Post by RS Davis on Apr 13, 2004 23:22:02 GMT -5
[shadow=red,left,300]
[glow=red,2,300]By Elan Journo[/glow]
Are America's CEOs paid more than they deserve?
Many people's answer is a vehement: Yes. That view is
reinforced anew every spring, when companies file their financial
statements and we learn how much CEOs were paid last year.
In 2003 the average pay for CEOs at 200 of the largest U.S.
companies was $11.3 million--but there are a good number whose
compensation packages approach the $100 million mark. Faced with these
figures, Americans from all walks of life--who revile CEOs as greedy
fat cats--are overcome with bewilderment and indignation. Astonished
to learn that what an average worker earns in a year, some CEOs earn
in less than a week--people ask themselves: "How can the work of a
corporate paper-pusher be worth so many millions of dollars?"
The answer is that successful CEOs are indispensable to
their companies. They earn their rewards.
How big an influence can one man have on the fortunes of the
entire corporation? Consider the impact of Jack Welch on General
Electric. Before his tenure as CEO, the company was a bloated giant,
floundering under its own weight. Splintered into dozens of distinct
and inefficient business units, GE was scarcely making a profit. Welch
turned it around. He streamlined and reorganized the company's
operations and implemented a sound business strategy yielding more
than $400 billion worth of shareholder wealth.
In business, success requires long-range thinking. But CEOs
must project a strategic game plan in terms not merely of a month or
two, but of years and decades. A biotechnology company, for example,
may spend 15 years and billions of dollars developing a new
cancer-fighting medicine. Success is impossible without the business
acumen of its CEO. For years before a marketable product exists, he
must raise sufficient capital to sustain the research. What long-term
business model will attract venture capital? Should the company accept
short-term partial sponsorship from a large drug manufacturer in
exchange for a modest royalty on the drug in the future--or risk going
it alone and possibly running out of funds? It is on such decisions
that a company's success is made--and lives of cancer patients may
depend.
In order to be successful in the long range, the CEO's
strategy must encompass countless factors. He must devise a plan to
grow the business in the face of competitors, not only from within the
United States but from any and every region of today's global economy.
The CEO calls the plays for a team of tens (and sometimes hundreds) of
thousands of workers. All of the actions of every employee and every
aspect of the business must be coordinated and integrated to produce
the cars, computers or CAT scanners that yield profits to the company.
It is the CEO who is responsible for that integration.
To successfully steer a corporation across the span of years
by integrating its strengths toward the goal of creating wealth,
requires from the CEO exceptional thought and judgment. Excellent CEOs
are as rare as MLB-caliber pitchers or NFL-caliber quarterbacks. And
in the business world, every day is the Super Bowl. There is no
off-season or respite from the need to perform at one's peak.
Given the effect a CEO can have on a company's success, we
can understand why their compensation packages can be so high. One way
employers reward excellence is through bonuses. For many CEOs, bonuses
amount to a large portion of their earnings. Some CEOs are paid a
token salary, but are rewarded with large parcels of company stock;
last year, for instance, the CEO of Apple Computer, Steve Jobs, earned
$1 in salary and received stock valued at $75 million. As is the case
with athletes and other individuals whose talents are rare and much
prized, the CEO's pay package is calculated with an eye on the
competition. Companies pay millions of dollars to a valuable CEO, one
who they judge will produce wealth for the shareholders, in part so he
will not be hired away by a competitor.
On the gridiron, the baseball diamond and the basketball
court, we see and admire the physical prowess of a superlative
athlete--one who earns the title of MVP--and we understand that it is
morally proper to reward him accordingly. Though the efforts of CEOs
are not televised on Monday Night Football, their achievements are
real and have a profound benefit to all our lives. It is time that we
learned to appreciate the work of successful CEOs and recognize that
they deserve every penny of their salaries.
____________________________________________________________________
Elan Journo is a writer and editor for the Ayn Rand Institute
(www.aynrand.org), in Irvine, Calif. The Institute promotes the
philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead.
Send reactions to reaction@aynrand.org
Copyright © 2004 Ayn Rand® Institute, 2121 Alton Parkway, Suite 250, Irvine, CA, 92606. All rights reserved.
This Op-Ed is copyrighted by the Ayn Rand Institute (ARI), and cannot be reprinted without permission except for non-commercial, self-study or educational purposes. We encourage you to forward this Op-Ed to friends, family, associates or interested parties who would want to receive it for these purposes only. Any reproduction of this Op-Ed must contain the above copyright notice. Those interested in reprinting or redistributing this Op-Ed for any other purposes should contact media@aynrand.org. This Op-Ed may not be forwarded to media for publication.#nosmileys
Successful CEOs are indispensable to their companies and deserve their high salaries
[/shadow][glow=red,2,300]By Elan Journo[/glow]
Are America's CEOs paid more than they deserve?
