SUMMARY: American CEO’s are the highest paid executives in the world and even when they fail their golden parachutes ensure that they will never have to work again. More and more, compensation of top executives is becoming a polarizing issue for the rank and file.
In using hard metrics to measure Marissa Mayer’s performance at Yahoo she failed to stop the sinking ship, yet she will leave Yahoo with tens of millions of dollars in severance. While she was laying off staff at Yahoo there was a lot of dissension around her “package” including the money she used for parties and to attend balls at the MET. What effect do you think this had on the rank and file and what was the effect on their motivation to really care about the work they did and the company where they work?
If you think that employees aren’t aware of executive compensation issues you’re kidding yourself. Job boards are filling with comments and complaints from employees who are held to higher scrutiny than company executives. It can cause serious issues in moral and can lead to your best people jumping ship.
“The current levels of compensation for CEOs in corporate America are, in a word, outrageous,” Jack Bogle, founder of The Vanguard Group, said recently. CEO pay grew a staggering 997 percent over the past 36 years, “greatly outpacing the growth in the cost of living, the productivity of the economy and the stock market, ” as a recent report by As You Sow reveals. And that disproves the claim that CEO pay is reflective of a company’s performance.
Most company HR departments and managers sweep excessive compensation talk under the rug and disregard its effect on employee productivity and mo ral. This is a serious mistake. HR executives may be afraid to broach the subject at meetings, but hiding from it only make it worse. How do you think the employees of Well’s Fargo and Mylan feel when they read how their companies are being crucified by the media while their CEO’s are taking home millions of dollars in compensation?
HR & management conferences need to openly bring the topic of excessive CEO compensation out in the open. Team building events and small raises are not enough to offset the anger that company executives are going to live well, even if they fail while managers can be fired for essentially any reason. Time to wake up.