Comments on: Mark Cuban’s Take on CEO Pay

By: Ryan

Ryan — Mon, 02 Jun 2008 17:55:57 +0000

I’m also all for a CEO getting a good bonus if the company performs well. But how about taking the quantum leap and asking whether or not the CEO really matters THAT much in how the company performs. They need to be judged on metrics that they can actually have an effect on…not just whether the stock goes up x %. I’m sure a lot of companies realize this and have performance measures in place that reflect this fact. Market forces beyond any one person’s control, plus just randomness in general, have far more impact than most are willing to admit.

The fact is, the skill-set required to be a good CEO is just not THAT unique. Certainly not to the point that they should be compensated 100x what a VP in the same company gets.

By: Mike

Mike — Sat, 31 May 2008 14:19:55 +0000

Chris,

Couldn’t agree more. My point was that to go down the path Mark Cuban suggests would be added by a reversal of the tax treatment of compensation. The other side of this, in my opinion, is that the company boards aren’t doing their part in making sure the comp plan for the CEO is reasonable. CEO’s don’t get to set their own pay, these package are approved by the board and there is a lack of diligence in this area when the plan lets the CEO get these bonuses and golden parachutes when they fail.

By: Chris

Chris — Fri, 30 May 2008 23:01:52 +0000

Mike,
Thanks for the info. I don’t mind huge incentives for CEO’s but they should be based on performance. I seriously don’t have a problem with a CEO making 10′s, if not 100′s of millions over the life of their tenure but it better come when the company is profitable and not screwing their own workforce.

How many CEO’s take pay/ bonus increases while freezing employee benefits and bonuses when the profits are tanking?

My main beef is the performance of the company (earnings/ profits while the CEO makes bank. I am a true capitalist and love when people make it big – when deserved!

By: Tan

Tan — Fri, 30 May 2008 21:27:28 +0000

Agree 100%

By: Janet

Janet — Fri, 30 May 2008 20:58:30 +0000

Yes, a heck of alot of truth in that article. The biggest malfeasance is when upper management are rewarded regardless of performance of the company. Also, you can definitely see the GREED FACTOR where 5-10 million isn’t enough for these people, they want more annd more.

By: Cleve Rueckert

Cleve Rueckert — Fri, 30 May 2008 19:21:12 +0000

Hi Chris,
I believe you had been a participant in the Ticker Sense blogger sentiment poll a while back and I was wondering if you would like to continue. You are not required to show your vote, although a record of participation in the poll is required. Please shoot me an email if you would like to participate, I always think the more the merrier. It’s about sentiment not being right or wrong.

Best wishes,
Cleve

By: Mike

Mike — Fri, 30 May 2008 17:25:24 +0000

Chris,

I don’t disagree with you on the huge buyouts of failed CEOs. But, onne thing that isn’t mentioned by either you or Mark Cuban (himself quite the lucky participant in the equity lottery) is that the tax laws were changed some years ago when CEOs were deemed by Congress to be getting too much cash compensation. I believe that companies are now prohibited from being able to deduct any executive compensation over $1M/year. So, the easiest way to raise compensation was through these stock/option grants.

The law of unintended consequences combined with Congressional class warfare rhetoric has been a big part in creating the current situation.