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.[/quote]
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.