Tuesday, April 11, 2006

CEOs who earn as much as utility infielders

Last Sunday's New York Times bemoans CEO compensation and, in the tactic known to NASCAR, if not to journalism, as "drafting," Milwaukee Magazine's Bruce Murphy takes another wack. He says that:

A recent national survey found that 81% of Americans believe chief executives of large companies are overpaid. The increasing gap between worker and executive pay is contributing to the largest wealth gap seen since the 1920s.

Maybe. Certainly from an arithmetic perspective. But if the problem is CEOs who earn multi-million dollar salaries, I am skeptical. There aren't enough of them to have a statistically significant impact on the national distribution of wealth. One might just as well say that the high incomes of movie stars and professional atheletes has such an impact.

I actually agree that the salary of the CEOs at many publicly held companies is too high. But, having spent some time in business, I also know that the difference between having the right, rather than the wrong, person in charge can be enormous - much like the difference between having Brett Farve and a host of pretenders at quarterback. I guess that, if I am going to have to choose who will be wrong less often, I'd choose the people who have money riding on the outcome.

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