My Tractor Forum banner
  • Are you passionate about Tractors? Would you like to write about topics that interest you and get paid for it? Read all about it here!
Status
Not open for further replies.
41 - 60 of 68 Posts

·
Registered
Joined
·
4,417 Posts
One of the intrinsic problems of why people view CEOs and others of the 'elite class' so negatively is that unlike 'normal' workers, their wealth is incredibly durable. Companies fail but rarely does a person who has ever made it to the top end up back anywhere near the bottom.
even more reason to make sure the guy at the top is not going to screw up. So the line workers don't end up suffering.

But I'm quite certain once a CEO drives a company into the ground, he'll have a tough time finding another gig.
And those people have expensive tastes - they can't go on living without working - just like we can't at our level....
The biggest risk is is not for the individuals working there, but to the market... all those poor suckers that pumped cash into the company (via stock purchases), hoping that the company will earn them a return.... instead they lose their capital..... CEO's hare huge owners of shares as well... their comp package may contain more payout via shares than actual cash... so if those shares tank - boom - the CEO is left with a stack of toilet-paper.

Here is the story on Deere's CEO.... just as I thought - most of it is tied to the company doing well...

Product Font Parallel Slope Circle
 

Attachments

·
Super Moderator
Joined
·
13,772 Posts
Interesting discussion on CEO pay and the strike. Here’s some questions to ponder.

Something I will ask those that think the pay is unreasonable. Would you feel comfortable walking into your office and making decisions that affect the company for 10-20-30-40 years in the future? I sure wouldn’t, tens of thousands of jobs all are on your shoulders and to know my decisions will affect all those jobs.

Something I will ask those that think the pay is reasonable. Out of 8+ billion people, can one not be found that will do the job for less?

Let’s compare and contrast. Why did Deere make it out of the 80’s and International did not? Talk about a really researched topic area! When were the decisions that IH made that caused their downfall? I’d argue decisions made in the early 1970’s contributed to their failure in 1985. Meanwhile, I’d say Deere made it through the 1980’s because of decisions made in the late 1950’s and 60’s.
 
  • Like
Reactions: CCMoe and kershner

·
Registered
Joined
·
235 Posts
I wasn't trying to suggest that CEO's shouldn't be paid more than others, but that the ratio from top to bottom has gotten out of control.

Perhaps somebody with better research skills than me can dig out how much Deere's CEO and shop workers were being compensated in 1980.
 

·
Registered
Joined
·
4,417 Posts
it may seem wrong... but it's the laws of supply and demand.... and the people "in demand" for these jobs all have very high price-tags.

the people who do the hiring (the leadership team and the board), agree to these salaries - they see something in this that is important to them.... they're not paying these amounts just for fun.....
these very people could just as easily walk down to the shop floor and approach anybody and offer them the same job for $150k, and take the saved $14M and pay it out as dividends to the shareholders... lower cost base will drive up the bottom line.... drive the stock price up, and have all kinds of other benefits.... employee morale as well....
but for some reason they don't do that!

Just like top movie producers hire A-class movie stars for big movie productions... they could save so much $$ by hiring B and C category actors.... but they don't do that..... weird

Don't get me wrong - i'd love to make even 1/10th of a CEO salary working on a tractor assembly line... that would be my dream job!....

CEO's pay has increased so dramatically because somebody is willing to pay that price.... and they are willing to pay that price because they see value in it. The benefit outweighs the cost. It's that simple. Market forces work this way. It's why a range-rover costs 3x that of a lincoln, even though it's arguably inferior to the lincoln. But... someone is paying that price, because they want THAT car.

cheers!
 

·
Registered
Joined
·
3,272 Posts
CEO's pay has increased so dramatically because somebody is willing to pay that price.... and they are willing to pay that price because they see value in it.
It's because it is easy to do that. Much of the compensation for a CEO comes from stock appreciation. The stock, or options, that companies give a CEO do dilute the value to other shareholders, but most don't notice/care so much, since much of it is based on stock appreciation, which most shareholders love. How much the CEO actually has to do with that is debatable. But, hey everyone is doing it.

Also, remember who is on the board, generally CEOs of other companies. So, if they vote for a raise for this CEO, they can then say they aren't getting paid enough. Capitalism pretty much CELEBRATES this inequity. As the saying goes, it's great work if you can get it.
 

