CEO pay vs average worker pay

http://en.wikipedia.org/wiki/Walmart#Incorporation_and_growth_.281969.E2.80.932005.29

The point is that he already had joined a successful business and worked his way up. He didn't create a business from scratch. Ragu's point was that if we all thought it would be easy to be a CEO, to just start our own business. Duke came into a situation where the business had already started, grown considerably, had made a name for itself, and had procedures for operations in place.

Putting this another way: Brian Cashman has an easier time being GM of the Yankees than he would if he was hired as a GM or started an expansion team. Why? Besides the resources, he already joined a successful organization, and doesn't have to build a team, and a farm system, from scratch.

 

What's Mike Duke's WAR?

 

This is your quote here:

You set the bar at "starting a business and growing it". You didn't just say, "Grow a business." By your own quote, you're telling us all that to truly test yourself on being a CEO, you have to start the business yourself. Had you said "either start or take over a business", your point would have been more understandable.

Those executives you named still had the advantage of their companies already having a brand, facilities already in place, and they weren't risking their own money. As I pointed out earlier, an executive who takes over a failing company and doesn't turn it around still manages to land on their feet. A guy who starts their own business and fails has a lot more to risk.

Ray Kroc grew McDonald's into a household name. Yet, he had the advantage of the McDonald brothers' system and the advantage of people willing to become franchisees. He didn't create the restaurant himself and build more on his own. If anything, the McDonald brothers were less enthusiastic about the business growing than Kroc was.

 

As an alternate route, you could convince an established company to make you CEO, I guess.

 

Exhibit Number good-God-can-it-be-that-many of Baron posting a contradictory tale about something he knows absolutely nothing about.

 

And you're contributing what, here?

 

Just making sure that whenever you make an inaccurate business or an economic point -- and, quite frankly, that's almost all of the time -- everyone's clued in.

 

How was the McDonald's point inaccurate?

 

There are a lot of different debates going on here. Like, is it right for such an income disparity? Or could a Walmart CEO make it as a cashier?

My question is it actually worth it - purely on a business standpoint - for the CEOs to be paid so much? The outgoing guy at Proctor and Gamble, Robert McDonald reportedly got over $30 million in compensation in 2011 and 2012. If you know that you're going to be extremely comfortable for the rest of your life, how much pressure to perform are you really going to feel?

Wouldn't it be better for CEOs "simply" to get paid something around the lines of $3 to 4 million a year? Enough so that they're well off but not enough so that they can rest on their laurals (if they want to - choose your adjective here - stay fairly/incredibly wealthy forever.) A great CEO will always eventually get hired away but with this system, there'll be dozens of more wanting to take their spot.

 

Apparently it is, because the people actually paying those CEOs those salaries* are the owners of those firms. Nobody's forcing them to compensate CEOs that much. It stands to reason that, if it weren't worth it, many/most firms wouldn't do it.

*Lots of the growth in CEO compensation since the 1970s and 1980s has been because CEO compensation has become much, much more stock-based. It's an attempt to align to a greater degree the interests of the CEO with the interest of his/her employers. This also addresses, to a degree, your follow-up question:

If the great bulk of your compensation rests on stock performance, then you have, at least in theory, much more of an incentive to perform in a manner that suits your employers.

 

It was inaccurate with respect to: 1) Kroc's contribution(s) to the growth of that business; 2) the challenges he (and his team) faced in making that business the success it was; and 3) the degree to which he was helped (or hindered) by the McDonald brothers.

I assume you based your post on your reading of Halberstam's The Fifties, which is a good book but which doesn't delve very deeply (or accurately) into the McDonald's story.