T Nation

Ten Highest Paid CEOs of 2008

  1. Aubrey McClendon, Chesapeake Energy Corp., $112.5 million

  2. Sanjay Jha, Motorola Inc., $104.4 million

  3. Robert Iger, Walt Disney Co., $51.1 million

  4. Lloyd Blankfein, Goldman Sachs Group Inc., $42.9 million

  5. Kenneth Chenault, American Express Co., $42.9 million

  6. Vikram Pandit, Citigroup Inc., $38.2 million

  7. Steven Farris, Apache Corp., $37.2 million

  8. Louis Camilleri, Philip Morris International Inc., $36.9 million

  9. Kevin Johnson, Juniper Networks Inc., $36.1 million

  10. Jamie Dimon, JPMorgan Chase & Co., $35.7 million

I think these numbers are pretty outrageous, but companies are free to pay whatever they want to their CEOs. Realistically though, how exactly can these salaries be justified? Ostensibly, high salaries are meant to draw the best talents, but I don't think any one person has this much worth to a single company, especially considering the performance of some of the companies on the list.

Of course in a free market, companies can pay whatever they wish, but in my opinion these salaries are out of control bloating just the same as the governmental spending that everyone here complains about. How can any of you free-marketeers convince me that pay packages like this are necessary, or even just beneficial.


How about because it's not your money and it doesn't effect you (until the government steals your money and throws it in a hole created by one of these companies)

That's the beauty of a free market, if you don't like it you don't have to participate in it. Think it's wrong? Sell their stock (or don't buy it) and spend your money with competitors.

Now, for fairness sake, what are your earnings and what did you do to deserve them? I'm going to be outraged if your company, whom I have no vested intrest in whatsoever, paid you more than I arbitrarily think you deserve.


What's to justify? I don't have to justify my salary, they don't need to justify theirs.


Alex Rodriguez is making about $28 million in salary alone this year and he hits a ball...Just sayin


Salaries are notoriously sticky except in the past few months of the recession. Many employees now are required to take furloughs, renegotiate contracts, and take voluntary pay cuts to keep their jobs. This is a sign that salary is a burdensome overhead, yet these CEOs are getting enormous sums. Why?

I'm not asking specifically if these 10 CEOs "deserve" what they got paid. I'm asking what the academic economic justification is for paying any individual enormous sums. To simply say "it's none of your business," and is the free market at work doesn't fly for me. I think this is exponential bloat, and what was once justifiable as the free-market at work is now something that doesn't make sense. I was asking for someone to explain why it makes sense, but if you guys can't then that's fine. I guess I'll just have to vote for more democrats who will make it my business, and will satisfy my curiosity.


If it doesn't make sense, they'll learn it doesn't make sense. If it does makes sense, then no problem.


My point is that if it isn't your money, why do you care?

Further, there are people whose job it is and whose livelihood depend on it to hire and pay the CEOs for the best profitability for the company.

I have to get my grass mowed on my rental property. The guy just raised my rates during a recession in order to give himself a bonus. The government and public opinion should obviously step in and force him to change what he charges for service.

The free market is much more intelligent about determining values of services than any bureaucracy or opinion poll. The only time anything ever becomes unfair is when the government intervenes and changes the rules in the middle of the game.

If these salaries are in-fact crippling companies, or damaging employee moral, they will be at a disadvantage in the free market. More responsible companies will eventually take their market share and put them out of business.

I find it funny that typically the same people who 100% wholeheartedly believe in the absolute effectiveness of survival of the fittest in nature to lead to better and better organisms, refuse to apply the same logic to business.


You have to remember these CEO's work for some of the largest companies in the world. Chesapeake Energy Corp made $11.6 billion in revenue last year. His salary is less than 1% of that revenue.


Same way your piddly salary is justified. It's the free market at work. If one can bring products to the market that makes people better off they will be paid handsomely for it. Needless to say, CEOs are the true American heroes helping to bring needed goods and services to the public at a price we like.

That is the only way to get wealthy in free society.


So long as there is not a conflict of interest situation, and the directors really are aiming to make the best financial decision for the shareholders, and as is ordinarily the case the company is in fact paying with money it has legitimately acquired (not by force or fraud) you're absolutely right, it is absolutely the decision of the company what to pay and entirely not any one else's business.

