Thursday, May 25, 2006
Pondering The Executive Paycheck
Scholars have studied the pattern of U.S. executive compensation in the last several decades, and have reached some highly rationalistic conclusions that will not please John Q. Public. They cited a correspondence between the rising value of corporations in the stock market with the rising incomes of their chief executives. Well, duh - we all know the stock market feeds on blood money. But there are apparently other factors at work - especially in regard to the vast difference in compensation between American boss men and their counterparts elsewhere in the world. Since there are so many more big corporations in the United States than in, say, France, the competition for the best (read: most charismatically ruthless) boss men is much fiercer, driving up the demand and therefore the price. The scholars note, however, that the actual differences in ability among chief executives is not that great, and that the Number 1 boss man is likely to increase the value of a company only about .014 percent more than the Number 250 boss man. Nonetheless, since the Number 1 boss man is generally the head of a far larger concern, that .014 percent is proportionately magnified - and therefore, supposedly, he deserves much more money despite the slight difference in talent. The bottom line is that, since America is a virtual sweltering Mesozoic of countless lumbering corporate monsters, the boss men that prey on their profits are equivalently dinosaurian. Needless to say, this study focused on the market dynamics of executive compensation, not its ethics or morality.
"Scholars analyze why top salaries are so high" from International Herald Tribune