4/10/2006

Cracking Down on CEOs Compensation

Due to the rules and regulations the CEO’s and other high executive’s salaries and bonuses are a hard number to figure out. On the books, CEOs and other executives usually make less than a million dollars because of the tax write-off the government gives. But the problem is executives make much more money than that through bonuses and other compensation plans. The SEC is trying to crack down and make the rules clearer to see the whole price of the compensation. I believe that companies can give their executives any amount of money they want but it should be easier for the investor to see the number.

5 comments:

will said...

I agree with this. I find it interesting that a CEO's salary can be listed as one thing but can be totally different depending on bonuses earned. It would be wonderful for investors to know what the CEO of the company is really making but on the other hand it would not make much of a difference. I don't think too many CEO's would be willing to take a pay cut just because it make look better to investors.

Blake said...

I think that companies should disclose all of the benefits, including salary, stocks, options, and perks that CEOs receive for their work. Just disclosing their salary is giving a deflated figure to the public, and is very deceptive, and uninformative as to a CEO's real position in the company. If someone is running a company that is supported by many investors, I believe it is those investors' right to see how their money is being utilized (including how it is funding the management that is running their company, etc).

Billy said...

When you list your pay, do you feel like you need to list all of the components of your compensation, or do you feel like you only need to list dollars per hour? I think that CEO's can be paid whatever the market supports. Yeah, it seems that getting on the company golf course, flying around the globe in the company jet, and multi-million dollar annual bonuses is really not fair - but don't tell me that none of you wouldn't take that cush job.

Seth said...

Normally market forces are pretty good at setting the optimal price for goods. There are, however, some circumstances in which either the market fails on its own (externalities, commons, etc.) or when people cause the market to fail (cartels, collusion, etc.). I can’t help but wonder if executive compensation is one area in which the market is failing.
Boards of directors are in charge of setting executive pay. Often executives are on the board, chair the board, or at least are close with board members. I think that would give an executive quite a bit of influence on his/her own pay. If some companies over pay executives, other companies are pressured to overpay as well.

Dr. Tufte said...

-1 on Will's comment for grammatical errors.

-1 on Seth's comment for spelling errors.

I think this is voyeurism. Most people don't like to reveal their compensation. Why should we impose this requirement on folks at the top of a particular heap?