RE: executive salaries

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Date: Wed Jun 21 2000 - 11:10:29 PDT

On Wed, 21 Jun 2000, Mark Day wrote:
> > It's not the point at which "people" in general can't tell the difference
> > that it's obscene. It's the point at which the "person" in question can
> > no longer substantively tell the difference.

> So it's never obscene as long as I have more than enough ways to spend it?
> That doesn't seem right.

Eh, close to what I'm saying, but not quite. This ain't Brewster's
Millions here. More like, "it's not obscene if it's not a huge change
over what you already had", somewhat. That allows for the incremental
building of pay without an upper limit. I'd like to think that it also
mirrors the increase in value provided by the person owning it. Much
like a person can't go from No-Op to Guru in a day, if the pay jumps from
No-Op to Guru level (relative) it shows a disconnect.

> I bet that people think it's obscene when the perceived value is far lower
> than the price, regardless of whether we're talking about the value of a
> person, object, or process.

Percieved value is the problem. Who percieves it? Must be "the market".
 The market (when discussing CEO salaries) is the aggregate Boards of
Directors of whatever industry in question, and that's not a very large
market in most cases - and they're setting the prices. So they must not
be obscene... unless, of course, the CEO controls the Board. So what,
poll the workers to set the pay? That's no good.
        Someone may think their CEO is nowhere near worth the comp plan he
gets, but may be willing to give that and more to a more responsive and
successful individual. If they like the CEO, and want to keep him, pay
has to remain commensurate with what the rest of the market is offering.

So, by this reasoning, "obscene" only happens when the pay grossly
exceeds market demand for the person, and that will only happen when the
Board is a puppet (or is foolishly handing out wads of cash). I'll
accept either definition of obscene executive salaries. Got a better one?


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