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Another Discussion About CEO Compensation



Whenever I see an article about how much CEO's are paid, I often wonder if most are really worth this type of money. As an example, I just saw a recent article about CEO Reed Hastings getting a significant pay increase in 2013. According to the article, this increase will raise his salary to about four million dollars. Since Hastings is one of the founders of the company, part of me agrees that he should get a raise. However, I do have a problem with the raise being two million dollars. I also have a problem with a CEO getting a pay increase when their company's are having major problems. If you are a Netflix customer then you know what I am talking about. Over the past year alone Netflix has had some major issues with their online video streaming service. This has included customers not being able to see the entire movie they paid for, and also the Netflix streaming major outage that occurred on Christmas Eve. The customer complaints about online streaming issues has been going on for sometime. In regards to the Christmas Eve power outage, Netflix blamed Amazon for the problem. I have no idea which company is truly responsible, but I do know that it severely affected Netflix customers. Since online video streaming is a major revenue source for the company, I think CEO pay raises should be put on hold until issues like these are resolved.

I also have a major problem with CEO's getting huge payout packages when they have royally messed up a company. I think about the CEO that recently left Best Buy, who resigned for having an inappropriate relationship. Although this was not acceptable behavior, this was not the worst thing he did to the company. What he did that literally destroyed the Best Buy company was his ineptness to develop a new marketing and business strategy to help improve sales. This guy also did nothing in terms of positioning Best Buy to effectively compete with their competitors. At the end of the day however, this man was able to leave the company with a multi million dollar payout package. At most jobs I have worked at if you make this type of mess, you are given a pink slip and the potential to collect unemployment. This type of scenario has also occurred at many other companies over the past several years. Paying a person who has messed up a company a lot of money, not only hurts the company, but it also sends the wrong message. This includes sending the message to up and coming young adults that it is more financially lucrative to do a bad job then a good one.

I also think that the board of directors of these companies should be held accountable when they know that questionable things are going in the CEO office and they do nothing about it.

In my opinion a CEO should only be paid based on his overall business performance. If this were to truly happen, some CEO's would probably be making minimum wage.  







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