Worst Tech CEOs Earn the Most Money 313
tappytibbins writes to tell us Baseline is reporting that in a recent look at the 100 largest tech companies they found that there was a striking correlation between the highest paid CEOs and the lowest returns. From the article: "The one-third highest performing companies paid their chief executives an average of $7.12 million--while the bottom third paid their CEOs $9.29 million. The study compared direct compensation, which includes base salary, bonus and value of stock grants. Why the disconnect? Jack Dolmat-Connell, founder and president of the firm, cites the phenomenon of 'chasing the median': Companies benchmark their executive compensation figures on peers instead of looking at factors related to performance."
In pursuit of excellence? (Score:5, Interesting)
Why the disconnect? Jack Dolmat-Connell, founder and president of the firm, cites the phenomenon of 'chasing the median': Companies benchmark their executive compensation figures on peers instead of looking at factors related to performance.
How about the former CIO where I worked? You could swear his primary motivation was to get himself more money, however he did it, by making his performance look good, the long-term problem is determining if that appearance of 'good performance' really was as good as it looked on paper and how it enabled the business the grow or trim costs effectively.
"If I make all those guys putting in 16 hour days wear suits and ties, we'll look more professional and I'll get compliments on what a tight ship I run! That should get me $100,000 more per year."
P2P Compensation. (Score:2, Interesting)
Isn't that how most pay is determined? By what others are paid in your profession/industry?
this is not completely new (Score:5, Interesting)
Re:Modify the numbers (Score:2, Interesting)
We had a guy who took a job, changed the numbers on a report to show his predecessor sucked, and then faked his numbers to look good.
Yeah, Lies, damn lies and statistics. Without oversight it's amazing what you can make metrics say. Don't like what one measure says? Come up with one that does!
"Hmm. The department costs too much in overtime, but we can't cut it or work won't get done and people will notice more problems since I took over. I know I'll show how much in Fringe Benefits we are saving by exhausting our current workforce rather than adding more headcount!"
Re:Or... (Score:5, Interesting)
My S.O. _is_ an executive recruiter, and I know this happens.
Re:Or... (Score:4, Interesting)
Aside from corruption from having special friends in the government, there is little evidence that good "CEO-sense" (whatever that means) has much to do with success. In fact, the only way we have of evaluating good "CEO-sense" is by looking backwards, which makes every CEO lucky enough to inherit a good market position "good" by tautology.
But as a predictor, as they always say in the buz, "past performance is not a guide to future performance".
Best CEOs Earn the Least Money (Score:5, Interesting)
Celebrity executives are not the best executives (Score:3, Interesting)
CEOs (Score:4, Interesting)
libertarianists (Score:4, Interesting)
Thus we have an example of the wealth of the many being transfered to the few (in a manner not based on merit, but rather, groupthink), and why a _totally_ free market is a terrible thing, and not in the interests of the majority.
Re:Best CEOs Earn the Least Money (Score:5, Interesting)
and let me clarify, it doesn't require greed to want to get compensated for your money, time, and the value you add. He led apple through an amazing turn around and was at the helm during 4 major occurances: the Ipod, switch to Unix OS, Intel Chips, and streamlining of computer production. But I'd bet he feels he has well earned those gifts just as much as he would probably ask for a very hefty salary for his incredible performance.
Re:Anyone remember Ashton-Tate and Wordstar? (Score:3, Interesting)
Sort of true, but not the complete picture. dBase IV was indeed the quality showpiece you describe (funny how yesterday's gods become today's devils) but more to the point the code was acquired by -- you guessed it -- Microsoft, who turned it into everyone's favorite mockery of a database, MS Access. When you can't compete, sue to cover your failures -- SCO didn't invent the technique.
Look up the story of Tom Rettig some time, one of the main developers, for a tid-bit of insight into the origin of the term "eating your own dog food". He used to co-star with a dog in the iconic TV series Lassie.
Re:CEOs (Score:5, Interesting)
Anyway, a few months later we hear news from Bangkok (of all places) of a stock scam. Guys in a "boiler room" had been selling a bunch of stocks in various companies. They would deliberately pick companies that were heading for bankruptcy (or could be pushed in that direction) and make press releases about the amazing stuff they were doing and produce nice glossy brochures. They'd then use this material to hard sell the stocks by phone. When the companies failed they'd then run off with the money paid for stocks knowing that they'd never have to pay out. (I don't fully understand the mechanics of this despite reading an article in Time about this exact scam.) Anyway, on the list of companies being traded, there was our company!
The key staff (who actually did work) at the company jumped ship. Almost everyone else followed. But bizarrely the company didn't need any staff to continue its scamming. They carried on making press releases describing their (imaginary) work and I remember reading a news story in which I myself was quoted talking about my work there, long after I left! On the basis of this they managed to get multi-million dollar grants from a US city famous for its Mafia connections and presumably, with few staff to pay, the CEO could pay himself very handsomely.
One day I want to write a book about our company. (I did start a Wikipedia entry which hasn't been deleted yet.) Sadly I think of it as 'ours' because a bunch of us worked hard to make it a world-class company that competitors looked up to. Unfortunately, due to the large number of Italian names of the people involved, and the aforementioned reputation of the city that was involved, I might wait a few years.
Neither. (Score:1, Interesting)
The way folks become CEOs is to work their way up the corp food chain. Unfortunately, what makes a good middle manager, technician, etc.. (attention to detail, knowing how to do the job, nuts and bolts type of stuff) makes a really shitty CEO. A CEO has to be a big picture type of guy - like Steve Jobs. Here's the catch-22, to become CEO, at least for your typical publicly traded corp, you have to work your way up the food chain. To do that, you have to be a great nuts and bolts guy to become a shitty big picture guy.
So what's a big picture guy supposed to do?
