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Do CEOs really need to make that much money?

I understand that they run the company and are the first to get the blame if the value of the company stock goes down. But do they really need to make 700 times more than the average employee at that company? To me, this is the problem of capitalism. These aholes not only make a ton of money on salaries but also get nice incentives and stock options. When the average employee at any company under-performs, they are normally fired. When a CEO under-performs, they get millions in bonuses or severance packages. How is that good business sense?

Public Comments

1. yes because they have to pay their laywers al ot of money to keep there asses out of jail. They are all crooks
2. You are pointing the finger at the wrong people. Who chooses the executives and their salaries? The Board of Directors Who elects the Baord members? The Stockholders Who are the Stockholders? Anyone who owns stocks, even if it is a part of a fund... so probably you.
3. Risk+Ambition+Invested Time should = Reward So long as they aren't being payed via the gov't bail outs they where the ones steering the ship and most worked hard to get there. Buck up or get out
4. who made you the person in charge of compensation?
5. There's NO business sense to it.. and it's been challenged and debated across at least 3 decades now. You can say that a Lee Iaocca had an impact -- as a leader, manager, lobbyist, PR focal point and motivator let's say for example...and the same rings true for Steve Jobs (pre-'09) and many other iconic business CEOs you can readily name. But, the CEO of (insert name of corp.) in no way deserves 10s of millions.. and many times, they're not even working 5 days a week, or a full day at that... they're essentially face people. Their staffs report to them, and they decide or head-nod. Maybe he or she's made a name, somewhere else -- and by "name", I mean was on TV sitting beside Maria Bartiromo, etc. and yapping about projections & the market & how/why they should do better, etc. and being placed in print/mags and getting the Corp. name seen/read.. in the faces of investors. That's all it is.. an expensive PR GAME with media & stock pickers/investors. Something to talk about. Outside of earnings. For Ex. -- Does Ford need a Ford et. al. at the top? how about if it simply sold a car that they do, say in Brazil that can get 40-50+ mpg on a hybrid engine for the last 5-6 years? (naaaaaaaaaw) This whole topic was given a 2nd life with the popularity of Jack Welsh, I believe.. the celebrity CEO that believes his own press-clippings. Superhuman manager that can spin a phrase or a concept and have heads nod, even beyond his own fiefdom. ("yes, we must cut the underperforming 10%") etc. etc. It's nonsense. Of the 100s of MBAs I've met.. I can see the frat boy underneath, additionally. The cancun partying, and well-connected family or neighborhood ties... daddy or uncle or old college bro... that brings you in -- and UP, UP, UP you go (for the most part). As if the hiring process goes like this: Do you golf? great. Do you drink? nice. Here's $10mil -- take the rest of the week off.
6. I do not think they need to make 20 million dollars a year, if the government is funding your corporation. It does not make sense. Carl Ichan made a great point, there is one reason for a CEO to make $$$$ of dollars out of shareholders expense. A cap is needed on wall street on these CEOs.