Tech CEO gets 163 times his average worker's pay

[VK3DRB]

I read today about this bloke who received from Telstra 163 times the salary of his average hard working employee. It got me fired up.
www.theage.com.au/business/comment-and-analysis/ceo-pay-in-spotlight-as-telstra-boss-pockets-163-times-average-workers-wage-20150813-giyduc.html

According to The Age, "I can't sit here and defend my salary against all the guys who are out there working every day and I wouldn't try to," he (David Thodey) said. "I think there's a real issue with income disparity between what an average person gets and some of the really big salaries." I can't imagine him sharing his salary and bonuses with his workers. The meter is in overload. In fact, it not only blew a fuse, it took out the whole power grid! Under Thodey's leadership, Telstra retrenched Aussie IT workers and sent jobs offshore, whilst the share price rose. My guess is Telstra employees would be quite angry at Thodey's "remorseful" statement.

But compared to Australia, things are often worse in the USA... http://www.aflcio.org/Corporate-Watch/Paywatch-2015

Did a CEO like David Thodey work 163 times harder than his average engineer? 163 times longer hours? Has he an IQ 163 times higher than his engineers? Is he 163 times more educated? Is he 163 times more valuable as a human being? Or is he 163 times more greedy? On the other hand, maybe such CEO's have earned (repeat, EARNED) their wages and bonuses because they simply are superior beings.

What do you reckon? Agree, disagree with big end of town CEOs' pay being obscene?

Especially as a worker in electronics or IT, are you paid what you are "worth"?

[Howardlong]

It fires me up too.

If you compare the productivity of this one person against 163 average employees, then no, the salary can't be justified. Whether that's a valid criticism or not, I'll leave that for debate!

Publicly quoted boardroom and upper echelon executive pay awards regrettably don't follow the same rules that everyone else has to. Bonuses seem to be arbitrarily calculated, and self-justification is through continual change, whether beneficial or not. When they are awarding themselves their own pay, it is not their money. It is the shareholders'. That is you and me, either in direct stock ownership or through other vehicles like pensions and mutual funds. Despite remuneration committees, there is still no self-control. Whether the company is doing well or not seems to have little correlation either, with the excuse that the company would be doing even worse if it wasn't for executive X.

Unfortunately I don't have a general solution. The differential between the "elite" few at the top and the rest continues to increase, and shows no sign of abating.

Personally speaking, getting out of the salaried world and working for myself 25 years ago was the best thing I ever did, I was sick of being farmed out as a consultant at six times my own salary, with the disparity excused as "overheads". That way you make the decision of how much to pay yourself, and you have no shareholders to answer to. If you own the company, pay yourself what ever you like. But if you're leaching off the back of investors, you should think very hard before thinking that awarding yourself excessive pay is justified.

[Marco]

The problem is that money is power, both politically and on the board. Combined with the complete lack of activism on the part of modern shareholders this is a recipe for massive corruption, inside and outside public companies.

[TheElectricChicken]

That's fair, he puts in 160 times as many hours as everyone else and is 160 times as smart.

  Oh gawd, they should pay people according to how smart they are. So many people would starve, but everyone is happy about it.

This what happens when people have no idea what unions are for. They teach nothing at all in schools anymore, you have to homeschool. People see kids come home to them from school and do not care that they learn nothing at all.

[Mechanical Menace]

I know a couple of people who do their own investing for pensions and the like and this is a common cause of much whining from them. Really the fact that shareholders, the owners the companies, can not do anything about wages they themselves think are too high is criminal.

I can't blame the executives for accepting what they're offered or getting even more if they can, but I also can't help but think there's something wrong with a system where your bosses can't sack you for reasonable reasons or even set your wage to begin with.

But compared to Australia, things are often worse in the USA... http://www.aflcio.org/Corporate-Watch/Paywatch-2015

As much as I may agree with a lot that site has to say I absolutely hate it when vertical axis on graphs don't start at 0...

EDIT:Too many silly mistakes, need more coffee.

[cimmo]

Let people get paid whatever they can get.
But then mandate 100% taxation on any earnings over a certain amount.
I'd suggest that amount be $1,000,000 a year (and no loopholes).

Factoid: In 1945 the US top marginal income tax rate was 94% on all income over $200,000, (equivalent of 2,500,000 in 2012 dollars) and remained above 90% until 1964.
Did this high marginal tax rate have any deleterious effect on the US economy for those two decades?
A: Nope.

[Stonent]

The worst possible thing you can do is give more money to the governments of the world.

[zapta]

...Really the fact that shareholders, the owners the companies, can not do anything about wages they themselves think are too high is criminal.

They can elect different directors.

[Mechanical Menace]

...Really the fact that shareholders, the owners the companies, can not do anything about wages they themselves think are too high is criminal.

They can elect different directors.

In theory I'd agree. Once upon a time that would definitely work, and I'd also say that in a lot of cases it's still true. But once upon a time 1 share definitely got you one vote, that's not the case anymore. Especially a if a company is "too big to fail*."

The worst possible thing you can do is give more money to the governments of the world.

But it can be very lucrative to do so. If you're giving enough to the right people.



*Disgusting idea.

[zapta]

... *Disgusting idea.

And so is class envy.

[EEVblog]

As terrible a gap as it is, I don't necessary mind it if they are held accountable. They get their pay if the company (genuinely) makes a profit in a sustainable way. But if the company loses money they should be accountable and get nothing. Heck, maybe even having to pay money back to the company.
i.e. great reward comes with high performance high pressure risk.

[bills]

You don't get paid for what you do you get paid for what you know and if you think you are not getting enough.
You don't use what you know. (let the flames begin)

[ivaylo]

But they are the captains of industry. Without them no one knows what to do!

