on Aug 30th, 2007CEOs Rob Company Value to Pay for Personal Bonanzas
This whole business of CEOs raking in obscene amounts of money relative to the rest of the worker suits in the corporation sure makes getting up every morning a waste of time. The only way to make real money these days is to own the right to reproduce something or offer a proprietary service. Once you own that right, the ability to earn a buck comes from doing it as efficiently as possible.
If the CEO bets on a new product or service and it turns out to be a money maker, then I half buy he’s entitled to make some bucks. Placing a bet on your own vision when nothing like it exists in the marketplace takes balls (or eggs). The reward, though, should be pro-rated over time. A CEO who makes these kinds of bets with the corporation’s limited resources deserves credit for his or her vision. What is a corporation except an organized venture to exploit an insight into the needs of human consumption.
On the other hand, merging two companies so the combined company’s revenues is twice as large does not warrant a giant paycheck. Most of these deals are about buying market share for existing goods and services. Given that most mergers fail to produce sustainable revenues, it’s pretty obvious that their only motivation is to make the greedy bastards at the top richer.
The joke: the money paid to CEOs robs the company of needed capital to sustain its future. You can’t place bets on new products and services without having a stash of cash. So the next time you walk by the CEO’s office why not pop your head in and tell him to stop making personal wishes when blowing out the candles on the company cake.
CEO pay: 364 times more than workers