·
Registered
Joined
·
4,417 Posts
well... generally speaking I agree with some of whats been said, and disagree with other things.
I've been working with CEO's and people that became CEO's for 15+ years..... most of whom I ever dealt with, were worth every penny they earned... mostly because they in turn led the companies that were doing well (ie I got to keep my job), and my investments in those companies paid off for me. Am I jealous that the guy comes to work in a helicopter?... nope!... I don't want that job (knowing very well - and I see it every day - what that job entails and the toll it takes on every other aspect of their life)...
 

·
Registered
Joined
·
1,836 Posts
I remember the UPS strike back in the 90's. A few days before the strike our local VP was in the parking lot and some guy came running through the parking lot yelling strike, strike, strike. The VP grabbed him by the arm and said, "You want to strike? When was the last time you saw chains on that gate?" "You want to strike, how much seniority do you have? You think you'll still have a job when it's over?" Usually negation's start well before the strike date. That contract UPS would not come to the table. All employees got a big folder in the mail, a copy of the offered contract. The first page said, "This is our First, Best, and Last Offer". I automatically voted no. A "No negotiation contract", got a no from me". I was a Steward, and The Vice President of our local and I, and the District and Building managers had to walk the whole building to make sure no dodo thought it would be good fun to hide out in a mop closet or something. When we got out, the gates had been chained. They made a big display in front of the TV cameras of them unlocking them to let us out. As I was walking to the parking lot I heard some guys arguing. Two tractor trailer drivers, from Harrisburg PA, just pulled in, and managers flagged them down and took their keys. When they asked how they were going to get home, the managers said, you are on strike, we don't care. Both of the drivers and I worked the night shift, so we were used to being up for several more hours, so I took them home, about a two hour drive each way for me. What came of the strike, The hourly's kept our health and welfare plan, that the company wanted to take over. The company said it was all our fault and they would have given us a much better contract than we ended up with. But, they had already sent us a packet that said, "First, Best, Last, Offer". I found that packet in my files a few months ago. What did the company get? They had customers that had been loyal to us for decades, and stayed with us right up till midnight. Then they found that putting all of your eggs in one basket is dangerous. So, they made accounts with the USPS and FedX. They didn't divert a lot of volume to other shippers, just enough to keep accounts open, in case it happened again. It was the most stupid strike I have ever heard of. Our founders had it written in the UPS Policy Book, not the contract, that we would all, "Address each other on a first name basis to promote a family atmosphere". When I started in 1986 Jim Casey was still alive and traveled all over the country to big and small buildings, and walked through them shaking hands and thanking people. If someone called him "Mr.Casey", he would hold there hand for a bit longer and gently say, "it's Jim". The big boss when I started would stand by the guard shack at delivery dispatch and wave to every driver as they left. He would not go back in until every truck was gone. If it was raining or snowing, he stood in the exact same spot with an umbrella in one hand, waving with the other. It's still a good company to work for, but the family that Jim Casey envisioned has long gone dysfunctional. I do have to modify what I just said. My last job before I retired was shifting trailers in the yard. We got a new Feeder Dept manager. He lived in Chicago, and flew into BWI every Sunday and home every Friday. He had the enthusiasm and care of family that those early guys had. Managers like him are few and far between now.
 

·
Registered
Joined
·
1,836 Posts
well... generally speaking I agree with some of whats been said, and disagree with other things.
I've been working with CEO's and people that became CEO's for 15+ years..... most of whom I ever dealt with, were worth every penny they earned... mostly because they in turn led the companies that were doing well (ie I got to keep my job), and my investments in those companies paid off for me. Am I jealous that the guy comes to work in a helicopter?... nope!... I don't want that job (knowing very well - and I see it every day - what that job entails and the toll it takes on every other aspect of their life)...
I have to agree with a lot of what you said. It seemed the higher you got at UPS, the more human you got. When you were at the bottom of the management drain, and the sewage flows down hill, you were never happy, always under the gun. Once you got into upper management, you really did care about safety, and other issues. On time I was moving a package truck that the mechanics just brought back. A guy was walking along an unlit walk way. I stopped and waved him on, he stopped and waved me on, back and forth. Finally he walked up to my door and laughing he said he was the Atlantic District Safety Manager, here for the big Safety meeting tomorrow. He said he just wanted to see if I had my seat belt on. I said, "If my butt's in the seat, my belt is on. See you tomorrow, I'll be speaking". The one thing where I felt UPS lost it, was they felt that threatening a supervisors job, was a viable means of motivation. They would say and do things to sups that they never would have dreamt of doing to an hourly. Broke the spirit of a lot of good people. I never cared what some one else made. I went to work under the premise that I would do my best every day, and for 30 years I did that, I have two titanium knees, and arthritis in my hands that make it hard to do up buttons and I haven't been able to snap my fingers in years. I gave them what they asked of me, and I'm the better for it.
 