Become an entrepreneur - Steve Jobs, Mark Cuban, Hewlett and Packard, etcc...
OR, get into a program like the one that IBM used to/still does have. They called the big picture guys "Wild Ducks", IIRC and they would work with them and try to groom them for something bigger. Of course, there's only so many CEO jobs out there. Which leads most of us to option #1.
Which means, someone like me, who hates the details, is usually considered a fuck up by the corporate world and techies and, well, everyone else. Hence the few years of my unemployment.
Yeah, try getting funding for a startup if you don't have a track record and/or you didn't graduate from Stanford, MIT, Harvard, Yale, you get my drift.
Anti-business bias (Score:5, Interesting)
So there are a couple of valid interpretations of this data, and the article (wisely, probably) makes no attempt to jump from correltation to causation. Too bad so many people -- even slashdotters -- have such a hard time resisting the instinct to see the two as being the same.
Unfortunately, I don't think this is a coincidence. There's no way Slashdotters would have so grossly misinterpreted a study correlating, say, video games and violence -- because the party line around here is that video games are a Good Thing. A lot of geeks, however, have complete disdain for the "suits" and "pointy haired bosses" in management. "Why do the 'clueless' managers make so much money, when I'm obviously so much smarter? Why do I have less job security when I'm the one working 100 hour weeks, fueled by Mountain Dew and fear of downsizing?" It's true that there are bad managers out there, but much of this attitude is just scapegoating for one's own job dissatisfaction
It also shows a profound misunderstanding of business. To the disgruntled coder, it may seem like the business world is stupid and arbitrary -- where people make more money the "dumber" they are -- because they don't understand it. But really, it's little different than if the CEO said: "I don't understand your C++ code; it just looks like a bunch of random characters you threw together. Therefore, it's stupid." Like it or not, there is such a thing as skill in business -- and oftentimes, it's rarer and less replaceable than technical skill. Just take a look at the career of Steve Wozniak, with and without Steve Jobs. Now look at the career of Steve Jobs, with and without Steve Wozniak.
Cheers,
IT
Re:CEOs (Score:4, Interesting)
Re:libertarianists (Score:2, Interesting)
http://www.worldwatch.org/node/4289 [worldwatch.org]
http://www.finfacts.com/irelandbusinessnews/publis h/article_10002825.shtml [finfacts.com]
To quote the above article -
"Nobody beats the U.S. when it comes to the difference in pay between CEOs and the average worker. In 2000, on average, CEOs at 365 of the largest publicly traded U.S. companies earned $13.1 million, or 531 times what the typical hourly employee took home. The corresponding ratio in 1980 was only 42, and in 1990 it was 85."
The norm seems to be for CEOs to help themselves, while they downsize away -
http://www.educationforjustice.org/index.fpl/1200/ article/4995.html [educationforjustice.org]
Compensation should be on the proxy (Score:3, Interesting)
The total compensation (including fringe benefits) for each of the top five employees of a publicly held company has to be reported to the SEC.
The shareholders should set that amount. You put a number on the proxy, and the share-weighted median of those values is the limit on total compensation for the top five. Management should be allowed to suggest an amount on the proxy, but that shouldn't be the default for unreturned votes.
Now that would make management more responsive.
For mutual funds and retirement plans, the right to set that value has to pass through to the beneficial owners. For a mutual fund, you'd specify a number on the fund's proxy, and the fund's managers would be allowed to specify the compensation limit for each company, but those choices would have to add up in some weighted way to the median of the value set by the real owners, the fundholders.
Re:Modify the numbers (Score:2, Interesting)
After that, their idea of training us on new products was to put us in a room, and have us listen to someone read parts of the new product manual. They passed out copies of that manual, and then told us to go back to the phones and support the new product. We rarely got to even see the new hardware we were supposed to support.
Hire me! I can save you $5,000,000 (Score:5, Interesting)
I am sure that together we can make just as good of decisions as your precious CEO.
Actually, I think the problem here is the Lake Wobegon Effect - no company is will to admit that it would dare hire a below average CEO. Therefore, of course theirs deserves pay greater than the average...
Re:Anti-business bias (Score:3, Interesting)
These are legitimate questions, and you sneer at the people asking them without providing any real answer.
But really, it's little different than if the CEO said: "I don't understand your C++ code; it just looks like a bunch of random characters you threw together. Therefore, it's stupid."
Whether the person looking at the code understands it or not, it produces a result that everyone understands: a working program. Business jargon produces
Like it or not, there is such a thing as skill in business -- and oftentimes, it's rarer and less replaceable than technical skill.
Agreed. However, there is a notable lack of evidence that such skill has any positive association with the enormous compensation packages and golden parachutes that characterize the "C*O" level of major corporations.
Re:Problem with pay-for-performance (Score:3, Interesting)
Re:Or... (Score:5, Interesting)
I think that the "study" basically says that bigger companies pay their CEOs more, which is not exactly insightful. IBM pays their CEO more than Adobe's? Really?
To get real data, they should have taken the top hundred companies from *last* year and seen how they did this year. They also might want to consider doing something like dividing CEO salary by last year's revenues. That would better control for the differences in size between companies like IBM and Adobe.
IBM: $12 million salary out of $96 billion revenue = 1/8000
Adobe: $1.9 million salary out of $1.9 billion revenue = 1/1000
Note: revenue numbers may not be from last year; too lazy to find details in google links.
It looks like Chizen is actually paid better per dollar of revenue than Palmisano is.
May be, (Score:3, Interesting)
integrity correlates with skill but not salary (Score:4, Interesting)
Those of you who discount this study, look around at the real world a bit before you do it. This study makes a lot of sense. Now how to fix it, that is the problem for us as a society....
Re:libertarianists (Score:2, Interesting)