Issues and Debates with CEO Compensation

Issues and Debates with CEO CompensationIssues and Debates with CEO CompensationThe topic of CEO compensation is popular in the business press and the subject of significant media coverage as the annual studies are released to the market. Few tears are shed for the earning power of the top executives of major publicly-traded corporations the firms where data is visible and reliably reported in shareholder and related documentation. In many cases, the scale of the largesse received by these visible executives is difficult for the typical worker to relate to. In one study, it was reported that the then-CEO of Walmart, Michael Duke, earned by 830 a.m. on the first of January as much as the average worker in his company earned for the entire year.Reports of some of the cosmically large compensation packages of top executives are met with outrage by groups, who view this income inequality issue as one of societys ailments. The purpose of this article is to look at the issue from multiple perspectives you are free to draw your own conclusion on whether CEO compensation is appropriate or excessive. What the Reports Say About CEO Compensation As reported in Bloomberg BusinessWeek, the average CEO of a major corporation made 42 times the average hourly workers pay in 1980. By 1990, that had almost doubled to 85 times. In 2000, the average CEO salary reached an unbelievable 531 times that of the average hourly worker. Another group that studies this topic the Economic Policy Institute (EPI) regularly tracks the ratio of CEO compensation to median worker pay. Their data suggests the following In 1965, CEOs earned on average 20-times the average employee.By 1978, CEOs earned just less than 30 times the average worker.In 1989, the divergence grew to 59 times and by 1995 it was almost 72 times.By 2014, the EPI suggested that the ratio was 313 times the average worker compensation. Of course, data and metrics have the potential to paint the picture you want to paint. In a n alternative view, the U.S. Bureau of Labor Statistics defines the role of top executive much more broadly and reports a ratio of just 3.8 times the average workers compensation in their much larger reporting sample. Regardless of source and definition, there is little doubt those who occupy the top role in our largest organizations are highly compensated, often at levels unimaginable to the rest of us. A key question is, of course, why? How CEOs are Compensated Salary is one measure of CEO compensation, however, other variables are involved. These include Bonuses paid for achieving targets in growth, revenues, earnings and other measures as established by the board of directors.Restricted stock grants or stock option grants that become valuable if and when the firms share price rises to a targeted level.Deferred compensation, retirement benefits, and the contingent golden parachute should the individual be terminated.Expense accounts, the use of corporate assets including a co rporate jet for travel. What CEOs Do for Their Money The top executive of any organization is ultimately accountable for ensuring the development and deployment of a strategy intended to achieve stakeholder objectives. Shareholders want profitable growth and an ever-increasing share price and possibly an ongoing and growing stream of dividend payments. Employees want an environment that offers rewarding work, some security and the ability to gain new skills and grow in their careers. Other stakeholders are concerned about fair and ethical practices in trade, foreign sourcing, and all other business dealings. The top executive is accountable to the board of directors for creating and sustaining a healthy, growing business. From top talent selection to strategy to ensuring the coordination and accountability of strategy execution, the internal work of the CEO is never-ending. From an external perspective, the CEO is the public face of the firm on a grand scale, representing the c ompany in all of the media and mediums in use in our world. Much like star athletes, boards, shareholders, and employees put a premium on the potential impact of a visible executive they believe can promote and realize success. The star power can have a positive impact on the share price at the time of hiring and it may buy some time and acceptance of less than stellar results as the new CEO works to change the direction and strategy of the firm. The Effectiveness is One Person Of course, the value question in CEO compensation is, are they worth all of that money? The answer is, maybe. Or maybe not. Given the visibility of CEO compensation to the external world, boards of directors are increasingly vigilant about protecting themselves and their firms from any aspersions of dereliction of duty. In many cases, CEO compensation is explicitly tied to results, especially growth in the share price. If the shareholders win, the CEO wins and, in theory, everyone is happy. In reality, th e hard work of creating shareholder value is carried out by the hundreds, thousands or hundreds of thousands of workers in our largest organizations. One person, even the CEO, has little impact on the work performed. What she or he does is own the issue of what work will be performed. The drumherum of direction, selection of markets, approval of investments and work to ensure that the entire strategy execution process takes place with the synchronicity of a well-tuned symphony orchestra. The CEO does not do the work, however, she/he directly or indirectly impacts it based on decisions around talent, direction, and investment. When and Where the Issue of CEO Compensation Becomes Contentious During periods of poor performance and layoffs across the organization, and in the absence of a diligent board, high top executive compensation is deemed as outrageous by those impacted by the results. Shareholders appropriately rankle at high CEO compensation when? the share price is sinking , and both the employees who lose their jobs and the employees who fear losing their jobs view high top executive compensation as offensive. Even nominal or more than nominal concessions by the board and top executives leave these individuals with compensation that seems laughably large to someone who lost their job. The Bottom Line As mentioned above, you are free to draw your own conclusion on this topic. In some countries, the ratio of top executive compensation to median worker pay is constrained by culture and a sense of duty. In others, it is viewed as a free market scenario and the price of a star CEO matches the pricing of star athletes. If you believe the practices are unfair, find ways as a shareholder to let your concerns be heard. hilfestellung the election of activist board members who will work on your behalf. Make noise at annual shareholder meetings or via your right to free speech. Ultimately, you can choose to vote with your purchasing dollars and your feet b y going elsewhere. This is a challenging and controversial issue with no easy resolution for many situations.

