ChineseRestaurantCapitalism

keeping the economy honest

Tag Archives: CEO

The Oscar goes to…. Inside Job

Watching the Oscars wasn’t a complete waste of time because it finally made me watch the Inside Job.  If you’re not in top 0.1% of the previous post, then you should probably watch it too because you’re getting screwed by them. Like I said in the previous post,  generally people can take a lot of injustice and unfairness before they start doing something about it.  I guess we still haven’t reached that point of outrage.

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Charlie Sheen lost his sweet gig

Charlie Sheen just lost his sweet gig because of his recent radio rant, which led the network to cancel the show.  Too bad, Sheen will have to kiss his fat $1.2 million/episode paycheck goodbye.  Now, that’s a sweet gig by anyone’s standard.  I would like the network to replace Sheen with another actor for $200,000/episode (which is still a sweet gig for 99% of the population)  to save the advertisers $1 million/episode.  Sheen is probably the best actor for this role given his mirroring lifestyle and will get the show more ratings and its advertisers more sales.   But we all know in business, what matters is profit not revenue.  The advertisers might have more revenues with Sheen, but they would have to get more than $1 million in sales per episode to get better profit with Sheen.  Finally, it’s not at all certain that this advertising generates a positive return.  If it did, then why would any company ever cut advertising spending?  … read more

 

Outrageous CEO compensation

I don’t understand why shareholders can’t have a say in CEO compensation.  Afterall, they own the company and the CEO works for them.   Having your overpaid CEO friends on the board of directors to decide your salary is like having other convicts to decide another criminal’s sentencing.  It may not be practical to get all shareholders to agree on a compensation package.  But I think we can all propose a better approach for CEO compensation that’s performance based.  One of the top of my head is… if the company averages 100 millions profit per year in the past, then let’s offer the CEO say 0.5% of the profit.   That’s a very good base salary of $500,000/year.  If the company makes more, he makes more.  If the company loses money, then he’ll make less, now that’s real incentive to perform.  There’s a reason why salesman, insurance, and real estate agents all work on commission.  No says they’re overpaid, because there’s tons of competition for those jobs.  Why can’t CEOs?

Probably, at the generous 0.5% of the profit, the CEO is still overpaid.  I would really love to run a social experiment to compare performance of one of the overpaid CEOs against one of those smart, common sense, business savvy contestants from the Apprentice show…I mean one of the good ones…to expose the fact that there are plenty of people capable of doing the same job and willing to work a lot less.  They can even make a reality show out of it.  But the problem is it’s almost impossible to do it, that’s why free market is often not exercised at higher level due to barrier to competition.  But anyone can start a chinese restaurant to compete, if he sees another chinese restaurant that is overpriced and making easy money.  That’s why you don’t see any chinese restaurant that charges $20 for chinese fast food… at least not in Vancouver.