I’ve never really understood the logic of paying CEOs multi-million dollar salaries. Can Telecom’s $7m man, Paul Reynolds, for example, really be worth 100 skilled technicians? Is there no-one who is basically as good who would work for a million or two less? Now, research shows high pay gaps for CEOs actually makes them worse bosses.
“In a conference paper presented at the International Association for Conflict Management conflict in Boston last month, professors from Harvard, Utah and Rice universities argued that as executives get bigger and bigger pay packets, they begin to mistreat workers.
“Simply put, as disparity between CEOs’ compensation and ordinary workers’ income increases, the former become meaner to the latter,” the researchers wrote in ‘When Executives Rake in Millions: Meanness in Organizations’.
“Higher income inequality between executives and ordinary workers results in executives perceiving themselves as being all-powerful and this perception of power leads them to maltreat rank and file workers,” the researchers, led by Harvard University research fellow Sreedhari Desai, wrote.
Larger salaries and imbalances in power may also make CEOs “come to view lower level workers as dispensable objects not worthy of human dignity,” they wrote.”
I can’t understand why companies are willing to hand over so much money. I simply don’t think it stacks up to think that these high paid CEOs create a lot more value than a lower paid one would (in fact, there’s evidence that the opposite is true: higher CEO pay correlates to lower stock value)
Come to think of it, I can’t really understand why anyone would insist on being paid that much. No-one can spend $7 million a year without wasting it on frivolous stuff. After a certain point, incomes must become pretty meaningless in terms of the actual monetary value they entail. I guess that at those extremes, money just becomes a points game: ‘I’m better than Johnson because he is on five million and I’m on six’. You must have a personality that is missing something (altruism?) to take those kinds of paychecks: you can’t be said to need that money in any real way, yet by taking it you deny it to the workers or the shareholders.
Maybe that’s it – the decisions about CEO pay are being made by people with warped value systems. I read somewhere that the explosion in CEO salaries in recent years has been linked to the growth in ownership of shares by managed funds, rather than individual shareholders. It’s the heads of the managed funds who now appoint the boards who appoint the CEOs – they’re all drawn from the same (sociopathic) stock, and there’s no control from ordinary people (the serfs) any more.