Unfortunately, it is very common for there in fact to be conflict of interest situations and for the directors to have interests other than the best financial interest of the shareholders. E.g., the degree of favor they are in with the CEO has a lot to do with whether they hold their seats.

In such an instance, the shareholders are being defrauded. Not customers, but shareholders.

Another factor is the stupidity of offering bonuses that in fact are poor measures of whether decisions are good for the company or not.

Offer a CEO a bonus package where a given decision will earn him tens of millions in bonus money, and then even if his judgment is long-term it is a bad decision for the company, what do you think he is going to do?

But this is stupidity, albeit a quite rampant stupidity that is doing a lot of damage to a lot of companies. It is not a crime.

As personal opinion, if a person can't be trusted to do his best job for a straight salary in the million-plus range (let alone $10M-plus range) and supposedly needs performance bonuses to do his best, there's a character problem in the first place and another person should be found.

As for why the executives you've named received high pay despite poor actual outcome, you will probably find that in many of these cases, there was a stupid decision to award huge bonuses on given paramaters that in fact were met.

Yes, I think companies would do better to have no conflict of interest situations in deciding what to pay CEO's, and would do better to get rid of these stupid huge payments based on things that may not reflect achieving the company's best interest.

As to whether it can be worth it to spend tens of millions per year on a single individual: absolutely. In these situations one person's decisions, if in that position, may result in a company losing a billion dollars per year, versus another person's decisions resulting in their making several billion per year. What, it would be worth cheaping out and not paying Jack Welch (for example) the pay he got so as to instead get someone under whom the company won't make nearly the money or will lose vast sums?

Nope. GE shareholders got their money's worth with Jack Welch, as one example.


He only hits it about 1 out of every 3 times.



I agree with the rest of the free market people here but just to add something...

These "salaries" aren't simply money being paid to them in a check every week. Most of these CEO's earnings are given to them in stock bonuses which typically take (at least) 5 years or so to be vested, which don't actually cost the company anything. If the shares are already authorized, they can simply give them to the CEO for hitting certain performance targets and it doesn't cost the company any real money, it just dilutes the ownership of the company a little more. It's not like these companies are using up all their liquid assets to pay these CEO's.


The way I see it if you don't like how much money these guys make then don't use their products or services. You don't have to bank with any the banks and you can put solar and wind power if you don't like the power companys.


It seems the only thing smaller than borrek's dick is borrek's paycheck.

I have more respect for a thief who does his dirty work himself than a person like you who wants his government to do it for him.

Yeah, you "make it your business"! That'll turn out great for everyone!


So long as they did not make the money by screwing other people I don't care what they make. If they laid off 1000 people in order to get the money then I got a problem. If they are skimming pensions and shit, I got a problem. If the company is in the toilet and they paid themselves a lavish bonus, I think that is wrong.
As long as they are not screwing others in making their money, more power to them.


Zing! You really got me there. Your well thought and deep contribution to the discussion is appreciated.


Maybe it was my use of the word "outrageous" which was meant more as "really really high" as opposed to "makes me angry." I'm thinking you guys assumed I was complaining, but I was more asking "how the fuck does this shit work." I got a few intelligent responses though. This wasn't about "omg we gotta do something about this"

The reason I care is that pay packages this high do not seem to fit the mold of standard compensation. That mold being reward for performance, or specialized pay for people with very specialized skillsets. A lot of people here are rabid free market advocates, but to me, this list is a very visible display of the fallibility of the free market. In a pure free market, the best should have the highest capital, but this is not the case here. People can come up with some very sophisticated ways of massaging markets, and this list shows some failures who have still raked in the dough, but the best most of you have answered is that they're paid what the market bears. It is more complicated than this.


excellent post. i think this is what borrek was looking for.

and kudos for not feeling the need to shit on him like some others have.


except when one or group of these companies build an enormous house of cards that entangles everything and everyone in it, regardless of participation or not, and comes crashing down on its self, and poof, half your retirement is gone. poof, your 401k is tanking.

so yes it effects you.

im not arguing against a free market economy, but to assume theres no problems that can arise, or that its all voluntary, is wrong. or at least if you want to live in society to any degree.


Well when CEOs play musical chairs on various companies board of trustees, one could see how a scratch my back and I will scratch yours system could develop.