How to Deduct Job Search Expenses on Your Tax Return

How to Deduct Job Search Expenses on Your Tax ReturnHow to Deduct Job Search Expenses on Your Tax ReturnIf it didnt hurt enough to be on the hund for a new job, then you realize youre on the hook for all of the expenses that come with the process traveling to the job, picking up copies of your resume and even new clothesso you give your best impression.We have some good news some of these expenses can be deducted on next years taxes Or, if you are preparing your tax return for last year and you were on the job hunt then, you might be able to slip in some extra deductions to help you get a bigger return. Heres how to approach your own deductions1. If you want to deduct your job search expenses you have to itemize your deductions on a Schedule A, and they must meet a minimum threshold. Since your job hunt expenses are considered a miscellaneous expense, they are deductible when they (and all your other allowable expenses) exceed 2 percent of your adjusted gross income. For example, if your adjusted gross income is $60,000 you must have miscellaneous expenses that add up to more than $1,200. If you have $1,300 worth of expenses you can only deduct $100. 2. You can only deduct expenses if youre looking for a consecutive placement at a job in the same occupation.If youre switching jobs in the same field from one company to anotlageher, youre covered, but if youre switching careers from one thing to an unrelated thing (such as electrician to writer), youre not. The switch must also be consecutive, which means youre moving from one job to another. If you took an extended leave of absence or stayed home with children for several years you cant deduct expenses for re-entry into the job market. You also are not covered for expenses when looking for your first job.3. If you hire an employment or outplacement agency, you can deduct those fees.If youre later reimbursed for those fees, you file it as income. 4. If you travel to look for a new job, you might be able to deduct those expenses. It will depend on what percentage of the trip was personal and whether or not the primary reason was to consider a new position in your current occupation.5. If you dont get the job you can still take the deduction.As long as youre trying to move from one job to another in the same field, you can take the deductions even if you didnt receive an offer or take the job. 6. If you land the job make sure you keep your receipts for your moving expenses, too.If youre moving more than 50 milesaway from your current home, you can deduct those expenses.As with any discussion about taxes, youll want to check with your tax professional before acting on any of the tips below. However, now you have a good sense of when and how it would be appropriate to deduct job search expenses on your tax return based on the IRSs instructions.

John George Leyner

John George Leyner John George Leyner John George LeynerOne of the great reforms in the history of industrial health and safety was championed not by a physician or lawmaker but by a mechanical engineer. Machinist John George Leyner revolutionized the mining industry with a series of novel rock drills produced around the turn of the 20th century. His drills not only worked better than earlier tools but also dramatically reduced one of the fruchtwein dreaded occupational diseases affecting miners silicosis, or miners lung. Linked to the inhalation of rock dust created by conventional triole and rock-breaking techniques, silicosis often meant a slow and agonizing death for exposed miners. The condition has been recognized since ancient times, when most of the worlds mining was done by slaves and prisoners. By 1700, when the first treatise on occupational health was published, miners lung was a well-documented phenomenon. It became a public health issue only after the industrial revolu tion inspired companies to dig deeper mines and hire more working-class men willing to risk death for a steady wage. Its possible Leyner had worker safety in mind with his novel hammer drill design after all, he himself knew something of industrial-age hazards from losing an eye in a youthful mishap with dynamite. But with business acumen as sharp as any drill, Leyner was above all about outselling his competition. And that he did. Leyner was born in the right distribution policy at the right time with the right inborn talents to make a difference in his profession. He was born to a German immigrant father and Pennsylvania Dutch mother in 1860 in the heart of Colorado mining country. Mechanization and the increased need for ores and minerals was driving settlement and expansion in the American West. John George Leyner engineering works, January 1903. Leyners formal schooling ended by eighth grade, but his education in the weaknesses of drilling equipment continued into his 30s as t he operator of a busy machine shop repairing equipment for the local mining industry around Denver. He saw the need for a lightweight, fast, and powerful drill that could break through rock far faster than the dominant piston-driven models. He created his first drill in 1896 and 1897, and then took the technology one step further by adding the ability to blast rock casting away from the drilling area with compressed air. Productive it may have been, but miners would not use the drill after seeing the billowing cloud of potentially hazardous particulate matter the machine created. Leyner went back to his shop to develop what would become his signature breakthrough. By devising a method to fabricate a hollow steel drill bit, Leyner was able to channel a stream of water as well as compressed air through the steel and directly to the point of contact with the rock face. This process converted hazardous rock castings and dust into cool, harmless mud. It was a major victory against the co nditions that gave rise to lung disease, and miners embraced it immediately. Leyners exclusive patents on the process would make him rich. So game-changing was the Leyner water-flushed drill that many mining states soon banned dry mining techniques. Business thrived and he was soon enticed to move his growing Leyner Engineering Works Company to nearby Littleton, where it employed nearly 170 workers in a nine-building complex. Top honors for Leyners equipment at the 1904 St. Louis Worlds Fair generated worldwide fame. By 1912, heavy equipment giant Ingersoll-Rand became Leyners sole distributor and manufacturer of rock drills under his patents. The agreement ensured him of significant wealth while freeing his adventurous mind for other endeavors in agricultural equipment, food processing, and other industries in which he perceived a need. Leyner died tragically in 1920 from injuries incurred in a traffic accident caused when he swerved his car to avoid a horse-drawn cart a rare inst ance in Leyners life and career when old technology would prevail over mechanized progress. Michael McRae is an independent writer.So game-changing was the Leyner water-flushed drill that many mining states soon banned dry mining techniques.