It seems we all agree that CEOs are overpaid and this is not fair...perhaps only some CEOs will object to that statement ;-)...but they probably don't post at EE Times...the question then becomes what can be done about this? Kris
Still, having the CEO of a company with ~100,000 employees or more paid a few hundred time more than the average worker means that it's not so much a question of his salary affecting negatively the workers' salaries. It's more a question of basic fairness, common sense, and you know, decency. Those intangibles.
One problem with the concept of "responsible to the shareholders" (owners of the company), is as Bert suggests, many of those shareholders are looking for quick returns and may in fact be shareholders only for a very short time. As an "owners," that type of shareholder has little regard for the company's health or future plans, and his behavior more closely resembles that of a gambler. Executive responsibility must -- and therefore usually does -- extend beyond the stock price movement this week or this quarter.
Depending what "doing well" means, all you're saying is that keeping the stock value high is good business for the shareholder. I also benefit from that strategy, when it comes to my 401K and other plans, but that doesn't mean this strategy works well for the companies' employees.
Companies that were once the envy of the world, as innovative technology powerhouses, have a strange way of becoming shadows of their former selves. HP is in the news these days, but surely you can think of many others. I can.
Here's a simple example of CEO thinking. There's a rule of thumb that says, if you aren't #1 or #2 in a particular field, get out of that business. The objective is not to stay in and strive to become the #1 or #2, but divest yourself of that work, employees and all. I'm not saying that this isn't a good strategy for share value, it may well be, but I find it impossible to be pollyanish about what this means to the employees. Which is what is being discussed here.
"'Often does not mean 'always' or even 'most of the time.'"
Often means, in this context, that a CEO primarily obsessing over the stock value is only secondarily, if at all, concerned about the employees. As a matter of fact, depending how long this person plans to remain CEO, he may not even be concerrned about making sound long-range strategic decisions. Just do what it takes to bring the stock price as high as possible, in the near to middle term, then retire and quick sell the stock.
US auto companies were a good example of this sort of short-term thinking, starting in the 1970s and on into the 1990s. It bordered on comical, were it not for the negative effects on the US economy. It wasn't JUST the unions.
The company I used to work for had a CEO who told us that his "primary concern was the shareholder." Soon after which, he sold off our division. Some 18 years later, our division is still doing great, as part of the company that bought it. Point being, keeping a profitable division going was not the original CEO's concern. Stock value was.
It matters what a person's objectives are. I feel no compulsive need to make excuses for people who are ludicrously overcompensated. That includes CEOs of large corporations, Hollywood stars, or star pro "athletes."