Microsft CEO made $84M this year

[Dirk Hofman]

I think in the case of Microsoft it's a little hard to get worked up about CEO compensation, even though it's patently absurd and unnecessary to pay him that much. As a stockholder I can tell you that we have little control over this pay, the board sets the price and a relatively small set of stockholders have a voting influence.

But as the folks who work there are generally well compensated, and certainly have a ton of opportunity to either move on or enhance their comp, it's quite unlike situations where you see CEO's getting paid crazy comp while the workers at the company struggle to make it.

Simply put it's cultural that we pay these folks this much. It doesn't happen in other countries, they simply realize there's no need to pay anyone this much and the comp at this level is no incentive to work any harder or make better decisions for the company.

Microsoft just isn't anywhere near the worst example of unnecessarily imbalanced pay. Folks there do just fine. Except having to live in the PNW.

[mjz]

Originally Posted by Heroditus

i can't think of another activity more pointless than complaining about how much money someone else earns, as long as it's done legally.

Legally is a defined term. I challenge you to think about who defined it.
max

[architype]

CEO pay went through the roof when the tax rate on the top 1% dropped in the early 80's. If you want to create a disincentive to reward these guys with huge pay packages raise the tax rates in that bracket back up to pre 80's rates and it suddenly becomes pointless to make that much if you are just giving half of it back to the Gov't.

Or, raise the rates back up and give them a few more loopholes that funnel the money back into the economy and let them make the choice of where they want their money to go.

[Brucebubs]

The CEO of Qantas only got his base $2.1 million this year (no $2.5 m bonus) when Qantas posted the biggest annual loss in Australian history of $2.8 billion.
After 'outsourcing' thousands of Australian jobs and reducing share values to roughly half what they were a couple of years ago he announced, "We've turned a corner and are on track'.
The planes may still have 'Spirit of Australia' painted on them but that 'spirit' has been killed.

[buddyhu]

Originally Posted by Heroditus

i can't think of another activity more pointless than complaining about how much money someone else earns, as long as it's done legally.

I'll bet you could if you tried a little harder.

[Dirk Hofman]

Originally Posted by architype

CEO pay went through the roof when the tax rate on the top 1% dropped in the early 80's. If you want to create a disincentive to reward these guys with huge pay packages raise the tax rates in that bracket back up to pre 80's rates and it suddenly becomes pointless to make that much if you are just giving half of it back to the Gov't.

Or, raise the rates back up and give them a few more loopholes that funnel the money back into the economy and let them make the choice of where they want their money to go.

Good points.

[zabdart]

Originally Posted by Heroditus

i can't think of another activity more pointless than complaining about how much money someone else earns, as long as it's done legally.

The legality and the ethics of paying some individual that much are two different issues. I think we're arguing the point from two different viewpoints... and we're never going to agree.
I remember arguing the legality and the ethics of the Vietnam War back in the 60s. I was always frustrated by those supporters of the war who injected the meaningless question: "Yes, but can a great nation make a mistake?"... as if that had anything to do with it.

[zabdart]

You know, capitalism is a system which has a certain amount of injustice built into it. Although we accept the principle that "All men are created equal," that's just in the legal and political sense. In reality, it's quite different. Ambition is not distributed equally -- anymore than athletic skill or artistic talent is. And, like it or not, capitalism is the only system which takes into account that disparity in human ambition.
Like Capt. Flagg said in What Price Glory?: "It's a lousy war, kid -- but it's the only one we've got."

[Bucc5207]

Originally Posted by Dirk Hofman

I think in the case of Microsoft it's a little hard to get worked up about CEO compensation, even though it's patently absurd and unnecessary to pay him that much. As a stockholder I can tell you that we have little control over this pay, the board sets the price and a relatively small set of stockholders have a voting influence.

Respectfully, Dirk, I think you are mistaken. The Board does not set CEO pay. If they did, why wouldn't they set it at $40M or $20M or $1M instead of $84M?

The market sets CEO pay. If it's necessary to get the best person for the job, it's necessary to offer the going rate for Best People. It's the same for any job. Microsoft can't hire software engineers for minimum wage. They have to offer competitive compensation, or they lose the best people to Apple or Intuit or whoever.

Anywhere you look at people who seem to make outrageous amounts of money, it's a similar story. Athletes, coaches, actors, CEOs: top talent goes to work for the highest bidder. If teams, producers, and boards of directors didn't think they were worth it, they wouldn't bid so high. And when performance no longer justifies the price, the talent gets replaced.

[Dirk Hofman]

Originally Posted by Bucc5207

Respectfully, Dirk, I think you are mistaken. The Board does not set CEO pay. If they did, why wouldn't they set it at $40M or $20M or $1M instead of $84M?

The market sets CEO pay. If it's necessary to get the best person for the job, it's necessary to offer the going rate for Best People.

I could have said approved, but ultimately they are guessing about the market rate and the offer to some extent. There are not a lot of "comps" for a company like Microsoft. They have a very particular size, market cap and core business. They have an idea of the market rate, but ultimately they make an offer and it's accepted or not. There is no blue book for this position.

[Bucc5207]

Originally Posted by Dirk Hofman

I could have said approved, but ultimately they are guessing about the market rate and the offer to some extent. There are not a lot of "comps" for a company like Microsoft. They have a very particular size, market cap and core business. They have an idea of the market rate, but ultimately they make an offer and it's accepted or not. There is no blue book for this position.

All true, but still not much different from any other hire. Top talent demands top pay. Hiring committees do not arbitrarily throw out insanely inflated compensation offers at random. You have a pool of candidates. Each one has a known salary history and an expressed salary expectation for this job. After some discussion with the candidates, you get a pretty good idea of the best deal you'll be able to make with each of them. That's basically a survey of the market and results in a price range for the position. If the Board decides the price is too high, or if they make too low of an offer and get rejected, they have to consider second-tier candidates instead. I'm guessing Microsoft is not interested in second-tier candidates.

And again, once the deal is done, the CEO delivers value for the company's money, or gets replaced. So who can say how much is too much?

[SongwriterFan]

Originally Posted by Bucc5207

So who can say how much is too much?

Besides AGF members?

[Bucc5207]

Originally Posted by SongwriterFan

Besides AGF members?

Touché, mon ami!

[mjz]

Originally Posted by Bucc5207

So who can say how much is too much?

Anyone, everyone and no one all at the same time.

I am uncomfortable when avarice is the motivation behind our system.
Equally as uncomfortable when ambition no longer is a deciding factor for the ability to earn and prosper.

Call me crazy, but I'm supporting like-minded folks aspiring to change the condition through policy.

max