Swiss capping ratio of CEO/peon pay

[Kheldarson]

Doesn't matter. The comparison of a CEO to an athlete is ridiculous.

How so? An athlete gets a contract that says they get X amount for the season with Y added for games played, right? So if they get let go ahead of time, then they're still owed X, correct, unless otherwise stated in contact? Same thing with a CEO. He's still owed his salary. Heck, when I left my teaching position early I was still paid the remains of my salary.

[Gravekeeper]

How so? An athlete gets a contract that says they get X amount for the season with Y added for games played, right? So if they get let go ahead of time, then they're still owed X, correct, unless otherwise stated in contact? Same thing with a CEO. He's still owed his salary. Heck, when I left my teaching position early I was still paid the remains of my salary.

Not exactly. An athlete's contract is more like a service contract. Its designed to prevent the player from being traded or from leaving for a better deal somewhere else. So if the organization wishes to trade the player with a no trade clause before his contract is up, they have to buy out the remainder of his contract. Its sort of like a cell phone contract ;p

With a CEO its pretty much straight up "I get money if I lose my job. Even if you fire me.". This is why a CEO with a golden parachute or handshake can effectively run a company into the ground for their own gain. If they devalue stock prices, they either get fired or the company fails and gets bought or merged. Either way triggers a huge payday for them.

[Kheldarson]

Not exactly. An athlete's contract is more like a service contract. Its designed to prevent the player from being traded or from leaving for a better deal somewhere else. So if the organization wishes to trade the player with a no trade clause before his contract is up, they have to buy out the remainder of his contract. Its sort of like a cell phone contract ;p

With a CEO its pretty much straight up "I get money if I lose my job. Even if you fire me.". This is why a CEO with a golden parachute or handshake can effectively run a company into the ground for their own gain. If they devalue stock prices, they either get fired or the company fails and gets bought or merged. Either way triggers a huge payday for them.

Well, either way, isn't it reliant on how their contracts are worded? Hence a similarity even if the reasons are different? I mean, a CEO could, in theory, tie their payoff to remaining with the company, or the company could negotiate for it. A wildly successful athlete might be able to negotiate out of the no trade clause.

[Greenday]

So when a CEO joins a company, he's signing a piece of paper that says he has the job for a certain amount of years? It's not just, "Okay, salary, perks, what we expect of you, go!" with an open-ended time limit?

[Kheldarson]

So when a CEO joins a company, he's signing a piece of paper that says he has the job for a certain amount of years? It's not just, "Okay, salary, perks, what we expect of you, go!" with an open-ended time limit?

Maybe? I know my teaching contract was up for renewal every year; I presume most work contracts are like that with renewal contingent on evaluation.

[s_stabeler]

So when a CEO joins a company, he's signing a piece of paper that says he has the job for a certain amount of years? It's not just, "Okay, salary, perks, what we expect of you, go!" with an open-ended time limit?

No. Basically, the contracts are more or less your standard employment contract, however, they will include a clause that says " if ACME Corp wishes to terminate the agreement, they will pay $X Million dollars to Mr. X" Of course, if the employee retires, or resigns, then no payment is necessary. Basically, it puts all the power in the hands of the CEO- because the benefit of chucking out an underperforming CEO must then be weighed against the cost of slinging them out.

[Andara Bledin]

Actually, CEO contracts are rather more complex.

They often include signing bonuses, can be from 1 to 5year terms with various renewal systems (though 'evergreen' or auto-renewing is becoming most common), include perks such as relocation covered by the company, include other perks such as the company keeping the CEO in the latest tech, have termination clauses for both sides depending on with or without cause, as well as a host of other details including non-salary compensation and non-compete requirements.

They really are a lot closer to sports contracts than typical worker contracts.

[Gravekeeper]

No. Basically, the contracts are more or less your standard employment contract, however, they will include a clause that says " if ACME Corp wishes to terminate the agreement, they will pay $X Million dollars to Mr. X" Of course, if the employee retires, or resigns, then no payment is necessary.

In the case of some golden handshakes, payment is necessary even with retirement. With some, the CEO gets a retirement package automatically the moment they lose the position. Regardless of how long they've been with the company.

The inherent problem is that these contracts are rarely if ever tied to the CEO's actual performance. There's a kickback bonus if the CEO is good, but rarely a corresponding punishment if they suck at it. As I mentioned, intentionally sucking at it can be more profitable for the CEO themselves then success.

[wolfie]

The average US McDonald's employee has been with the company for 17 months and they have turn over rate estimated at around 150% per year. So the average restaurant is replacing its entire staff at least one a year. High turn over and short tenure means its hard for employees to gain enough traction to form unions. -.-

Does not compute - with 150% turnover (i.e. for every 2 positions, there are 3 people fired/quit and replaced each year), how can there be an average tenure of more than a year?

High turnover doesn't necessarily mean that a union can't gain traction - in truckload freight, a driver turnover on the order of 100% is considered normal, but that doesn't seem to be much of an obstacle for the Teamsters.

[Hyena Dandy]

Does not compute - with 150% turnover (i.e. for every 2 positions, there are 3 people fired/quit and replaced each year), how can there be an average tenure of more than a year?

Like so.

Jane has worked at her local MacDonalds for 20 years. She's very devoted, or something. Her store has, for people other than Jane, lost and replaced an employee every six months this year. The store has 9 other employees.

To determine the store's average tenure, we'll put Jane's 20 years, and everyone else's .5 years in. Since the statistic GK cited shows only CURRENT employees, that's 4.5. 24.5.

Since the store has 10 employees, to determine how long the average employee has worked, we divide by ten. The average tenure of this store's employees is 2 years, five months, and 12 days.

Now we'll look at the store's turnover.

For 10 positions, this year, the store has had 19 employees. The store's turnover rate is 190%... Despite the average employee having worked there for 2 and a half years.