Dominic Basulto, of the recently debuted American, investigates a major problem affecting upper-level management in today's largest companies: CEO's who don't make enough money. Better break out the Kleenex-- this one's a tearjerker.
“How do I feel about executive compensation?” said John Bogle, founder of Vanguard mutual funds. “Terrible.” CEO pay packages are “outrageous” and “inexcusable,” he added.
But are they really? In fact, there’s strong evidence that, far from being paid too much, many CEOs are paid too little. Not only do the top managers of multibillion-dollar corporations earn less than basketball players (LeBron James of the Cleveland Cavaliers makes $26 million), they are also outpaced in compensation by financial impresarios at hedge funds, private equity firms, and investment banks. Should we care? Yes. If other positions pay far more, then the best and the brightest minds will be drawn away from running major businesses to pursuits that may not be as socially useful—if not to the basketball court, then to money management.
Certainly, some excessive corporate pay packages are “outrageous,” as Bogle and other critics claim. But even more outrageous is a system where Dr. Phil makes more than twice as much as Jeffrey Immelt, CEO of GE, the world’s most valuable company.
The fact that this is a somewhat absurd concern aside, we just want to say this: you've obviously never seen his show.
Why Do We Underpay Our Best CEOs? [American.com]