Many people's answer is a vehement: Yes. That view is
reinforced anew every spring, when companies file their financial
statements and we learn how much CEOs were paid last year.
In 2003 the average pay for CEOs at 200 of the largest U.S.
companies was $11.3 million--but there are a good number whose
compensation packages approach the $100 million mark. Faced with these
figures, Americans from all walks of life--who revile CEOs as greedy
fat cats--are overcome with bewilderment and indignation. Astonished
to learn that what an average worker earns in a year, some CEOs earn
in less than a week--people ask themselves: "How can the work of a
corporate paper-pusher be worth so many millions of dollars?"
The answer is that successful CEOs are indispensable to
their companies. They earn their rewards.
How big an influence can one man have on the fortunes of the
entire corporation? Consider the impact of Jack Welch on General
Electric. Before his tenure as CEO, the company was a bloated giant,
floundering under its own weight. Splintered into dozens of distinct
and inefficient business units, GE was scarcely making a profit. Welch
turned it around. He streamlined and reorganized the company's
operations and implemented a sound business strategy yielding more
than $400 billion worth of shareholder wealth.
In business, success requires long-range thinking. But CEOs
must project a strategic game plan in terms not merely of a month or
two, but of years and decades. A biotechnology company, for example,
may spend 15 years and billions of dollars developing a new
cancer-fighting medicine. Success is impossible without the business
acumen of its CEO. For years before a marketable product exists, he
must raise sufficient capital to sustain the research. What long-term
business model will attract venture capital? Should the company accept
short-term partial sponsorship from a large drug manufacturer in
exchange for a modest royalty on the drug in the future--or risk going
it alone and possibly running out of funds? It is on such decisions
that a company's success is made--and lives of cancer patients may
depend.
In order to be successful in the long range, the CEO's
strategy must encompass countless factors. He must devise a plan to
grow the business in the face of competitors, not only from within the
United States but from any and every region of today's global economy.
The CEO calls the plays for a team of tens (and sometimes hundreds) of
thousands of workers. All of the actions of every employee and every
aspect of the business must be coordinated and integrated to produce
the cars, computers or CAT scanners that yield profits to the company.
It is the CEO who is responsible for that integration.
To successfully steer a corporation across the span of years
by integrating its strengths toward the goal of creating wealth,
requires from the CEO exceptional thought and judgment. Excellent CEOs
are as rare as MLB-caliber pitchers or NFL-caliber quarterbacks. And
in the business world, every day is the Super Bowl. There is no
off-season or respite from the need to perform at one's peak.
Given the effect a CEO can have on a company's success, we
can understand why their compensation packages can be so high. One way
employers reward excellence is through bonuses. For many CEOs, bonuses
amount to a large portion of their earnings. Some CEOs are paid a
token salary, but are rewarded with large parcels of company stock;
last year, for instance, the CEO of Apple Computer, Steve Jobs, earned
$1 in salary and received stock valued at $75 million. As is the case
with athletes and other individuals whose talents are rare and much
prized, the CEO's pay package is calculated with an eye on the
competition. Companies pay millions of dollars to a valuable CEO, one
who they judge will produce wealth for the shareholders, in part so he
will not be hired away by a competitor.
On the gridiron, the baseball diamond and the basketball
court, we see and admire the physical prowess of a superlative
athlete--one who earns the title of MVP--and we understand that it is
morally proper to reward him accordingly. Though the efforts of CEOs
are not televised on Monday Night Football, their achievements are
real and have a profound benefit to all our lives. It is time that we
learned to appreciate the work of successful CEOs and recognize that
they deserve every penny of their salaries.
____________________________________________________________________
Elan Journo is a writer and editor for the Ayn Rand Institute
(www.aynrand.org), in Irvine, Calif. The Institute promotes the
philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead.
Send reactions to reaction@aynrand.org
Copyright © 2004 Ayn Rand® Institute, 2121 Alton Parkway, Suite 250, Irvine, CA, 92606. All rights reserved.
This Op-Ed is copyrighted by the Ayn Rand Institute (ARI), and cannot be reprinted without permission except for non-commercial, self-study or educational purposes. We encourage you to forward this Op-Ed to friends, family, associates or interested parties who would want to receive it for these purposes only. Any reproduction of this Op-Ed must contain the above copyright notice. Those interested in reprinting or redistributing this Op-Ed for any other purposes should contact media@aynrand.org. This Op-Ed may not be forwarded to media for publication.#nosmileys
...when he's around
