This article reminds me of our conversation about corporations in class. Corporations, at their founding, were believed to not only develop quality products, but protect their workers by offering benefits and fair wages. Now, it seems that in this "shareholder maximization" world, there is no room for worker care in a company. Executive pay rises highlight this. Although I am no corporate America expert, it seems that CEO's are increasingly disjointed from a company. They are more of a figurehead than anything, and their salaries reflect those of famous professional athletes more than figureheads of companies. In this world of profit maximization, the image of a company is of utmost importance. Therefore, CEO's reflect, first and foremost, the image of a company. For example, look at Yahoo hiring Marissa Mayer as CEO. They were not only trying to kickstart their stagnating web browser, but try to project a different image of Yahoo by hiring a woman as CEO. It's like politics, essentially (remember Sarah Palin being the "savior" of the GOP?) Thus, the market for CEO's is extremely competitive because they reflect the values of a company, and therefore are extremely important in determining shareholder folder.
Those spikes in Employee Compensation / GNP remind me of sticky wages. When a recession hits, corporations lay people off rather than cut wages. Thus, relative to the size of the economy which is contracting in a recession, employee compensation seems to go up while corporate profits go down. Of course, it is worrying that there seems to be a trend for that compensation to go back down relative to the economy with recoveries.
This article reminds me of our conversation about corporations in class. Corporations, at their founding, were believed to not only develop quality products, but protect their workers by offering benefits and fair wages. Now, it seems that in this "shareholder maximization" world, there is no room for worker care in a company. Executive pay rises highlight this. Although I am no corporate America expert, it seems that CEO's are increasingly disjointed from a company. They are more of a figurehead than anything, and their salaries reflect those of famous professional athletes more than figureheads of companies. In this world of profit maximization, the image of a company is of utmost importance. Therefore, CEO's reflect, first and foremost, the image of a company. For example, look at Yahoo hiring Marissa Mayer as CEO. They were not only trying to kickstart their stagnating web browser, but try to project a different image of Yahoo by hiring a woman as CEO. It's like politics, essentially (remember Sarah Palin being the "savior" of the GOP?) Thus, the market for CEO's is extremely competitive because they reflect the values of a company, and therefore are extremely important in determining shareholder folder.
ReplyDeleteThose spikes in Employee Compensation / GNP remind me of sticky wages. When a recession hits, corporations lay people off rather than cut wages. Thus, relative to the size of the economy which is contracting in a recession, employee compensation seems to go up while corporate profits go down. Of course, it is worrying that there seems to be a trend for that compensation to go back down relative to the economy with recoveries.
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