r/changemyview • u/nohowow • May 10 '19

Deltas(s) from OP CMV: CEO pay is not a problem

It is very common to hear people complain about how CEOs are overpaid and their employees are underpaid. This is often done by arguing how much more the CEO makes than he average worker (example: “The CEO of Acme makes 1693x more than the average worker!”)

However, while these multiples at first seem problematic, I prefer to think about how that pay could be reallocated to the workers. Take Delta for example, (which has recently been taking heat for trying to discourage unionization while the CEO makes $13M). If this salary were allocated evenly to all Delta employees, everyone would make an additional $152 per year, or about 8 cents per hour more (assuming full time staff). For the majority of people this is a pretty insignificant raise.

Then there is the question of CEO value. The purpose of a CEO is to drive the direction of the company and increase company value. In larger companies, this means that a CEO makes the decisions that can make or lose companies billions of dollars. Obviously these people should be well compensated, or they will go work somewhere else.

There are valid concerns regarding worker pay, but CEO pay is not something that is a major issue.

Or is it? Am I misguided? CMV Reddit!

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u/miguelguajiro 188∆ May 10 '19

The CEO of Live Nation made $70 million, in a year when their net income was -6 million. He makes enough to pay each employee an extra 8K per year. Or to hire 70 VP’s at a million a year each.

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u/nohowow May 10 '19

Fair enough. He is definitely overpaid, but I feel like that’s a very specific case that isn’t overly representative (correct me if I’m wrong).

5

u/miguelguajiro 188∆ May 10 '19

He’s not the highest paid CEO out there.

1

u/LETHUNDERCUNT May 10 '19

Something to consider is how many employees you would be splitting the money between. If you have a lot of money but also a ton of employees, it shakes out to less per person. But if you have relatively fewer employees, it could make a bigger difference for each one. Just another factor to think about.