CEOs Are Underpaid

From now on, I am only going to buy stock in companies that have the greatest disparity between the compensation of the CEO and the compensation of the workers. Thanks to a little thing I call science, this strategy looks like a winner. Yes, I will explain.

I came across two unrelated studies that I cleverly related. In one study, researchers found that happiness makes people successful.

http://www.sciencedaily.com/releases/2005/12/051219090811.htm

In another study, researchers found that sad workers are the most productive.

http://www.sciencedaily.com/releases/2001/06/010612065304.htm

To summarize the studies:

Happy = successful

Sad = productive

Now, if you were to describe the job of a CEO versus the job of a lower level worker, I think you might say the CEO needs to be successful (as opposed to productive) whereas the lower level worker needs to be productive (as opposed to successful). Ideally, everyone should be both successful and productive, but in terms of importance, you would prefer a successful CEO over one who has more meetings, or however else you would measure “productivity” in that job. And a factory worker, for example, needs to be productive more than he needs to “succeed,” if success even has meaning in that sort of job.

So it follows from the science that grossly overpaying a CEO makes good sense. It allows the CEO to be happy, which increases his odds of success, which is good for the stockholders. And best of all, overpaying a CEO makes the workers sad, which makes them more productive, which is also good for the stockholders.

You often see stories in the press about CEOs who are apparently overpaid. That used to annoy me. Now I realize the genius of it. Those overpaid CEOs are buying hookers and cocaine in a valiant effort to increase their happiness, and therefore their success, which lifts all boats. And by “all boats,” I mean the boats of everyone but the workers, who need to remain sad or the whole system breaks down.

If you would like to make your loved ones or coworkers more productive, try sending them the Amazon.com link to my new book with a note that says it is terrific and you read the entire thing on the Dilbert Blog while getting paid to allegedly work. Then toss in a "neener neener." That will make them a little bit sad, thus boosting their productivity.

http://www.amazon.com/gp/product/1591841852?ie=UTF8&tag=dilbertcom-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=1591841852

Comments

[warren marabwa]

For the risk that comes with the Job CEO`s are not overpaid, there job is more like a sports man`s career you are never certain that tomorrow you will still have a career it could be takeover or a coup by the shareholders. So due to the nature of the job the reward have to match the risk and one thing for sure best perfoming CEO`s get what they deserve and so does everyone because results dont lie.

[warren marabwa]

For the risk that comes with the Job CEO`s are not overpaid, there job is more like a sports man`s career you are never certain that tomorrow you will still have a career it could be takeover or a coup by the shareholders. So due to the nature of the job the reward have to match the risk and one thing for sure best perfoming CEO`s get what they deserve and so does everyone because results dont lie.

[John]

I guess this explains why I'm not happy or successful.

http://awritersblock.com

[fred]

where do u find this retarded shit?

[rd]

i was to post the saddest song ever to make you more productive, but 1) impulse control prevailed, 2) two posts like today's about weirdos? spare me if you can
but i'm not about that, i thought you'll write about SL session
yesterday i managed somehow to get there in the last 10 min
have you noticed me
you were saying 'ten more minutes to abuse me and posters are copyable etc Mr.Aboum doing some kinds of pas de des
Dilbert was kicking you etc
i wanted to shout look at me i'm here right beside you
but could not - weird
then i got stuck in the lower stage and SL crashed
when i was back you already left and people were praising your quick wits

[Bill]

>In another study, researchers found that sad workers are the most productive.

Obviously not true. Otherwise Auschwitz, Pol Pot's Cambodia, the Soviet Gulags, inner-city Detroit, etc. would have been the most productive places on Earth.

[Gandalf]

Different spokes for different folks.

[rita mae]

DRAMbo: Thanks. You used "diametrically opposed" in your post. I love that. I was gonna write that, but it got too late and I had already written things like, "long, bigger, hard" -- you get the idea.

It's Halloween and no new post yet this morning. I have to leave work to make my rounds. I dress as a nun. People laugh because it is so not like me. Hey, I was gonna be a nun until I found out what "none" meant.

