Comments on: Poll: Is Limiting a CEO’s Pay Based on Net Worth Fair?

By: Mack jackson

Mack jackson — Thu, 03 Sep 2009 04:15:54 +0000

According to me pay should be depend on persons performance only. CEO pays are not determined by performance alone, unless the performance is absolutely worthless. It seems a CEO is paid just for staying around with the company.

By: Ryuko098

Ryuko098 — Sun, 29 Jun 2008 04:43:12 +0000

Pay should ALWAYS be based on performance. But more importantly, a good CEO needs to realize that, if his company is to succeed (meaning, if he wants to remain CEO) in our modern economy, he is going to need to cut down waste.
The scenario where the CEO voluntarily reduces his mammoth pay (c’mon, dropping your salary from $50mil to $45mil isn’t gonna make that big a difference for you, but the savings can be passed to the consumer or your employees!) is probably too much to hope for. However, I still believe CEO’s should be punished for failing. If I lose a hundred million dollars at my job, I’ll get fired – and maybe even go to jail.
The threat if losing everything for tanking your company should encourage a CEO to be at least somewhat thriftier.

By: Steve Olson

Steve Olson — Fri, 27 Jun 2008 17:33:59 +0000

I voted no, and I’m glad to see most of the others did too. No one should be able to control you much money you earn. There should be no limits. It think the reason is obvious. It violates our basic right to exchange our time and services to the highest bidder. If you aren’t making enough, limiting someone else’s pay won’t help you. And Instead, it will likely hurt you economically. What you need to do to earn more money, is make yourself more valuable in the marketplace.

By: Chad @ Sentient Money

Chad @ Sentient Money — Fri, 27 Jun 2008 17:12:48 +0000

@ Steve – Market value is fine, but many of those packages are put together by boards loaded with CEOs from other companies. The higher they make this guys salary the higher theirs is next time. I voted no, but that doesn’t mean I think CEOs are paid what they are worth…they are still over paid.

By: Chad @ Sentient Money

Chad @ Sentient Money — Fri, 27 Jun 2008 12:23:23 +0000

This is just a terrible idea. Pay should be performance based. Should a teacher have their pay reduced because their last name is Buffett and they are worth millions?

By: J.Arthur

J.Arthur — Thu, 26 Jun 2008 16:52:09 +0000

Limiting their pay based on net worth is not fair. It provides no incentives for the best to stick around. What we should be asking is what happens when they fail? We have seen some CEOs lately do horrible jobs without facing much consequences. Just look at their severance packages and you would think they are being rewarded(see number five and 8). To be really fair their pay should change quarter to quarter--pay for performance. Just knowing that CEO pay rose 298.2% in 2005 while the average worker only rose 4.3%. That helps put things in perspective.

By: Jeremy

Jeremy — Thu, 26 Jun 2008 13:42:04 +0000

Well, I pretty much agree with everything that has been already said. You have to pay for talent, and if you’re telling a prospective CEO that his earning potential is going to be capped because they already have a lot of money, they will just go to another company that will pay more. Doesn’t seem like a good strategy.

But I also think that the ridiculous golden parachutes are out of control, and I think that is where most of the public outrage comes from. Why should someone who ran the company poorly, lost shareholders billions of dollars, and potentially even cost jobs, get tens, or hundreds of millions of dollars when they leave?

Sure, they have incentive to do well because they own a lot of company stock and want to see it rise as well, but there is also little downside. Who cares if you fail, you’ll still get millions. That is not a recipe for innovation and striving to do the best you can.

By: HF Markets

HF Markets — Thu, 26 Jun 2008 11:00:52 +0000

I agree with the points above, especially Shadox. If CEO pay was limited, or somehow based on net worth, then the talented managers would soon find their way to other companies in other parts of the world who would pay ‘the going rate’. Jen hits the nail on the head though discussing when CEOs go bad. Much of the pay of a CEO should be linked to the performance of the company. Losing millions (in some cases billions) and walking away with a pre-arranged 100mn is criminal.

By: Shadox

Shadox — Thu, 26 Jun 2008 07:34:36 +0000

It’s not a question of fairness, it is a question of market economics. Companies that limit their CEO’s pay based on that executive’s net worth, will soon lose their CEOs to to rivals who are willing to pay market rates. Can you imagine losing a world class leader based on some insane, psuedo economic theory? Boards that try to do this will quickly find themselves replaced by shareholders (that is, if the CEOs in question are worth their salt).

By: Sara

Sara — Wed, 25 Jun 2008 22:14:04 +0000

Limiting pay is a terrible strategy if the CEO is money-motivated. It’s like asking someone to do an amazingly difficult, pressure-packed job out of the kindness of their hearts. I’m not in love with sky’s-the-limit pay packages, but I don’t think putting caps on people is the way to boost performance. Hopefully, some companies can find non-cash ways to reward top performers to bring some balance to the current situation.