Comments

USA government employees [save pols] are an extremely incredible VALUE - 3 branches of government checks & balances - they MUST perform ... total benefits mean high retention.

$53M+ bonus to Goldman Sachs '06 CEO ... Blankfein - free market free enterprise per design?

Posted by sean_usa_government at December 22, 2006 10:04 AM

There is no free market in the US, only a very expensive market. :-) Greetings from Holland, a less corrupt country.

Posted by Tinus at December 22, 2006 10:22 AM

Being a general is easy:
1. Don't get fired.
2. Soldiers MUST do what you tell them.
3. They cash in when they retire and become lobbyists.

Posted by duffer at December 22, 2006 10:29 AM

It is a totally different environment
* Only one customer: Elected officials
* Orders get followed.
* Clear Organizational Goal: Nation's defence
* Standard protocols: Greater operational stability

(24 words!)

Posted by Krishna Kumar at December 22, 2006 10:46 AM

What’s the ultimate conclusion of this line of thinking? Suppose that we say starting January 1, 2007 all CEO pay will be reduced to $216,000 which is about 6:1 of the average employee at $36,567. Great, I am sure that CEO will sign on to giving me a 5% raise now, not. How many of us are willing to take a 98% cut in salary? Hello, Hello… Hmmm, the crickets are deafening. The great thing about America is that you can pay $216,000 for your CEO. You may not get the top of the line but in today’s world where 99.9% of information is available and free why spend that kind of money.

Sometimes I feel like the frosted mini-wheats, one side I hate that that kind of money is being spent but on the other hand, this is America where you define how much you make. If you are happy with 36k, then great; drop out of school, have fun, party during school and go home at 5:01pm. If you want to make millions then get out there on the practice range and hit balls for 10 hours a day for 10 years (Golf Professional) work your tail off for 30 years doing every crappy job asked and taking on more and more responsibility. Or better yet, build your own company and have unlimited potential.

Take a short quiz, if you want to be a millionaire and you only have a day, go play the lottery. If you have a couple of weeks then head to Vegas. If you have 10 years then open your own business and work dusk till dawn. If you have a life time then save 15% and work hard. It’s that simple; you gain nothing by condeming others.

Posted by RTodd at December 22, 2006 11:10 AM

Easy.

(1)Because of the ever-present danger of death and mutilation, those who pursue military careers are in general motivated to a greater degree by non-economic values than are those who pursue careers in most other fields.

(2)There is only one employer for American generals: the Department of Defense. You can't offer your services to the highest bidder.

Posted by david foster at December 22, 2006 11:36 AM

High ranking military officers know, understand and accept the difference between Service and mere customer service. CEO's, by and large, don't.

Posted by Mark JF at December 22, 2006 11:42 AM

It's even simpler than 25 words: CEOs have more of a say over their compensation.

Oh, and another thing: why lower CEO pay to $216,000, when (if the CEO makes $10 million) you can raise the lowest wage your company pays to $1.7 million? Think big!

Posted by Joe Marier at December 22, 2006 12:01 PM

A long time ago, Peter Drucker wrote that one of the best indicators of a company's quality is its compensation structure: if there is a huge gap between what the CEO gets and what the top executive tier gets, then watch out (and similarly, I presume, at each successive level.)

This sounds very plausible; it would be interesting to know whether any actual research has been done on the topic recently.

Posted by david foster at December 22, 2006 12:15 PM

How about three words? - Greed versus vocation.

Posted by Trevor Gay at December 22, 2006 12:25 PM

Profit versus Cost centre.

Posted by Rob May at December 22, 2006 12:43 PM

The US military doesn't generate revenue! (6 words)

Posted by Stacy Gentile at December 22, 2006 12:50 PM

I'm a big believer that money is most important when purpose is lacking. Military leaders are not in it for the money.

Posted by George Brymer at December 22, 2006 1:22 PM

One word: Purpose.

Posted by xyb at December 22, 2006 2:44 PM

Supporting evidence for greed vs. vocation: Pope John Paul II received no salary. http://www.cwnews.com/news/viewstory.cfm?recnum=15948

Posted by Mike L at December 22, 2006 2:49 PM

Mike L - I rest my case

Posted by Trevor Gay at December 22, 2006 3:19 PM

Steve Jobs is paid $1 per annum: what does salary prove?

Posted by Mark JF at December 22, 2006 3:53 PM

1. Character of a Man = his Fate; (Heraclitus)
Therefore:
2. CEO’s Character = Company’s Fate!
If:
3. Company’s Fate = high $$$-Performance,
Then:
4. CEO’s Pay = high $$$-Compensation-Package!

Posted by Horst Schueberl at December 22, 2006 5:37 PM

CEO "value" is relative?
Corporate Performance irrelevant!
"Independent" Board of Directors = Oxymoron!
Compensation comittees are pawns!

Generals make life and death decisions!
Worth every penny!

Posted by Andrew Hayden at December 22, 2006 10:17 PM

Andrew, that was precisely my point! I believe the life of a 1-star or 4-star is far more complex, far more demanding with far more important consequences than the doings of a typical CEO. The generals are wildly underpaid--or the CEOs are wildly overpaid. And I am thrilled by the relative equality of pay among troops and senior leaders, compared to the private sector model.

