‘No defensible argument’: Anger boils over at CEO pay
‘No defensible argument’: Anger boils over at CEO pay
The historic UAW strike puts an exclamation point on more than a decade of efforts by Washington lawmakers to narrow the pay gap between top executives and workers.
The historic UAW strike puts an exclamation point on more than a decade of efforts by Washington lawmakers to narrow the pay gap between top executives and workers.
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“The argument that firms would make is that the job of a CEO has gotten exponentially more difficult in terms of responsibilities, litigation risks and outside pressure,” Dambra added. “Stock-based compensation allows for an alignment of interests between shareholders and managers. These are market (i.e. competitive) prices, and CEOs that are underpaid relative to their peers would leave.”
This is actual relevant information from this article, and a spotlight shone on why CEO pay actually needs a cap.
The pay difference between a CEO and manufacturing laborer is irrelevant to any discussion about CEO pay. The externalities of poaching CEOs from underfunded competitors can and should be seen as anti-competitive practice.
Taking the CEOs entire paycheck and distributing it to workers gets the workers pennies, each. Worker pay and CEO pay are not linked at all.
Taking the CEOs entire paycheck and distributing it to workers gets the workers pennies, each. Worker pay and CEO pay are not linked at all.
This is mathematically true (ish) but it misses the point. Super-rich people don't spend their money, they use it to outbid other rich people for control of existing assets, control media platforms, and schmooze politicians. So your rent and bills go up while your pay goes down.
You need much more than simple arithmetic to describe this problem.
By that logic, every front line worker should've received a 1400% increase during COVID.
You seem to think this money is given as a gift, or as some sort of recognition, and instead it is how they purchase talent.
Then those talented people will have to come up with a new way of doing things. Humans as a species are sensitive to relative wealth differences. It's hardwired. Riding tide lifting all boats kind of thing
Rising tide lifting all boats kind of thing
That's not what this means.
The argument "you have to make less money because I want you to" is not a very strong one.
That's kind of a false equivalency though. Most laborers are not given any stock-based compensation, and those that are rarely given enough for it to make much of a difference in lives, if they're even employed there long enough to accrue much. If motivation and alignment of interests between shareholders and employees is actually their argument, shouldn't all employees be given similar stock-based compensation then? I don't believe that businesses should be based on shareholder value at all (let alone the fact that the stock and debt markets seem to run our entire economy now), but based on actual, delivered value of services or products to customers. The argument that shareholder value is more important than employee pay and benefits (or human/environmental/legal rights, as it actually plays out) just creates more ways for people to be exploited and held down.
What do you see as a false equivalency? My point is the actual harm skyrocketing CEO pay does is result in a more difficult time for companies that get their C-suite poached away.
I'm not equating anything. Worker pay is independent from CEO pay in that capping CEO pay has no expected impact on employee wages. Companies are already paying the market rate - they're unlikely to just raise wages forever because of this.
We can have our own opinions on the ethics of that, but if we're not running companies, that doesn't matter. If you wanna fight for fair wages, you've got to live in reality.
“Stock-based compensation allows for an alignment of interests between shareholders and managers.
And ignores the other stakeholders in the equation, such as employees, customers, and community. People forget that there are two (that I, at least, know of) kinds of Capitalism. We have gone the route of Shareholder Capitalism, and look where we've ended up. But Stakeholder Capitalism, which considers all stakeholders to be important, is a real thing and is, perhaps, a better model for society in general.
Sadly, that's not what they're teaching now, and it's not how the CEOs, Boards, and markets think.