·
Registered
Joined
·
4,417 Posts
very good example. I am sure other will have examples that go the other way... there are always stories on both sides... but I can say that most successful companies have people that balance the cut-throat market (customers) needs of whatever service or product the company provides, with the well being of the working population. If the pendulum swings too far one way, or the other way - things fall off track.

Check out this video example... it's a bit too soft and squishy for my tastes, in regard to "loving your employees", but dont focus on that... listen to the factual information / data & statistics... and the information this guy shares about industry and Southwest Air....
cheers!
 

·
Registered
Joined
·
2,903 Posts
Discussion Starter · #51 ·
Slightly off to one side of this topic, but has to be considered, it offshore manufacturing. In my opinion, the bloom is off the offshore rose at this point. "Cost creep has set in as companies struggle to reconcile their P&L reports. A few reasons offered:

  • "Over the horizon" QC often does not work. Too many parts arrive that require reworking or re-machining or are simply unusable. Huge increase in the bottom line cost per part installed. Shows up in "cost creep" in the P&L reports.
  • Increased need for a full time local QC rep, or constant CQ visits to the manufacturing site. Accommodations, living expenses, travel, all add to the offshore parts costs over and above the "quoted per unit price". Again, "cost creep".
  • Material specifications often get "shaved" in production. Metallurgy testing has shown that fillers in such things as aluminum castings, have been added during production runs. See above need for a local on site inspector.
  • Communications are often difficult, especially when there are issues. Offshore manufacturers are often Job shops on a huge scale. Just because your castings have a flaw, they won't drop everything to correct it. You end up with containers full of scrap metal or what turn out to be just raw castings needing complete reworking. Yes it percolates down to added costs at the P&L level.
  • Finally, there is the shipping costs. Just have a look at the mess that has developed globally on container shipping.
  • How long can your firm handle multiplying shipping costs, and delays, and pay workers to sweep floors while the maybe useable parts you need sit for a month off San Diego? Then, if a pallet does show up, chances are that they won't be to spec in some way. Now you wait another 60 to 90 days....maybe more, maybe never. Too much complaints and these big job shop plants just quit your parts, and stop communicating regularly. Only the really big guys get some attention.
  • Then there is political shifts and outright instability. That, I won't comment on here.
These are just a few of the basic reasons why I believe that manufacturers from all over the globe are having second thoughts on particularly the popular big name it "offshore" sourcing. Things are rapidly changing. The JD strike is perhaps just a tiny part of the changes we will be seeing in the near future.

Just one guy's opinion, all others are welcome.
 
  • Like
Reactions: wally2q

·
Registered
Joined
·
3,319 Posts
Personally, I think america has become dysfunctional..... :)

But yeah, I think events of the last year or so are most certainly going to prompt folks to bring some of their manufacturing back to US shores. Either that, or invest in cargo aircraft. :D (which is already happening.) Of course, it will be several years before locals can pick up the backlog that is happening now. Factories just don't spring up overnight. Especially specialty manufacturing, like computer chips.
 

·
Registered
Joined
·
4,417 Posts
Slightly off to one side of this topic, but has to be considered, it offshore manufacturing. In my opinion, the bloom is off the offshore rose at this point. "Cost creep has set in as companies struggle to reconcile their P&L reports. A few reasons offered:
agreed.

Boeing learned some valuable lessons off the back of its 787 production disasters — not least that the production and assembly of a highly complex product cannot be easily outsourced.

+Since then, the company has launched several reshoring initiatives.


