it is perplexing that shareholders aren't more actively opposing some of these compensation plans, but I think I am missing the point as to why exactly these compensation plans are harmful to society overall. More specifically, I am still failing to see why even those compensation plans that are performance-based are not efficient. Wouldn't these incentivize t CEO's to run the company in the most profitable way possible?
My favorite part of this plan is that Bonuses are going to be paid by a formula that excludes subjective bonuses. I think the amount of pay given to CEO's has grown from representing company growth to representing a status symbol.
I just really think it's funny that CEOs defend their colossal salaries as performance based. If that was the case, a CEO would have to be working 380 times more than the average worker.
^ I agree with Hikaru to a degree.. These CEOs do have more responsibility and arguably highly stressful positions in the companies. They also had to work to get to the top, and shouldn't they be rewarded for getting to the top of a grand corporation? Maybe they don't work 380x harder than the average worker, but they did something to get themselves to not be in the same position as the average worker. At the same time, they don't need all this money and should have to give a decent amount to taxes.