Economy in the Tank but CEOs get a Pay Raise

If you were the CEO of Merrill Lynch, you made $83 Million joining a company that has been badly hit by the worsening U.S Economy. AP did a survey on the salaries and signing bonuses given to CEOs and found out that even though the economy is in the tank, CEOs seem to be doing excellent. You can check out the entire list here: Merrill Lynch’s Thain tops CEO pay ranking for 2007

One wonders how this is possible, do these CEOs really turn around a company that they deserve the raise or the hefty bonuses? Not really, board members do set few goals that need to be achieved in order for a pay raise or a bonus but to AP’s knowledge, there are no damaging consequences if that doesn’t happen because CEOs usually have contracts written in concrete and they do get their way no matter how the company does.

Even though it sounds like I am not happy about this, maybe the title gave you that impression, I actually don’t have a problem with it. Sports stars, Film Celebrities, TV Show Anchors etc all make millions of dollars but no one raises a finger at them, one wonders why? People who are popular and make ridiculous amount of money are often idealized and followed and their compensation is never an issue. If you are not popular then there is this fear of unknown, one is forced to ask this question “What does he do that someone making less money can’t do?” etc. There is no way to answer that question except to say that if one of us is offered the opportunity to make money, we would take it in a heartbeat.

If a company is privately held, CEOs can be paid whatever the board members decide but if it is a publically traded company, the choice should be left to the share holders and not the board members who are not representative of the share holders as they are sometimes appointed by the CEO.