There are a number of people who are over-compensated. Markets being what they are, they generally find themselves either paid less or out of work soon enough.

– Max

The next ‘extraordinary’ CEO could be the welder-who-went-to-trade-school -and -tinkered-at-nights-in-the-hangar-after-work-and-9-years-later-wins–the-X-prize-and-makes-millions-in-the-IPO.

Whereas 9 years in academia to often means mind-numbing committee work and nasty tenure in-fighting, only to end up [to paraphrase Fliterman] a farm-club or lounge-act scholar lavished with multiple millions in [your tax dollars] grant money and a golden parachute for life.

Entertainers and performers incomes are more tied to a self-regulating free market than CEO’s. Their income is normally directly tied to their performance. Those at the very top of their profession can command large crowds willing to pay top dollar for their performances. Extraordinary and very rare performance = extraordinary income. Likewise, those of far less ability and performance are relegated to a Council Bluffs lounge acts or the Huntsville Stars AA baseball team, and the relative and proportionate, much lower income.

CEO’s compensation on the other hand, is far too often unrelated to their performance or value.

Rather than the customer determining their value and paying as it is with entertainers, it is a small Board of Directors that determines the level of CEO compensation, and it’s the stockholders that pay. Too often, these Boards are lax (as are shareholders) in regulating this excessive executive compensation. Worse, Boards of Directors are often filled with cronies, and companies frequently have interlocking Boards that scratch each other’s backs, compensation-wise.

Like extraordinary entertainers, there is nothing really wrong with extraordinary compensation for CEO’s whose performance is extraordinary. But in recent years, there has been a growing disconnect between CEO pay and performance. It is not right when a farm-club or lounge-act CEO whose company’s stock severely underperforms is nevertheless lavished with multiple millions and a golden parachute for life. Not even movie stars or pro-athletes get those kinds of deals.

Exceptional CEO compensation despite their poor performance is a theft of stockholders equity, and a theft of their employee’s productivity.

Roles and missions-I have mine!

For every Steve Jobs or Bill gates there is a Glenn Tilton-the man who reneged on his company’s obligations to his employees screwing every employee out of pension benefits they had earned while he himself keeps a 5 million dollar a year pension package for himself.

Moral suasion means nothing to these guys so the only way to get them and the income flow back on the track is to make it not worth their while to profit at the expense of their employees.
Government does have a role to play in that process.

Furthermore-while in macro numbers the economy is growing, slower than it used to this year thanks to the housing crunch, the gap between sectors of society is getting wider. ( Kiplinger is the source for that statement). Again, government has a role to play in incentivizing the correct behavior and making the all boats float higher-not just those of the privledged few.

There is nothing wrong with advocating that-especially in a world that is increasingly becoming divided between the haves and the have nots.

Any theories as to why?

I’d like to take a tangent off of CaptJ’s comments regarding welders Vs. CEO’s, etc.

I’m getting more than a little tired of hearing all the advertising, both commercial and governmental, about how kids absolutley HAVE to go to college, how having a degree is paramount to success, yadda yadda yadda.

The problems with this approach are three:

1.) It steers money into (mostly) private, commercial, for-profit ventures called Universities. These institutions exist to make money by providing an (alledged) “higher education”. What they do mostly, however, is take an impressionable 18-19 year old, and, four years and copious amounts of PC indoctrination later, send them off to the real world saddled with what for many will be a crushing debt burden.

2.) That crushing (or, at least, significant) debt burden is born by both the child AND the parent, and in many cases will force the child into a for-rent/lease existence for far too many years, thus depressing the housing/ownership market and keeping a great many forever out of the full American dream.

3.) It takes good, industrious folks out of the tech and trade schools, and leaves us dependent upon a dwindling supply of people able to provide those skills which any succesful society requires. Plumbers. Electricians. Finish Carpenters. Etc. Witness the sky-high pay that those who chose to persue these skill sets command.

My plumber starts at $60.00 an hour and is at least 6 weeks booked. He charges (and gets) $90-$120.00 an hour for weekends, overtime, etc. He dribes a Lexus. My doctor has a 7-year old Taurus. Go figure. She also has a huge debt load from medical school, college, residency, and crushing insurance premiums, etc.

No, we need to start steering kids to trade schools vice college in order to return us to a more self-sufficient and more productive nation. We need to return some sanity to the college level schooling as well, because far too many are being cheated of future wages to pay for some shmuck with a PHD who doesn’t contribute anything to society except mental masturbation. For outrageous returns. Think Ward Churchill times 10,000.

Respects,