I went next door to another office and the head of the office is around 85. He was having a meeting with all his staff and I went in told him I was there to collect for the lap dance I had given him last night. He didn't miss a beat and said, "You should have collected then. We'll talk about it tonight." I think they're all on to me.

I will be in and out today (I said "in and out" tee hee). Will post something relevant later. Maybe. Some people think nothing I say is relevant, but to them I say "Go kiss a nun."

Sister Rita Mae

[axl foley]

uuuhhhh, are we sure there's not some circular reasoning going on here...? i'd imagine these CEO's are happy precisely because they are successful, and the workers sad because they are forced to overwork. otherwise, we are saying the way to cure the problems at Merrill Lynch would have been to chuck O'Neal a joke book and a DVD of Monty Python...

[Adam]

"Posted by: Desi | October 30, 2007 at 09:25 PM

... but if you make the workers too sad, they end up killing themselves, and I can't think how that can be good for productivity..."

If you're the CEO of a Chineese Abbatoir producing "generic meat product", it's great for productivity.

[DF]

Okay, so how would you classify postal workers? They couldn't be classified as sad as they don't seem to be very productive. I wouldn't classify them as successful, or else we wouldn't have the phrase, "going postal". How about disgruntled, does that fit?

Happy = successful
Sad = productive
Disgruntled = suicidal?

[100rabh]

I think you really missed the whole point Scotty. I have tried to capture that here http://the100rabh.blogspot.com/2007/10/theory-of-success-and-productivity.html at my blog. Guess you would like to see this. Some maths and logic involved ;-)

[sharlin kaur]

I agree at some point you are true

[indir]

You know what, Scott, I was going to buy your book. But after seeing so many advertisements, I have changed my mind :)
That thought makes me happy. Now I wait with baited breath for oh-so-sweet success!thank you

[oyun]

Best post in months...Enron was a VERY happy-management company for sure.

[Wikipedia]

So, very nice blog! Congratz! I add this site in my bookmark :)

[Little me]

Ok, your thesis is that:

Happy = successful
Sad = productive

In a job where you must be productive, being productive is considered doing your job successfully. Ergo

Sad = productive ^= successfull = Happy
or
Sad = Happy
q.e.d.

[Yuki]

I just proved you right. I put in my 2 week's notice on Monday. Now I am grossly unproductive because nothing is expected of me and I am very happy.

[arby]

Overpaid CEOs and some politicians are a drain on society. The little people stock holders of the company generally get screwed in the long run. The stock market becomes a joke and corruption in the government abounds. These clever and greedy bastards suck away our tax money and the company assets earned by the lower paid workers and use the proceeds to live a decadent lifestyle.

Gee, they really need a car that cost multiple hundreds of thousands of dollars and 20,000 square foot homes. Putting up a front they give away to charity only what they have to meet the IRS standards for deductions and get the maximum after tax income. The rest of the money is used to indulge themselves and their spoiled family members and opportunistic “friends.” Anyone else doing this and getting caught would be in prison with a cell mate named Bubba-Babe for a significant other and be labeled as a domestic terrorist.

Al Capone got away with much of the same activity until the Feds caught up with him for tax evasion. This new batch of white collar criminals hires brainy CPAs to cover their tracks and out maneuver incompetent, lower paid federal agents. They laugh at the rest of us.

But this injustice and distortion of the capitalistic system is not going to stop just because I rant against it. Go official with my complaints and I would end up being run off a remote road into a Florida swamp with alligators crunching my bones. Can’t win.

Yeah, I know Scott…. Watch the monkey dance…..

[Custard]

You assume that money makes people happier, when all the studies show that once you've got enough to live on, it doesn't.

[CDriK]

Thanks for the tips, it feels good to help people. :-)

[Maarten]

As usual, your stock options will plunge. Speaking of that, do you still have those stock options you purchased a whole bunch of months ago?

[chuckleberry]

ooh now i know why some posts of Scott's kept disappearing from time to time.. Scott you think you too smart huh ?

[gautam]

I like the way you keep posting the link to buy your book. It is making some of your readers monkey-mad and I like reading thier disgruntled comments.

[Geoffrey James, Sales Machine]

Correlation is not causality.