Over-Paid CEOs: Are They Really Worth All That Dough?

Forbes recently published their list of America?s Highest Paid CEOs. ?Our report on executive compensation will only fuel the outrage over corporate greed,? writes Scott DeCarlo. ?In 2011 the chief executives of the 500 biggest companies in the U.S. (as measured by a composite ranking of sales, profits, assets and market value) got a collective pay raise of 16% last year, to $5.2 billion. This compares with a 3% pay raise for the average American worker.?

Wow. DeCarlo suggests this amounts to about $10.5 million apiece. Of course, it isn?t all salary; it includes vested stock awards and exercised stock options. Nevertheless, that?s a chunk of change. I?m not ashamed to say I can?t even wrap my head around a comp plan like that. Furthermore, I have to wonder if CEOs are really worth that kind of dough.

In fairness, I can?t honestly say I have the skills needed to run a multi-million dollar organization as CEO, let alone a major corporation like Apple, Oracle or Kraft Foods?but that doesn?t mean I believe that the collective group running America?s biggest companies are worth a $10.5 million pay raise as many organizations scratch and crawl their way out of the worst economic crisis since the Great Depression.

In light of the huge compensation packages won by the above-mentioned CEOs I find it interesting that a GfK study published about this time last year, interviewing some 30,000 employees in 29 countries, ??finds a labor market polarized between disillusioned 18 to 29 year-olds and their older, possibly more resigned counterparts.?

GfK suggests that 5000 interviews conducted in the U.S. suggest that the North American workforce is experiencing the same thing as workers in the rest of the world. The last few years have been tough for everyone. ?In many countries, work pressures are taking their toll on well-being among the younger work generation,? suggest GfK. ?The recession has dealt a hammer blow to the aspirations of many ? In the US, more than four in ten young employees feel like they have been forced to take a job that they are not happy with (42 percent), or have taken a different career path because of the economy (45 percent). Nearly half of young workers (47 percent) are forced to change life plans, such as delay having children or buying a home, because of the economy.?

I would imagine that this gives a lot of workers pause when they look at the fat compensation plans enjoyed by their CEOs. However, according to DeCarlo, ?We now have five executives who take in $1 in annual salary, four are Forbes Billionaires: Oracle?s Larry Ellison, Google?s Larry Page, Hewlett Packard?s Meg Whitman and Kinder Morgan?s Richard Kinder. The other executive is Whole Foods? John Mackey.?

I think it?s all fine and dandy for some of the world?s wealthiest business leaders to forego a salary, but I think a bigger issue lies in figuring out how to engage a workforce that has taken a beating over the last four or five years and is disillusioned at their opportunities for success. I know there will be a number of folks out there who would argue; ?I could have told you that the younger generation is unhappy with their lot in life. They just don?t want to work hard.? I believe that is a gross over-simplification of the issues we face and doesn?t line up with the fact that GfK?s survey (although more focused on younger workers) suggests that older workers aren?t really any more engaged right now than their younger colleagues.

The elephant in the room is the myth that doing more with less is the answer to our collective economic woes. Doing more with less eventually leads to doing more and more with less and less, which doesn?t get us anywhere. We should be thinking about doing less with less, but more of the right things.

I was speaking with an analyst friend of mine earlier today about some recent client visits he?d been conducting over the last quarter. He suggested that while the chief executives and their boards might effectively set priorities and allocate budgets for major corporate initiatives, it?s the initiatives that fly under their radar that are really killing productivity and burning out the workforce. It?s like the tiny little dinosaurs in the Jurassic Park movie, you might not be gobbled up in one bite, but 30 or 40 of the little devils will literally tear you to shreds in short order.

Over the course of my career, I?ve observed that most employers want, expect and often demand the workforce be willing to spend extra hours on the job. There are times when this is important to get a project finished or handle a crisis, but in light of the current economic situation, many people are finding it to be a weekly situation?and it?s taking its toll. In an environment where we need the workforce to be totally engaged and invested in what they?re doing, the GfK survey suggests, ?Young workers around the world are lacking in engagement with their employers and are the most affected by perceived pressures at work, posing long-term retention and management problems for companies and countries??

I?d suggest that it?s not just the younger workers. In this morning?s conversation, we talked about ?job hoppers? who jump from job to job about every 18 months and how the reasons for that seem to be changing. He suggested that many people, often more experienced and maybe even senior people, know that for 12 to 14 months there?s a honeymoon phase for every executive hired and it will take about that long to get up to speed on what?s important, after which they?ll be expected to burn a little midnight oil and spend late nights and weekends at the office. They?ll stick around until that starts to happen and then jump to the next new thing and do it again. Basically wasting tens of thousands of dollars and countless hours, handicapping organizations.

http://www.forbes.com/sites/tykiisel/2012/04/17/over-paid-ceos-are-they-really-worth-all-that-dough/