Posted by tom peters at December 23, 2006 6:33 AM

Don't Boards of Directors have lots of CEOs from other companies? Something about one hand washing the other.

Not too many generals in Congress.

Posted by John at December 23, 2006 7:36 AM

Like CEO's, very few generals are "excellent".

All military is wildly underpaid (not just O-10's).

All decisions = life & death. Some just more immediate than others.

[25 on the dot if you don't count = and & as words]

Posted by Paul at December 23, 2006 12:07 PM

For those that think that it takes that much to be a general. Out of about 1.5 million in the Army, there are about 300-400 1 star Generals, about 150 2 star Generals, about 50-75 3 star Generals and about 5-10 4 star Generals in the Army at any given time.

It is a pyramid of career soldiers that is continually narrowing and you have to be pretty sharp to get to the very top of the ladder.

Posted by Dave at December 25, 2006 11:26 AM

Note to Duffer: It is better to be silent and thought a fool than to open ones mouth and confirm it.

In 25 words or less:
* They aren't liked much by their employers (the job not the individual).
* It's an over-regulated market:
** No job hopping.
** No salary negotiation.

viagra canadian And why the salary isn't as bad as it seems:

1) How many CEOs really DO get to kill their competition?
2) On your way up through the ranks you get to work with some truly cool s**t. M1 tanks. F/A 18s. Crypto gear that is [censored], Gernades, rocket launchers, Remote imaging systems.
3) In the end you don't have to wonder whether your life made a difference. You were an American Fighting man, and you helped keep the other 99% of the population from external threats. Now if the civilians would just do the same against the internal ones.

Privates have to do what they are told. NCOs at a very early stage (like E4--at least in the Marine Corps) are expected to be given orders--very TERSE broadly worded orders in some instances (take that hill), generate an "action plan" and then implement it, decide and then give orders to junior troops--while being SHOT AT in weather conditions that CEOs pay thousands of dollars to go play in. Or in my case being the senior CFR person at the scene of an incident involving a 100 million dollar aircraft. I was 21 and I was functionally in charge of the scene. 3 crew memebers on my team, and 10-15 other people (including junior officers) involved with the aircraft and I had to make the decision on how to proceed. In my case there was no fire or death, but it was a near thing.

I was 21--an age when most of your Corporate Executives were in college skipping classes and engaging in questionable behavior with members of the opposite sex.

And if I'd have screwed up in ANY way but the most minor I would have caught hell for it, but my CO would have caught LIVING HELL. It would have been my fault, but HIS responsibility. CEOs largely get to duck that.

Most Generals, like most top executives in ths country (especially Airline and Automobile execs) are overpaid. Most Generals, like the rest of the "executive class" in this country are a bunch of play along to get along namby-pamby CYA types who got where they are through the ability to not notice just how bad it smells in the places they stick their nose.

That said, given the choice between someone who had served their country for 20-30 years with all the hardship, disipline, sacrifice and intelligence that it requires just to become a staff grade officer I'd fall on the side of the officer EVERY TIME. At least then I have someone who knows the meaning of the word "integrity", even if they don't have as much of it as I'd like.

I could spend another two or three hours expounding on the difference between a CEO who can "bat .500" and collect a 100 million dollar bonus, and a General who has to consistently perform at a much higher level. There is a tremendous difference between losing 25% of your stock price and 25% of your command.

There is a difference between having to lay off 90% of your company and getting 90% of your company killed.

(If Airline Executives collectively had the integrity of a single Marine Private they'd all resign their jobs and go work in the Peace Corp for a century or two) (Yeah, someone didn't make it home for christmas because it SNOWS in denver IN THE WINTER TIME. WHO'DA THUNK IT?)

(USMC, US Army NG, USAFR. Proud to serve.)

Posted by Billy Oblivion at December 25, 2006 1:54 PM

Demand and supply to deliver ROI.
Current assets vs Plant & machinary.
Goods have a value if they are in the market.
Financial imperealism

Posted by Lokesh Nagpal at December 26, 2006 4:02 AM

The generals have the lower relative pay because they don't determine their salary. Put them in a structure where pay is determined in the same manner CEO pay is determined and I believe you would see the highest-to-lowest gap widen quickly and considerably.

Posted by Michael Schaffner at December 26, 2006 9:58 AM

Shareholder oversight(voters) keeps a tight rein government with most of the gross margin returned as dividends(benefits/services). Additionally, no one is seen as indespensible, just ask the GOP leadership.

Posted by Tom Coffin at December 27, 2006 1:11 PM

Bad comparison. You should be comparing generals' pay with catholic church cardinals' pay.

Posted by Peter Shepherd at December 28, 2006 12:04 PM

Tom:
It seems you have forgotten the core of Coram's book about Boyd.

From the book:

"Those who do not conform will one day realize that the path of doing the right thing has diverged from the path of success, and then they must decide which path they will follow through life."

IME, most Generals and CEOs are cut from the same cloth. A few shine through as wonderful leaders, but by in large the majority are confomist, don't-rock-the-boat, types.

Posted by david at December 28, 2006 5:37 PM