[TheElectricChicken]

But they are the captains of industry. Without them no one knows what to do!

Then why do they need so many poorly paid people to tell them what to do ?

[miguelvp]

Was going to write a long post but I think one phrase will do:

Sure it's easy to make multi billion dollar decisions, anyone can!

Do I think multi billion dollar companies CEOs should be payed more than professional athletes? yup, so probably they are not being paid enough in comparison.

[bills]

[quote



Sure it's easy to make multi billion dollar decisions, anyone can!

[/quote]
Really ?

[miguelvp]

Sure it's easy to make multi billion dollar decisions, anyone can!

Really ?

I thought the phrase after that quote would make it clear I was being sarcastic. Otherwise we all be rock starts, professional athletes, genius painters/composers and captains of industry.

Edited to fix the mismatched quotes

[Mechanical Menace]

...Really the fact that shareholders, the owners the companies, can not do anything about wages they themselves think are too high is criminal.

They can elect different directors.

Is that some sort of veiled accusation? If it is I'm pretty certain you're throwing it at the wrong person.

[Zero999]

... *Disgusting idea.

And so is class envy.

I wonder how long it would be before a capitalist chimes in.

Well I don't envy those on high salaries myself. I could get a job with better pay if I wanted to but I'm happy with where I am at the moment.

It's good for people to be rewarded for hard work, innovation, skills ect. Indeed putting laws into place which punish people who do well is not good for the economy.

On the other hand. Having a few people with a disproportionate share of the wealth is also bad for the economy because they end up taking more than their fair share of resources and make it more difficult for others to to well.

[Karel]

It's good for people to be rewarded for hard work, innovation, skills ect. Indeed putting laws into place which punish people who do well is not good for the economy.

On the other hand. Having a few people with a disproportionate share of the wealth is also bad for the economy because they end up taking more than their fair share of resources and make it more difficult for others to to well.

The problem is to find the right balance between kapitalism and communism.

[TheElectricChicken]

The simple difference between Capitalism vs Communism if you want it in clear easy to understand terms, think of a pre-school class. There are say, a dozen kids or so, representing society. Money, assets, luxury items, they are the toys for the kids to play with. Capitalism right now, and the wealth inequality right now, would be represented by one child in the class having all of the toys to themselves, and not sharing any of the toys with the rest of the class. You just go look at luxury goods ownership.

Communism is where there is a teacher present. Hell, look at the USA, they torture innocent people just for fun and have nobody to tell them that it's wrong. https://firstlook.org/theintercept/2015/08/13/hunger-striking-detainee-tests-obamas-will-close-guantanamo/ and that is for people who the government itself states it has no interest in. Not criminals, but people 'of no interest to the government'.

They don't have a clue that endlessly torturing people which they themselves call innocent is wrong, so what would they know about sharing or other kindergarten concepts of healthy social interaction.

But back to wealth inequality, what would YOU do if one kid in the class is hogging all the toys to themselves ?

[zapta]

The simple difference between Capitalism vs Communism if you want it in clear easy to understand terms, think of a pre-school class. There are say, a dozen kids or so, representing society. Money, assets, luxury items, they are the toys for the kids to play with. Capitalism right now, and the wealth inequality right now, would be represented by one child in the class having all of the toys to themselves, and not sharing any of the toys with the rest of the class. You just go look at luxury goods ownership.

Your example assumes a fixed amount of toys. In reality, new value is created.

What matters is not Capitalism vs Communism but freedom vs. oppression. If free people chose to live in a commune and share their assets, it's their privilege. In the same way, if free people chose to throw their money at a successful or a failing CEO, it's their privilege.

Think freedom.

[TheElectricChicken]

Your example assumes a fixed amount of toys. In reality, new value is created.

What matters is not Capitalism vs Communism but freedom vs. oppression. If free people chose to live in a commune and share their assets, it's their privilege. In the same way, if free people chose to throw their money at a successful or a failing CEO, it's their privilege.
Think freedom.

No worker in history and no member of the public has ever been asked to help determine the payrate of any CEO.

No Australian has ever been asked to give permission for the government to rule over them, they are not given any options, 

[VK3DRB]

...i.e. great reward comes with high performance high pressure risk.

Sorry, great reward does NOT often come with high performance, high pressure and risk if you are a high performing employee in a multinational corporation.

I developed some technology and processes in the late 90's which was key to IBM adding $100 MILLION to the bottom line in the first year the technology was used. I was rewarded soon after with being sold off to a start-up company funded by venture capitalists, when the IBM Australia CEO told all myself and my colleagues verbatim "You either join the new company or you will be deemed to have resigned from IBM, in which case there will be no redundancy." At the time of the sell off, IBM confiscated about $40,000 of my superannuation retirement funds.

IBM did however offer me a 30% discount on a new Aptiva PC in recognition of my 19 years of dedicated work with IBM. Louis Gerstner the then global IBM CEO on the other hand walked out with a $189 million golden handshake for 9 years work.

The behaviour of IBM has been summed up, quite accurately, in the brilliant e-book http://www.amazon.com/The-Decline-Fall-IBM-American-ebook/dp/B00KRHWZ22.

Gerstner's son died choking on a steak in 2013.

[ivaylo]

But they are the captains of industry. Without them no one knows what to do!

Then why do they need so many poorly paid people to tell them what to do ?

Oh no, no, they don't need all these people. They are so good at everything they do, that they can do everything themselves singlehandedly. The captains of industry are hiring all of us just to feed us and keep us off the streets, don't you see? They also give to charity a lot. And all of us have an equal chance to join them one day. See, no class envy here...