The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- A CEO makes more in a day than a worker makes in a year. In 2010, the average private sector worker received a 0.5% raise; the average large-company CEO had a 28.5% raise. The average annual compensation tallies in 2010 were $11.4 million vs. $33,800. CEO-to-worker compensation has risen from 40:1 in 1980 to 337:1. When is this bubble going to burst? That's wishful thinking. CEO compensation is now performance based and CEOs in 2010 presided over some healthy stock appreciation. They are ostensibly being rewarded for meeting their charter of maximizing shareholder value.
Baby Doc BenefitsThese types of pay plans conjure up images of Jean Claude "Baby Doc" Duvalier. Haiti's former president is ranked in the top 10 most corrupt leaders of all times for skimming 1.7% to 4.5% of GDP. Trivial next to Daumann or Gabelli, but their take is legal because its "performance based." When CEOs are paid more than performance warrants, this can't be maximizing shareholder value. Let's take Dauman's extra $40 million. What if that money had instead gone to: hiring productivity-enhancing new employees or employee education or training; or bonuses for employees that increased output or developed new products or services? Wouldn't 109,900 employees motivated for the right reasons drive more shareholder value than one CEO who should already be plenty charged up with $44.5 million for a year's work? Evaluating alternatives for motivating performance to maximize shareholder value, beyond CEO pay plans, takes work and it takes people that know something about motivation. That's just not how things are working today. When the 2011 CEO compensation numbers come out in 2012, it will become instantly clear just how performance-based pay is playing out. On Sept. 30, 18 of the Dow 30 were in negative territory and eight had double-digit declines. That's a sign that scores of CEO pay will be tumbling, barring an unlikely end-of-year raging bull. If it doesn't tumble, then there will be evidence for a different type of CEO pay bubble -- a well-protected bubble.
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