Katherine Mangu-Ward Discusses CEO Pay on CNBC's Closing Bell

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"The thing that makes me nervous is the idea that somehow there is a magic ratio between what the CEO earns and what the janitor earns and that government…can dictate it," says Katherine Mangu-Ward, Reason managing editor. Mangu-Ward discusses whether high CEO pay is ethical on CNBC's Closing Bell.

Airdate: September 12, 2013

About 6 minutes.

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  1. This is a great example of a problem for which the only solution is for it to play itself out and eventually for the system to correct itself. I think a lot of boards are negligent as hell. And they hand out millions to connected idiot CEOs who fail from one job to the next. They are basically ripping off the share holders to take care of each other.

    Any government cure for this will be worse than the disease. Either share holders will get tired of overpaying CEOS and demand better stewardship of their money and do something about it or they won’t. No amount of government action can do it for them. And even if it could, no system is ever perfect. There is always going to be some inefficiency and stealing going on. It may be that the few million that boards are stealing for CEOs is so small in comparison to the rest of the company, nothing will ever be done about it.

  2. Most CEOs are grossly overpaid, and a lot of that is because of the stupid idea that the CEO = the company. Which perception is largely the creation of our wonderful media. Of course, once a mess like this gets started, the market distortion becomes the market, and it becomes hard to unravel. It’s made worse by how very little shareholders can do about it.

    That all said, there’s no ratio needed. There’s a market price for CEOs, and if you don’t want to pay it, stop hiring celebutives and just promote from within.

    1. Most CEO’s are grossly UNDERPAID relative to the value they bring to the company. Just look at the $30 BILLION rise in market cap at Microsoft when Steve Ballmer announced his retirement.

      Fortunately, the high supply of people that want to be CEOs keeps the price down.

  3. KORPORASHUNZ!

    WEALTH DISPARITY!

    DERP!

    1. Ah, he used the old “rich CEOs disrupt the fabric of society” argument, kinda like gays disrupting the fabric of society. People always appeal to the fabric of society whenever they’re an idiot.

  4. Weren’t stock options supposed to be the solution to this?

  5. Totally agree that most CEO’s are way overpaid and compensated ? for the value that “I” think they deliver. But you know? It doesn’t matter what I or anyone else think they should be paid. If anyone has a problem with a CEO’s compensation ? here’s a novel suggestion ? Don’t patronize them. But DO NOT use the force of government to do your bidding, that will only makes things much worse. The only ones who it should matter to are the owners of the company. Why should any John, Dick or Harry care how much anyone else is getting paid? It is nothing but greed envy. They’re pissed because they comparing themselves. Same thing with famous actors and professional sport players ? who determines their compensation? The owners ? that’s who. Might not be the best solution, but the alternatives are far worse.

  6. It’s a case of the shareholders not holding the boards accountable. Most boards are comprised of other CEO’s and high level managers. They have no incentive to push executive pay down, because the trend may very well catch them as well. I’m still surprised that large pension funds have remained largely silent while executive pay has moved up. Until shareholders start firing board members for absurd executive pay, and those insulting golden parachutes, I’m going to personally not buy stocks.

  7. May as well chime in. CEO pay should be set by negotiations between candidates and the owners (board, shareholders, whoever). Not only do I and everybody else not know what the proper level is, it is none of my or anybody else’s business, except potential investors and employees who think it reflects management mad skillz.

  8. From the idiot in the video

    “We have more inequality now than we did at the time of the great depression.”

    Horseshit. People have estimated JD Rockefeller’s net worth at $600 billion in today’s dollars. Andrew Carnegie @ $300 billion. Henry Ford @ $200 billion.

    NTTAWWT

    Bill Gates? A measly $60 billion. It’s not even close.

  9. Some people win life’s lottery whether through talent, brains, connections, inheritance, dumb luck, whatever. So what. System isn’t perfect. Never will be. Having the government try and make it so will only screw things up more. Most of these guys are working long hours and have a lot of obligations that interfere with their personal lives so it’s not like they don’t do anything for the money. I’ve met some pretty smart people who were more than capable of moving up the corporate ladder but valued personal time or some other lifestyle choice more than money. CEO’s pay massive amounts of taxes as well so to a great degree the government already punishes their good fortune but just on the back end and not the front end. I’m not not trying to nor do I feel I need to justify their salaries. Athletes, entertainers, all sorts of people make more money then many of us think they “deserve”. But we benefit way more from a system that’s let’s them make that money then we would from a system that tries to impose wage controls that always create more problems then they solve.

  10. I work in a Corporate Headquarters on the executive floor. I have absolutely no desire to be the CEO or an Executive VP. The travel constantly, work 14 hours a day and have no life. No thanks.

    I see lots of guys (and some women) who aspire to that level. Most don’t have the charisma, judgement, or brains. There is finite number of people who can successfully lead a large corporation, just as there are a limited number of people who can play in the NBA or NFL. That is why they are all highly compensated.

    Any attempt to change that is just price fixing – which people will immediately start looking for work-arounds.

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