Comparisons of national GDPs with respective salaries of heads of state reveals some interesting facts
Much is being discussed and debated on the issue of who gets to decide on the CEOs’ remuneration in a listed company. This is true especially in US, where shareholders felt cheated by the recession and excesses by CEOs; both in terms of pay and in the way they took excessive risks to take their companies, and shareholder wealth, to newer lows. So if it’s all about taking accountability to the highest level, it does make sense to look at remunerations of the ultimate CEOs – the heads of state. After all, their role is far greater than any of the corporate leaders.
Voters in a democracy don’t exactly have a say on what their head of state gets, in fact, many of them may not have even seriously considered that an issue. But then, is there a pay to performance link at work? We decided to check for a correlation between remunerations of some heads of state with GDP performance of their respective nations; and came up with some interesting revelations.
To start off, the US shows greater parity. The concept of compensating the President took shape during 1790s in the US. In as early as 1789, the basic salary of the US President was $25,000 annually, the value of which in 2009 dollars is $566,000 when the GDP of the country was over International $527 million (the currency being used at that time). Exactly 84 years later, in March 1893, the basic salary of the President was doubled to $50,000, value of which in 2009 dollars is $865,000, while the GDP of the economy grew by 187 times. Salary was again hiked in 1909 to $75,000, the current value of which is an astonishing $1,714,000; even as the US became the second largest economy of the world after the UK, with a GDP of International $517.38 billion. The salary was revised to $100,000 in 1949, even as US became the largest economy of the world with a GDP of about International $1,456 billion. The salary was further raised to $200,000 on Jan 20, 1969; while the size of the economy nearly doubled. And when the basic salary was given its final boost – to $400,000 on Jan 20, 2001, the size of the economy increased to $10.29 trillion. Since then, the economy has not done quite well, with the current GDP at $13.84 trillion, and interestingly, the basic salary of the President has remained the same.
Much is being discussed and debated on the issue of who gets to decide on the CEOs’ remuneration in a listed company. This is true especially in US, where shareholders felt cheated by the recession and excesses by CEOs; both in terms of pay and in the way they took excessive risks to take their companies, and shareholder wealth, to newer lows. So if it’s all about taking accountability to the highest level, it does make sense to look at remunerations of the ultimate CEOs – the heads of state. After all, their role is far greater than any of the corporate leaders.
Voters in a democracy don’t exactly have a say on what their head of state gets, in fact, many of them may not have even seriously considered that an issue. But then, is there a pay to performance link at work? We decided to check for a correlation between remunerations of some heads of state with GDP performance of their respective nations; and came up with some interesting revelations.
To start off, the US shows greater parity. The concept of compensating the President took shape during 1790s in the US. In as early as 1789, the basic salary of the US President was $25,000 annually, the value of which in 2009 dollars is $566,000 when the GDP of the country was over International $527 million (the currency being used at that time). Exactly 84 years later, in March 1893, the basic salary of the President was doubled to $50,000, value of which in 2009 dollars is $865,000, while the GDP of the economy grew by 187 times. Salary was again hiked in 1909 to $75,000, the current value of which is an astonishing $1,714,000; even as the US became the second largest economy of the world after the UK, with a GDP of International $517.38 billion. The salary was revised to $100,000 in 1949, even as US became the largest economy of the world with a GDP of about International $1,456 billion. The salary was further raised to $200,000 on Jan 20, 1969; while the size of the economy nearly doubled. And when the basic salary was given its final boost – to $400,000 on Jan 20, 2001, the size of the economy increased to $10.29 trillion. Since then, the economy has not done quite well, with the current GDP at $13.84 trillion, and interestingly, the basic salary of the President has remained the same.
Source : IIPM Editorial, 2012. An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
