CEOs are not overpaid, according to TIME magazine:
It is true that CEO pay has gone up—top ones may make 300 times the pay of typical workers on average, and since the mid-1970s, CEO pay for large publicly traded American corporations has, by varying estimates, gone up by about 500%. The typical CEO of a top American corporation—from the 350 largest such companies—now makes about $18.9 million a year.
But:
While individual cases of overpayment definitely exist, in general, the determinants of CEO pay are not so mysterious and not so mired in corruption. In fact, overall CEO compensation for the top companies rises pretty much in lockstep with the value of those companies on the stock market.
And finally:
In fact, the main driver has been the blossoming of superstar firms that sell an innovative product and have global reach, as well as productivity shifts that benefit those companies especially. These firms include Google, Facebook, Boeing and Verizon. Typically, everyone in these companies—from senior managers to personal assistants—is paid more than workers at their more traditional counterparts. But that reality makes for a less juicy narrative than stories of CEOs taking money from their workers.
However, all the above was adapted from:
The author is Tyler Cowen, Holbert L. Harris Chair of Economics at George Mason University. So this attitude is more Cowen's not necessarily that of the magazine.
So do you agree with Cowen? I'm missing the logic, but Fortune provides the top ten OVERPAID salaries in America, with the median employee pay in parentheses:
- Ronald F. Clarke, Fleetcor Technologies Inc
Salary: $52,643,810 (Median employee pay: $34,700) - Mark V. Hurd/Safra Catz, Oracle Corp.
Salary: $81,562,244 (Median employee pay: $89,887) - Hock Tan, Broadcom, Inc.
Salary: $103,211,163 (Median employee pay: NA) - Dirk Van de Put, Mondelez International, Inc.
Salary: $42,442,924 (Median employee pay: $42,893) - Stephen Wynn, Wynn Resorts Ltd.
Salary: $34,522,695 (Median employee pay: $44,437) - Robert Iger, The Walt Disney Co.
Salary: $36,283,680 (Median employee pay: $46,127) - W. Nicholas Howley, TransDigm Group, Inc.
Salary: $61,023,102 (Median employee pay: $46,742) - Brian Duperreault, American International Group, Inc.
Salary: $43,086,861 (Median employee pay: $64,186) - Margaret H. Georgiadis, Mattel, Inc.
Salary: $31,275,289 (Median employee pay: $6,271) - E. Hunter Harrison, CSX Corp.
Salary: $151,147,286 (Median employee pay: $98,697)
A rough average is a ratio of 1000:1, although the Mattel head makes 5000 times more than the median employee pay. But that has everything to do with that figure being only $6,271, about a tenth of the other companies. Why so low? Mattel reports that 70% of its employees are in developing nations on the manufacturing line.
According to Bloomberg:
The gap between pay for U.S. chief executive officers and the people who work for them has widened sixfold in three decades. Do bosses work six times as hard these days, or have they gotten smarter or scarcer? Company boards seem to think it’s all of the above. They say large pay packages stem from fierce competition for talented managers capable of leading global organizations, and that pay is closely tied to performance.
The Fortune article is a bit mysterious, and this Bloomberg tally seems rather high, but that could be because maybe stock value increase is included:
According to ETTech.com, #2 Tim Cook in 2018 received a TOTAL compensation of $15.7 million. Something is off by at least a factor of TEN!!! Marc Lore, #1, made $22.8 million in compensation from Walmart in 2018, when the average employee was paid $19,177, or a ratio of 1,188.1. Again off by a factor of ten.
If you're now confused about executive salaries, CareerAddict provides the 10 highest paid CEOs in the World in 2018, and be prepared to be shocked:
- #1 Jeff Bezos, Amazon, American, $151.7 billion
- #2 Mark Zuckerberg, Facebook, American, $70 billion
- #3 Charles Koch, Koch Industries, American, $60 billion
- #4 Larry Page, Alphabet (owns Google), American, $48.8 billion
- #5 Michael Dell, Dell Computers, American, $24.1 billion
- #6 Elon Musk, Tesla, South African, $20.8 billion
- #7 Suphachai Chearavanont, Charoen Pockphand, Thai, $13.7 billion
- #8 Marc Benioff, Salesforce, American, $3.9 billion
- #9 Sundar Pichai, Google, Indian-American, $1.2 billion
- #9 Annel Bhusri, Workday, American, $1.2 billion
So you say, something is wrong up there, for the net worth of Jeff Bezos is only $153 billion. Whatever, this is why there are incredible differences in compensation reports, for Bezos in 2017 only earned $1.7 million/year from Amazon. But he owns 80 million shares of Amazon. As such, while the median Amazon salary is $28,000/year, Bezos makes more than that in 10 seconds. There are 31,536,000 seconds in a year. Thus, Bezos makes more than 3 million times Amazon's average salary. That might be low, for his annual earnings would thus be less than $100 billion/year, and his 2018 annual compensation was supposed to be $151.7 billion.
It appears then that CEOs are not overpaid, as such. It depends on how much stock they have accumulated over time.
Back in Hawaii, Connie Lau of Hawaiian Electric Industries leads the state with a compensation of $5.7 million. #2 is Peter Ho of Bank of Hawaii at $5.2 million, while #3 is Matt Cox of Matson at $4.6 million. All three are at least somewhat regulated, maybe banks less so. Utilities and banks occupy 9 of the 16 top salaries.
I remember Connie Lau as a low-ranking utility employee 40 years ago. #15 is Paul Yonamine of Central Pacific Financial at $266,602. How quick those numbers dropped. I worked closely with Paul on various projects dealing with Japan more than 30 years ago.
#16 is David Watamull of Cardax at $198,034. I was on David's board a quarter century ago. Nice to see him in the top 16 and still surviving in the tough field of biotechnology. Oh, I have all kinds of stock options in his company, except the way financing works, those shares now amount to almost nothing, and, maybe nothing.
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