Wednesday, November 20, 2013
Swiss CEO Pay
Now it's my belief that if a company is run successfully and efficiently, yielding high profit margins, a CEO should be able to grant him or herself or be granted significant pay for efforts leading to that success in managing a company. If you can afford to be allotted significant pay from a company and not cause any detriment to its revenue and profit or others salaries then that should be sufficient. Novartis was mentioned in this article and I can't help but have bias because I interned with the company while living in Greensboro, NC for a decent amount of time. I know a lot of people who work for the company and know that the company is worth upwards of 60 billion dollars. It doesn't shock me that they would pay the chairman 76 million and obviously this does not really dent their budgets when I know the animal health division alone spends at least that much annually on developing projects, its part of the companies risk factor. If shareholders were put in charge of the pay behind chairmen and other people in high positions would that also give shareholders the right to manage other financials of the company? I don't think that is at all fair, people should be given control over the things they have experience with and should be allowed to continue their current practices as long as the companies in question, like Novartis, stay successful without intervention by outside forces.
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After reading this I would have to agree with you Tyler. If the company can afford to pay its chairman $76million and not damage the revenue of that company they should definitely be allowed to pay him/her. Unfortunately people think that it's unfair when big companies pay their chairman that kind of money mainly because they wish they were receiving that money. When in turn if the chairman of company is the reason for the success of that company they should be payed that much. Just because people think it's unfair that someone is making more money then they are doesn't mean they should complain about. Because lets face it the way the American dream as well as the way our culture is set up its a dog eat dog world.
ReplyDeleteAs long as the company is not affected by the high pay out I personally see nothing wrong with it. The idea of a business is to make money and that is the reason these CEO's created the business. People are constantly trying to make things fair but do not want to work for it. Hard work payed of for many of these CEO"s and they are receiving the benefits.
ReplyDeleteVery interesting that this article hit so close to home for you! Thats crazy! On another note, I could not agree more with you your opinion on The Swiss CEO pay. If it does not alter the company, then the CEO should have the ability to determine their own pay. Who knows what shareholders would do? Were also talking about multibillion dolllar companies, and honestly what is 76million worth to a company that big? Everything needs to be put into perspective. Nice post!
ReplyDeleteYou guys are a bunch of commies: you are all implying that owners should not get to control their companies, but that the employees should get to tell the bosses what to do.
ReplyDeleteSeriously, though, CEOs are employees. They may own stock, but in a publicly traded company, those who own the stock own the company. They are the owners. Often one person or group will own a controlling share--meaning more than 50 percent of the stock--and this person/group may often be the founder of the company. They should be fairly familiar with the business. That said, if they want to ruin their company with stupid decisions, shouldn't that be their prerogative? They are the owners, after all.
It seems that would be their prerogative however, the CEO was placed in the position over all others in managing the company because they are the ones who supposedly know what they're doing and understand the inner workings of how to run the business, 76 million dollars especially is a lot to spend on someones salary but you also have to weigh in how large the company is first and put their financials in perspective before looking at paychecks. I think there definitely needs to be incentive for someone who's putting so much time into a large global company (I assume they go above and beyond the average worker) into making it better and increasing overall profit. I understand the owners should be given to a degree some ability to control how the money is spent but then again, the reason you hire people is to do the work you don't want to do, don't have time to do, or don't have the qualifications to do for you. So once again, I think that it would be fair to pay a CEO significantly higher than average employees.
DeleteMany argue that allowing shareholders a direct vote would not amount to much for the reasons you cite: presumably, the owners are already relatively happy with the pay and performance of companies, at least in general (a key caveat). So owners already have control, even if it is less direct, and this may not have a big impact.
DeleteI just don't think that a shareholder with very little stock should have more power than an executive. It is okay for the shareholder's with a majority because they actually do have more power. They are the main owners so they should be able to choose the pay of the executive.
ReplyDeleteTyler, I completely agree with what you wrote. The main job of the company is to make money for their shareholders, and as long as they are reaching that objective, they should be able to pay their executives as much as they see fit.
ReplyDeleteNice work