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High pay equals low performance

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Trump is spot on.  What no one talks about though, is that there is actually evidence that, in most cases, CEOs that are paid above industry averages do a WORSE job of running their companies.   Think Bob Nardelli or Dick Fuld.  These guys ran their companies into the ground and were paid hundreds of millions to do it.  Warren Buffet, for all his vast wealth, actually makes only a modest salary, by CEO standards, and lives relatively modestly (most of his wealth will be going to the Gates' foundation, as will Bill Gates' - another ex-CEO who drew relatively little in salary).  It turns out that people who want to collect a lot of money up front are really in it for the short term, and are often willing, or at least unable to prevent, having their companies soar than crash and burn, instead of planning for a long term future.
The idea that we have to pay gargantuan salaries, bonuses etc. to get performance is not only a myth, it is actually counter-factual.

So, when a John Thain or some similarly overpaid CEO complains that lowering salaries to a "mere" $500,000 a year would discourage talent, you can say it would actually encourage it, or more prosaically, "Don't let the door hit you on the way out."

Here are some links that back up the fact that we are paying exorbitent salaries for under-performance.  As citizens and shareholders, we deserve better.

click here

click here

 

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Scott Baker is a Managing Editor & The Economics Editor at Opednews, and a blogger for Huffington Post, Daily Kos, and Global Economic Intersection.

His anthology of updated Opednews articles "America is Not Broke" was published by Tayen Lane Publishing (March, 2015) and may be found here:
http://www.americaisnotbroke.net/

Scott is a former President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist activist group. He has written dozens of articles for (more...)
 

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