i dont understand why ceos get paid so much. companies are always trying to cut costs -- we see outsourcing to mexico and massive layoffs fairly frequently -- but ceos never seem to get cut as a cost. when one is fired another is hired and paid just as much. 40 million for being the ceo? how is it possible that you could never find someone who could do the job just as well who would take 20 million?
Often the CEO is so influential they get to pick the board, especially if the CEO is also a large shareholder.
Even if they're not in as dominant a position they can pressure out the less desirable members of the board and install those that are more sympathetic.
They made $99 million losses in 2015. Sure 42m is tiny compared to 1.09b rev, but it's half of their losses which does feel weird. If you made losses, why are you compensated at all with bonuses? But this was obviously negotiated a while ago but it seems strange when that happens. If your favorite sports athlete or movie star does not perform year after year they are not going to get millions.
It's important to note that Yahoo's board did not give her a 69% raise this year or decide that her performance over the last year was worth more than $42M. This is the compensation she agreed to as part of contract when she joined as CEO.
Ever year we see a multitude of articles highlighting CEOs of poorly performing companies who had a huge increase in compensation, but they completely miss the point. There is no "news" here, per se. It's just like a professional sports player who signs a very large, guaranteed 5-year deal. It doesn't really matter if the payments each year are equal or if they are backloaded so that the player gets a huge "raise" in his final years. Just take the total size of the contract, divide it by 5, and call that his effective yearly compensation.
Now, it is certainly the case that we can debate whether the board overpaid for Mayer, but that's completely independent of this "news".
14 comments
[ 2.8 ms ] story [ 46.6 ms ] thread1. The company has cash. 2. You have the authority to sign checks.
Even if they're not in as dominant a position they can pressure out the less desirable members of the board and install those that are more sympathetic.
Nobody seems to complain when their favorite sports athlete or movie star gets paid millions so why is a CEO any different?
You have to put aside the amount itself (which just seems large since it's such a big number for many) and realize how the economics of it workout.
I see people complain about this all the time, especially with pro athletes
Ever year we see a multitude of articles highlighting CEOs of poorly performing companies who had a huge increase in compensation, but they completely miss the point. There is no "news" here, per se. It's just like a professional sports player who signs a very large, guaranteed 5-year deal. It doesn't really matter if the payments each year are equal or if they are backloaded so that the player gets a huge "raise" in his final years. Just take the total size of the contract, divide it by 5, and call that his effective yearly compensation.
Now, it is certainly the case that we can debate whether the board overpaid for Mayer, but that's completely independent of this "news".