Despite the feel-good angle on this it is a horribly bad and irresponsible decision. Now, if they only have a couple of people doing just below $70K it is a dishonest yet clever marketing move.
It is a violation of a CEO's fiduciary responsibility to pay significantly more than market value for anything. That includes salaries.
Example: CEO announces the company will pay double for all office supplies. Desks, chairs, computers, etc., the company will pay double market rate.
How quickly would he or she get fired?
How many people would immediately conclude he or she was irresponsible or nuts?
CEO's fiduciary responsibility to whom, exactly? He's sole owner of the business.
Now, if he has loans outstanding, his bankers might raise an eyebrow about whether this move reduces his ability to repay; private investors would have a similar concern. But if he can demonstrate that his business will continue to deliver the returns he's committed to to those creditors, what does it matter to them whether he is spending additional money on his staff, or on replacing all the potted plants in his office, or on giving himself a big fat bonus?
I'm honestly glad this is one CEO who's not figuratively sucking the Wall Street c. I know* he's expected to do that for the good of Capitalism and all that junk, but, honestly, is pleasing a bunch of, basically, very-overpaid gamblers what we should strive for, as a society, as a culture, as a country?
What about happiness? Less stress? Not hating the 8-10 hours a day you spend of your life working? Why is funneling money up the chain to those that already have more than any human could possibly know what to do with, such a great thing ???
Yes yes. I know. I have a 401k too. We're all in on this, but I'm glad that somewhere, someone, decided to take one for the team, so to speak, and made a few dozen people happy. Just because he could. And if that pissed off a bunch of "investors" because the shares dropped from $82.52 to $81.88, I'm ok with that.
But there's no such thing as an absolute market value for chairs--it's a function of quality (among other things). There are plenty of CEOs who choose to buy expensive chairs for their employees without causing any controversy.
Employee market rates are a function of quality too. If paying twice as much gets you employees who create three times more value, that shouldn't be a controversial decision either.
I guess you could argue this if it was a publicly-traded company (although sometimes you get what you pay for). For a privately-owned company it's a totally irrelevant argument.
Comments
Despite the feel-good angle on this it is a horribly bad and irresponsible decision. Now, if they only have a couple of people doing just below $70K it is a dishonest yet clever marketing move.
It is a violation of a CEO's fiduciary responsibility to pay significantly more than market value for anything. That includes salaries.
Example: CEO announces the company will pay double for all office supplies. Desks, chairs, computers, etc., the company will pay double market rate.
How quickly would he or she get fired?
How many people would immediately conclude he or she was irresponsible or nuts?
Right.
The CEO also owns the company. "Don't I have the right to do what I want with my own money? Or are you envious because I am generous?"
CEO's fiduciary responsibility to whom, exactly? He's sole owner of the business.
Now, if he has loans outstanding, his bankers might raise an eyebrow about whether this move reduces his ability to repay; private investors would have a similar concern. But if he can demonstrate that his business will continue to deliver the returns he's committed to to those creditors, what does it matter to them whether he is spending additional money on his staff, or on replacing all the potted plants in his office, or on giving himself a big fat bonus?
I'm honestly glad this is one CEO who's not figuratively sucking the Wall Street c. I know* he's expected to do that for the good of Capitalism and all that junk, but, honestly, is pleasing a bunch of, basically, very-overpaid gamblers what we should strive for, as a society, as a culture, as a country?
What about happiness? Less stress? Not hating the 8-10 hours a day you spend of your life working? Why is funneling money up the chain to those that already have more than any human could possibly know what to do with, such a great thing ???
Yes yes. I know. I have a 401k too. We're all in on this, but I'm glad that somewhere, someone, decided to take one for the team, so to speak, and made a few dozen people happy. Just because he could. And if that pissed off a bunch of "investors" because the shares dropped from $82.52 to $81.88, I'm ok with that.
The CEO wholly owns the company. So his only fiduciary responsibility is to himself.
But there's no such thing as an absolute market value for chairs--it's a function of quality (among other things). There are plenty of CEOs who choose to buy expensive chairs for their employees without causing any controversy.
Employee market rates are a function of quality too. If paying twice as much gets you employees who create three times more value, that shouldn't be a controversial decision either.
I guess you could argue this if it was a publicly-traded company (although sometimes you get what you pay for). For a privately-owned company it's a totally irrelevant argument.