 

·
Premium Member
Joined
·
5,807 Posts
I'd like to believe that this pandemic and now global supply chain mess is going to encourage companies to bring more manufacturing back to the U.S., but sadly I'm probably wrong. The U.S. needs more manufacturing jobs, not less. People in all walks of life who have been working continuously for the last two years are burned out now and fed up with working too many hours, many for a lower wage than they think is reasonable for their amount of commitment. The next few months are going to be very interesting for labor relations with the CPI up 5.9% year-over-year right now. A little 1% or 2% cost-of-living increase isn't going to go as far anymore.
If that's all it took was two years. Will I can not say it here.
When I graduated I went to work at what was then one of the worlds largest manufacturers of off-road equipment.
I was paid salary (+ overtime) and started at a little less than the UAW workers employed there.

During that era, the compensation to the most senior executive at that company was between 20 and 25 times my annual earnings.
I thought the difference was way to wide, given the number of levels between out 2 positions.

Articles suggest deere's shop workers are at about $19 and skilled trades at about $31 (so about $38,000/year and about $62,000/year -- before overtime and ignoring benefits. ($31 x 40 hours x 50 = $31 x 2000 = $62,000)

Deere's CEO is reported to have been paid $15 million in 2020, up $6 million from the year before.

This means that senior executive compensation is 15,000,000 / 62,000 or 240 times that of those in the shop.

This puts the ratio of executive to worker compensation at 100 times what it was about 40 years ago.


You have a supervisor/manager. How much more than you should they make?

If you make $30 (and the next level makes 45, then that is 1.5 times what you make.
I'm gonna guess that most don't think their supervisor is worth 50% more than they are making....

But here goes, from the skilled trade number, not the assemblers number.
$62,000 x 1.5 x 1.5 x1.5 x 1.5 x 1.5 x 1.5 x 1.5 x 1.5 x 1.5 x 1.5 x1.5 x 1.5 x1.5 = $12,066,409.
(with a scientific calculator $62,000 x 1.5^^13, if wanting to experiment with different %'s between levels and different number of levels)
$12,000,000 more that those in the shop ($12mm splits the difference before and after the $6mm bump)

13 levels up is likely way way more levels than what there really is.


Point of all this is that in the the ratio of compensation for 'most' employees and those at the top has gotten way out of whack.

Deere is not the only company where this is an issue.
The same ratio 'problem' now issue exists at many, many large organizations.
Years ago when I was much younger I asked the head of purchasing why he did not retire (he was in his 70's) so the company could hire three new guys to take his place. When he retired three years later the company didn't even replace him. Speaks volumes for corporate culture.
As to Deere's strike it will not make any difference to what the plant makes it just creates an excuse for the whole system. If the union gets what they want expect price hikes threw out Deere.
 

·
Registered
Joined
·
4,417 Posts
If that's all it took was two years. Will I can not say it here.

Years ago when I was much younger I asked the head of purchasing why he did not retire (he was in his 70's) so the company could hire three new guys to take his place. When he retired three years later the company didn't even replace him. Speaks volumes for corporate culture.
As to Deere's strike it will not make any difference to what the plant makes it just creates an excuse for the whole system. If the union gets what they want expect price hikes threw out Deere.
the reality of economics is: "The Consumer Always Pays"

Companies have only 2 options when labour cost increases:
1. To keep the product price unchanged, reduce cost somewhere else - for example materials: this may drive a reduction in product quality/robustness - for example install an even cheaper Tufftorq transmission in the x300 series tractors
2. To keep product quality / robustness unchanged, increase price: this puts pressure on market share and volume of sales
 

·
Registered
Joined
·
198 Posts
But I'm quite certain once a CEO drives a company into the ground, he'll have a tough time finding another gig.
And those people have expensive tastes - they can't go on living without working - just like we can't at our level....
The biggest risk is is not for the individuals working there, but to the market... all those poor suckers that pumped cash into the company (via stock purchases), hoping that the company will earn them a return.... instead they lose their capital..... CEO's hare huge owners of shares as well... their comp package may contain more payout via shares than actual cash... so if those shares tank - boom - the CEO is left with a stack of toilet-paper.
This is definitely a 'one mans trash is another mans treasure' scenario. I said end up 'anywhere near the bottom'. Now, if someone failing to live within their means bankrupts themselves, that's one thing. Ironically, it's a LACK of fiduciary responsibility, which is what CEOs actually get hired for. So a CEO bankrupting themselves is already funny in one way, but what i meant by 'anywhere near the bottom' is this: Let's say you invest 5 million dollars. ONCE. One year only. Then you become unemployable. If you manage a 2% return annually on that, you can effectively 'make' $100,000/yr off that for the rest of your life, and STILL have 5 million dollars when you die. How many CEOs can break off more than 5M? A whole bunch. EVERY YEAR. Meanwhile, someone who had only had hold of 5M one time in their life, but was actually good with money, could have a solid upper middle class existence off it for the rest of their life without ever 'working' again, or better if they decided to draw it down in a planned way over time the way people usually do with their retirement savings.

