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Dumb Ass Stupid Management: Compensate This

Dumb Ass Stupid Management: Compensate This

I feel if someone creates a company, they deserve to make as much money as they choose from the organization. Thus, people such as Hewlett and Packard, Jobs and Wozniak, Fred Smith, Jeff Bezos, Henry Ford, Joe Gebbia and Brian Chesky and Nathan Blecharczyk—all of them took great risks and exhibited great talent and smarts to launch their firms. (In case you don’t read: HP, Apple, FedEx, Amazon, Ford, Airbnb.) They should pay all appropriate taxes under whatever the current tax codes are, but they’re entitled to the fruits of their creations.

However, I don’t believe hired CEOs deserve astronomical sums. The Times, today, has an article on people being paid over $30 million—at least three well over $100 million—and are heading up giant money losers, pandemic or no pandemic. (Boeing’s 737 Max problems are not pandemic-related, for example.)

The reason I feel this way is that, no matter what the company, you can find someone at $10 million who can run it just as well or better than the current person at ten times that. (Fill in your own salary estimates.) The shareholders, employees, and customers are all paying for this excess compensation.

In 2019, Sundar Pichai, CEO of Google’s parent, Alphabet, received $280 million in total compensation. If you calculate his contributions to shareholder return at the time, the non-profit company As You Sow calculated that 95% of his salary was excessive. (Source: https://www.fastcompany.com/90608055/these-are-the-countrys-100-most-overpaid-ceos)

You want to invent an electric fork and make a fortune, that’s fine with me. But if you’re a subsequent CEO of that company hired for the job, don’t stick that fork in your investors, employees, or customers.

Written by

Alan Weiss is a consultant, speaker, and author of over 60 books. His consulting firm, Summit Consulting Group, Inc., has attracted clients from over 500 leading organizations around the world.

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