None of this answers the question of how we can measure CEO productivity in order to evaluate whether their pay is “worth it.” Does anyone know if there exists some sort of CEO rating system out there? What does it take into account? EPS? P/E? Number of jets/vacation homes/mistresses?[/quote]
CEO pay is absurd. Agree completely. It’s the fault of the boards… and the shareholders who elect them. In order to cover their asses from lawsuits, the boards hire compensation consultants, generally at the suggestion of the CEO. The compensation consultant always uses averages for the industry in question and everyone thinks their CEO is above average (like Garrison Keillor’s Lake Woebegone), so CEO pay naturally drifts upwards every year and eventually we arrive at today, where it’s so disconnected from reality that it’s just ridiculous. The same goes for board pay, just in reverse. But, who allows this? The shareholders. Ultimately, it’s the shareholders who pay for all of this crap – well, until recently with the large banks. Now we as taxpayers are involved. But, outside of the TARP banks – which now have pay restrictions – it’s the shareholders of these companies that are getting screwed, not society at large. But it is irritating all the same.
By the way, anyone know how much Bud Selig, MLB Commissioner, makes each year? The number will absolutely flabbergast you.