So a CEO failing to find another CEO position is one thing. Maybe a personal tragedy on some level. But once someone has risen to a certain point, they generally do NOT ever come close again to the financial conditions and constraints that the other 99.X % of the country (or the world) operate under, unless it is through their own negligence.
 

·
Premium Member
Joined
·
5,807 Posts
This is definitely a 'one mans trash is another mans treasure' scenario. I said end up 'anywhere near the bottom'. Now, if someone failing to live within their means bankrupts themselves, that's one thing. Ironically, it's a LACK of fiduciary responsibility, which is what CEOs actually get hired for. So a CEO bankrupting themselves is already funny in one way, but what i meant by 'anywhere near the bottom' is this: Let's say you invest 5 million dollars. ONCE. One year only. Then you become unemployable. If you manage a 2% return annually on that, you can effectively 'make' $100,000/yr off that for the rest of your life, and STILL have 5 million dollars when you die. How many CEOs can break off more than 5M? A whole bunch. EVERY YEAR. Meanwhile, someone who had only had hold of 5M one time in their life, but was actually good with money, could have a solid upper middle class existence off it for the rest of their life without ever 'working' again, or better if they decided to draw it down in a planned way over time the way people usually do with their retirement savings.

So a CEO failing to find another CEO position is one thing. Maybe a personal tragedy on some level. But once someone has risen to a certain point, they generally do NOT ever come close again to the financial conditions and constraints that the other 99.X % of the country (or the world) operate under, unless it is through their own negligence.
If anyone that had 5M to invest and could only get a 2% return doesn't deserve to be the CEO of any corporation. We are not looking at little boy investments. But those that put their big boy pants on to say. Those stock investments most of us will never be able to make and some do not even know exist.
 

·
Registered
Joined
·
1,281 Posts
the reality of economics is: "The Consumer Always Pays"

Companies have only 2 options when labour cost increases:
1. To keep the product price unchanged, reduce cost somewhere else - for example materials: this may drive a reduction in product quality/robustness - for example install an even cheaper Tufftorq transmission in the x300 series tractors
2. To keep product quality / robustness unchanged, increase price: this puts pressure on market share and volume of sales
No option to reduce executive compensation?
[$1,509, 370. base & other total pay per yr. -- That's excluding all the rest.
Not bad.]

Why do employees usually seem to be the ones that have to make concessions?

"Labour" = Canadian spelling. "Labor" = US spelling.

No doubt, Unions always have been, and still are, very involved / instrumental, in getting workplace safety laws \ statutes enacted.
 

·
Registered
Joined
·
4,417 Posts
if you take the CEO compensation and cut it by $10M.... and then take that and give it to all the union employees on strike (10,000 of them), then everyone will get 1 thousand bucks. Wow Stop the presses!
Wait... take all executive compensation combined and do the same... ok... now everyone gets 2 thousand bucks.

Meanwhile, that disgruntled leadership team, with the CEO at the helm will then "not care" what happens to J. Deere, or move production to a lower cost region, and in a few years everyone will be unemployed. Is that what we would call success?

Come on everyone - taking from the rich and giving to the poor results in only 1 thing: everyone winds up poor (there is a name for this approach, and it was invented by Karl Marx but that's beyond this post).
There aren't enough rich people out there to make this robin hood philosophy work. Everyone knows that.... don't they?... it's simple math.

yes: "Labour" = Canadian spelling. I am canadian. So I spell it that way.

Oh and the employees are not being asked to take any concessions at all. They are just demanding a "bigger" raise than the original contract. Good for them, and I wish them luck. If I was a union employee I'd do the same. But then everything else I said will play out: and the consumer will pay. The consumer ALWAYS is the one to pay. It's how the world works.

cheers!
 
41 - 60 of 68 Posts
Status
Not open for further replies.
Top