2006-10-09 00:43:00 · 11 answers · asked by Eric Inri 6 in Business & Finance ➔ Investing
Why can't they just be paid by their dividends?
2006-10-09 00:52:52 · update #1
It is very simple. The salary and other benefits of the CEO, which may include private use of the company jet, lavish expense account, and extravagant bonus and stock options is dictated by the board of directors, which the CEO appoints. Get the picture?
2006-10-09 01:07:22 · answer #1 · answered by Anonymous · 0⤊ 0⤋
First, CEO's cannot determine their own pay. That must be done by the board of directors; however, you are right that in the past, most CEO's were chairman of the board and their board was mostly "yes" men whose job was to support the Chairman and CEO. Support included generous compensation plans.
Secondly, dividends are paid to shareholders. Because CEO's run the companies, they have access to volumes of inside information so their ability to buy and sell stock in their company is limited. Also, their company may not be paying dividends. If the company is in a growth mode, like Microsoft was just a few years ago, the company may be retaining all of its earnings and paying no dividends.
With respect to why they make so much more than other people, there are relatively few people that are qualified to run a company. Combine that with the fact that boards may want to hire a superstar, then those people get much higher compensation packages and end up on the evening news. I believe the average compensation for most CEOs in the country is around the $200k - $300k mark, which is not unreasonable based on years of experience, educational requirements, company size, and overall responsibilities. This is the same as a well compensated attorney or doctor.
2006-10-09 02:44:30 · answer #2 · answered by Jeff S 3 · 1⤊ 0⤋
If you work at McDonald's and your job is to keep the toilets clean and you leave one dirty nothing happens.
You will get fired and you will get a new job at Burger King the next day.
If you work at McDonald's and you buy cheap cows from Africa and you start an epidemy you will go to prison for the rest of your life.
Harvard (Or any other Ivy League) school is very expensive and by the time you are graduated you have $500,000.00 USD in debt.
It usually takes seven years of very hard work just to pay for your student loans.
CEOs cannot paid themselves hundred of millions of dollars of salary.
The Board of Directors calls the shots.
There are few CEOS in the World.
If you fire a CEO and you place an ad in the local newspaper ofering a low salary nobody will want the job.
Nobody with enough experiencience and education.
You cannot just hire a recent student from Harvard to run a Billion Dollar Corporation.
2006-10-09 05:10:48 · answer #3 · answered by Anonymous · 0⤊ 1⤋
They actually get paid very little. A CEO position of a FTSE 100 company is the absolute pinacle of a corporate career. Also, CEOs are only typically in place for 3 years. They must be paid highly for that. CEO salaries at private companies dwarf those of public companies nowadays.
2006-10-09 00:52:54 · answer #4 · answered by The Golden Child 1 · 0⤊ 0⤋
It is direclty proportionate to the risk that the persons takes in that business. So for example, if a business runs into financial trouble, the employees may not even know or realise or at worst get retrenched but the directors and up are personally liable for the loss ! Did you know that? They will lose everything, its a huge responsibility and thus they get paid accordingly
2006-10-09 00:46:03 · answer #5 · answered by tay_jen1 5 · 0⤊ 0⤋
How someone is payed (legally) depends on the value that he or she brings to the market. So CEOs bring much more value to the market than an employee.
2006-10-09 01:03:52 · answer #6 · answered by Artguer 2 · 0⤊ 0⤋
You answer your own questoin -- they pay themselves.
As for why they don't just pay themselves with dividends -- they do that too -- though traditionally there has been a tax disadvantage to paying with dividends.
2006-10-09 03:19:39 · answer #7 · answered by Ranto 7 · 0⤊ 0⤋
They don't have a conscience,I can't believe anyone is worth what they grab for themselves even when the company is failing.
2006-10-09 00:48:53 · answer #8 · answered by Anonymous · 0⤊ 0⤋
They control the purse strings.But you may also notice that they may end up in jail if something goes wrong,where the aveage worker may only lose their job.
2006-10-09 00:51:50 · answer #9 · answered by teddybear 3 · 0⤊ 0⤋
The board of directors sets their salary and compensation. Do you want some kind of law regarding maximum compensation? Please say it ain't so.
It's a free market economy and capitalism at work.
2006-10-09 01:40:32 · answer #10 · answered by derek 4 · 0⤊ 0⤋