At Work

CEO pay and you

Most of what you hear about CEO pay is bogus propaganda. First, it focuses not on the average CEO, but on a few select high rollers in companies where relatively few Americans are employed. Second, pay as criticized is not salary, but total compensation the bulk of which is some form of stock and/or the potential future value of retirement income. Next, CEO pay is an annual decision that can be changed quickly by the board of directors. The stock awards can even be taken back under certain circumstances.

To say you can take a portion of CEO pay and give it to workers which represents an ongoing obligation with multiplying and compounding effects (such as payroll taxes) is naive, misleading and irresponsible. Increasing pay unless justified by business conditions puts the organization and jobs at risk.

Having said all that I will acknowledge that some of the CEOs of S&P companies likely do not deserve their level of compensation. That is an entirely different issue that should be addressed by the shareholders and their board. And speaking of shareholders, let’s not forget these people directly and indirectly are the owners of the organization entitled to a profit for their investment and risk taken. And you too can be a shareholder.

But there is an alternative for sharing the wealth.

A smart company will allocate stock shares to workers as profit-sharing and productivity incentives even if some of the shares come from CEOs. Fair and smart.

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Categories: At Work, Observations on life

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