Bosses who walked away with large payouts

I worked at Merrill. It was ridiculous that O'Neal got that much money after destroying the company.

Surprisingly I've never heard a good micro economic reason why a CEO should be paid so much. What are the market dynamics that result in a particular resource, CEOs, to be insanely overpaid? Is it really that supply lags so far behind demand or is it the perception that there a so few qualified to do the job? Or is it that our market economies are still so primitive?

Sorry but dont you think those are very low?

I mean an owner of a middle sized company with 100 staff can make 1 mil per year without problems.

Is it really worth to kill yourself during 26 years of hard work for one company to reach the top and make only 1 m per year?

I rather own a company of 50 than be the CEO of BP

Hayward's payout may be unreasonably high. But it might be remembered that 3 years is a short time to turn around a company culture. And his predecessor is the one actually responsible for the cut-corners-wherever-possible culture that is responsible the Gulf oil spill. Any word on how much his predecessor is making in retirement?

Tony Hayward’s problem is that he is too decent and too much of a gentleman.

To appease the gun-toting Americans he should have fired the BP Head of American Operations on the day of the explosion, followed by a randomly picked BP senior engineer every day thereafter, until the gushing well was stopped. He should have instituted a roving BP inquisition to decent on the BP American offices to leave carcasses and broken ribs in its wake. The Americans would have bought this subterfuge because they understand ‘action’.

No once did I hear Tony mention the fact that there were no Brits on the drillrig and that the spill was an American stuff-up from the word go!

Once that blow-out preventer is brought to surface, dismantled, and inspected, Tony Hayward will be vindicated and his paltry payout will shame BP.

It's none of my business but what would they do with all that money in retirement? Would they not be affected? They may be out of power but money still corrupts and spoils.

I am getting a pension which is more than what I had thought it would be but still in quite an ordinary range (somehow I was not interested to know exactly how much it would be till retirement became reality). With kids no longer requiring support, now I thoroughly enjoy a modest but my own life, flying discount economy, taking public transport and driving a modest car, and walking a lot in between. I had not imagined that an ordinary but free life would be such a joy. Above all I feel much healthier and fitter than the time I was working my tail off.

With that much money, I am afraid I would not have such satisfaction.

It's probably a good thing they received defined benefit pensions. They obviously cannot be trusted to invest wisely.

Honestly, the level of responsibility they take on when they assume the role is ridiculous. A worker can fall off a rig, and it will hit Haywards safety numbers/Haywards fault. They are on call 24-7, and expected to respond 24-7. I would not want the job, and if I was giving up my life, just to have better vacations than someone paid less, the pay better be good. I do agree though, the pay is excessive at the end of the day.

Immoral numbers!

@greatmongo

Oh yes, those poor executives are sooo underpaid and over worked. That's a new and interesting viewpoint . . . .

Proof that the "small" people of the gulf will further be screwed in this deal.

While BP pollutes Nigeria and the Gulf, their rich cronies will live like kings off the French Riviera.

The fact the Economist is trying to "minimize" the size of this man's pay is itself reprehensible. Do me a favor Economist, peddle your trash elsewhere.

"Surprisingly I've never heard a good micro economic reason why a CEO should be paid so much. What are the market dynamics that result in a particular resource, CEOs, to be insanely overpaid?"

I heard a rather good argument in Tim Harford's 'Logic of Life', he dedicates an entire chapter to the economics of why bosses are paid so much more. He reckons it's not to reward the people who actually possess those jobs, but for the people who want their job in the future. Working well might score you a promotion one day. What other pressure is there to work above and beyond the call of duty other than favourable results when it comes to promotion? The pay isn't paid for by the bosses amazing value, but the added productivity that comes from motivating all the subordinates.

C-level positions are not the envy of all, that is certain. Despite these huge numbers, there is an even huger drawback - lack of a real life. You become your company's b*tch. Your family never sees you (if you ever got one) and your kids only become fat off of your excess dough (they're the ones seeing the benefits of your cash, and it won't prepare them for the shit jobs they'll get from your influence). Like greatmongo, it pays (not nearly as high) to enjoy a less restrictive position and still have the freedom to actually enjoy what you earn. Aim for the board or the comfy job of a corporate technology consultant. They don't have the responsibility, but get nearly the same pay.

Yes, perhaps saying 'Poor Tony Hayward' isn't called for and Tony probably wouldn't like that for himself, but it is clear that his pay packet is very reasonable compared to contemporaries that have been in a similar situation.
Also, the economist did not mention the most egregious pay out ever, in my eyes at least. And I feel it my duty to mention it here.
This gentleman, although its hard to call him that, was: Richard Grasso, Ex CEO NYSE.
The guy paid himself $140 million/Annum in 2006. State Attorney General Cuomo sued him and the state lost, because Grasso had an iron clad contract.
How can a guy get 50% of the turnover of a company as pay??!!. The NYSE isn't even a company in the conventional sense and is really tiny compared to BP or Microsoft.

It's funny how golden parachute seem unrelated to results in this chart. I think golden parachute are definitely not well designed and should get more scrutiny from shareholders (maybe some help from gov here to make sure shareholders do really have the power).

On the other hand, greatmongo show the populists why a CEO can and must be well paid if he's successful. What would be the point of a 25 year carreer to reach a CEO job if you don't get paid for it?

The reason most CEOs are paid so much is not because they're so highly demanded, but because they're at the top of the ownership chain. They have the power to give themselves that kind of money.

Laws enforced by governments allow such extreme ownership patterns to be developed and so much resources to be concentrated to single individuals. Those laws must be questioned, and possibly changed or balanced with other laws to give us a more humane system of resource distribution.

The CEOs deserve what they are being paid considering the fact that majority of the work for those companies for almost their whole career. They put in a lot in terms of growing the company and making it profitable.What do people expect when they lose their job-go with empty pockets? With nothing to show for their hard work?

They should have got bullets instead of bonuses!! Isn't amazing to what great heights hype & Hot Air can sour..sorry soar !!!

Andover Chick
Absolutely right. Economist please add O'Neal of Merrill to the list of undeserved payouts.
I mean its hard to see how Rex Tillerson of Exxon deserved $ 400 million in bonuses, but one could argue that Exxon was doing very well and shareholders/pension funds did not suffer. On the other hand Stan O'Neal ran ML into the ground and still earned millions. Totally insane!

While Boards and shareholders may be thought fools or worse for allowing this to happen, executive compensation in corporations is not now and has never been the business of the public or, god forbid, the government.

The excessive salaries of CEO's is the result of global companies competing for the best leadership and management skills.

However, we also have to take into account economics 101; the production possibility curve. Is it really possible for just one person's capabilities to be worth a hundred million a year?

Some people try to argue against such Marxist principles by explaining a sort of multiplier effect a good CEO can pass down. But should the rewards and profits of a good synergistic company be concentrated at the top, or be more evenly distributed among the parts contributing to the larger sum? Heed Dr. Goodnight of SAS, Google execs Brin, Page, and Schmidt, John Chambers of Cisco took a $1 salary following the .com bust, and even Steve Jobs takes $1 salary.

Granted that each of the aforementioned are worth a billion dollars, but the principle of not being overtly egoistic carries its message much further than the comparatively small amount of money large companies save on executive pay, which impresses greatly upon the new incoming generation Y workforce.