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SEC adopts rules mandating disclosure of CEO-worker pay ratios

reuters.com

11–20 of 86 posts

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#11
post #4

Can someone explain to me why we're outraged that CEOs make lots of money? I truly don't understand it. My presumption is that CEOs are adding enough value to be worth their pay, just like every other worker (should be).

Who decides that and is it true or fair? If the CEO earns 25x the average employee salary would it be clear that they add 25x more value to the company than any other employee?

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#12
post #4

Can someone explain to me why we're outraged that CEOs make lots of money? I truly don't understand it. My presumption is that CEOs are adding enough value to be worth their pay, just like every other worker (should be).

Honestly CEO's getting paid a ton isn't really much of a problem as opposed to the US's absurdly low income tax rates for the wealthy. Not to mention capital gains... estate taxes... etc

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#13
post #9
post #7

I have thought once I establish a company, I might tie CEO salary to be limited to being a multiple of the least paid employee. Then what the good ratio is becomes an interesting question to me. Is 10x enough? Is 100x too much? Is a CEO's productivity worth 100x the lowest paid employee? If we go with the lowest paid employee is making 30k a year, and the CEO is making 3mil? Is that too much, not enough, just right?…

> Is a CEO's productivity worth 100x the lowest paid employee? No. Not if you want to live in a peaceful society, but we're talking religions again... You are correct, there is no right answer. Views vary based on how much 'socialist' or 'liberal' someone is.

[deleted]

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#14
post #4

Can someone explain to me why we're outraged that CEOs make lots of money? I truly don't understand it. My presumption is that CEOs are adding enough value to be worth their pay, just like every other worker (should be).

There's a lot of suspicion that your presumption isn't accurate. It's a fairly big area of research, though. One alternate hypothesis is a form of "executive capture", that companies nominally owned by shareholders are actually run by more of a clique of executives, who serve on each others' boards and pay each other large salaries. Some mild but inconclusive correlational evidence for that view is that when controlling for other factors (size, industry, etc.), CEOs are paid less at private companies and companies with concentrated ownership, than at companies with diffuse ownership—suggesting that when the owner is in charge and paying attention, they prefer to rein in executive pay.

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#15

I'm not really sure what this is going to accomplish. CEO pay is already public. And this is going to end up on page 37 of a companies 68 page annual report. And then there is this.... > Under the Securities and Exchange Commission's final rules, companies will get some flexibility in how they find the median. For instance, they can exclude 5 percent of their overseas workers when arriving at the number and use stati…

http://www.npr.org/sections/thetwo-way/2015/08/05/429628037/...

* It is an unimplemented part of a law that was passed 5 years ago. Why the 5 year delay? * In the past 2 years, there were 280,000 public comments supporting the pay ratio rule. * Why would the page of the annual report on which this figure appears matter? As far as I can see from AAPL's report, the first page is fluff: http://investor.apple.com/secfiling.cfm?filingid=1193125-11-... * Did I mention it is a requirement of a law passed 5 years ago?

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#16
post #4

Can someone explain to me why we're outraged that CEOs make lots of money? I truly don't understand it. My presumption is that CEOs are adding enough value to be worth their pay, just like every other worker (should be).

That is a very naive presumption..although if the CEO is the founder of the company, then I don't have any qualms about it.

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#18
post #4

Can someone explain to me why we're outraged that CEOs make lots of money? I truly don't understand it. My presumption is that CEOs are adding enough value to be worth their pay, just like every other worker (should be).

The populist (read: uninformed/envious) belief is that high-paid CEOs are simply entitled ladder climbers that don't provide any more value than the mail room clerk, and yet soak up zillions in bonus dollars that should instead go towards paying said mail room clerk.

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#19
post #4

Can someone explain to me why we're outraged that CEOs make lots of money? I truly don't understand it. My presumption is that CEOs are adding enough value to be worth their pay, just like every other worker (should be).

Who decides that and is it true or fair? If the CEO earns 25x the average employee salary would it be clear that they add 25x more value to the company than any other employee?

I'd say no. Salary is more a function of negotiating ability than value added. Consider this, does your salary fluctuate regularly as your performance waxes and wanes? Or does it stay relatively constant with occasional steps up?

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#20
post #4

Can someone explain to me why we're outraged that CEOs make lots of money? I truly don't understand it. My presumption is that CEOs are adding enough value to be worth their pay, just like every other worker (should be).

There's a lot of suspicion that your presumption isn't accurate. It's a fairly big area of research, though. One alternate hypothesis is a form of "executive capture", that companies nominally owned by shareholders are actually run by more of a clique of executives, who serve on each others' boards and pay each other large salaries. Some mild but inconclusive correlational evidence for that view is that when controll…

I wonder why non voting stock is not more commonly used.
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