While a lot of what he does is admirable, I find it reprehensible that he pays himself so little (assuming he's not compensated in some other way). Either he is actually worth that little, or he's pretending to be worth less to make people feel better.
If it's the former, the airline should hire a new CEO.
If it's the latter, it's a petty pretense aimed at petty people. And a self-respecting "ordinary" person who has a sense of the value of her time would consider it a slap in her face if her boss doesn't see fit to apply the same sorts of standards to his time.
There was an old Peter Drucker adage that the top executive should only be at a 20-to-1 compensation ratio from top executives to entry level positions. In the U.S., this is now around 260-to-1. (http://thedx.org/2011/02/turning-up-the-heat-on-ceo-pay/)
In short, there's a limit to most people's tolerance for inequality in pay, especially in the face of it being mostly decoupled from performance. The question is whether there that matters, and what the consequence is.
Japan Air's profits haven't been amazing, and in fact, they filed for Chapter 11 in January 2010. I presume (with no actual knowledge) that if the airline were doing very well, he would pay himself significantly more. However, in a world where banks in America have to be bailed out while their CEOs give themselves raises, this is, I think, the preferred way to go.
Airline unions usually negotiate the payout contract to between 95% to 98% of the expected airline's profits (what is the airline going to do? shut down?).
When the airline does not make the expected revenue, by numbers, they end up having to borrow money and pay out a sum that ends up being over 100%.
with all those nasty unions stealing all your money it's amazing that the executives want to carry on running the airline - it must be the pure love of flying that keeps the CEOs in the job
Hollywood doesn't claim that the blockbusters make a loss. They can't get that creative with their accounting to make millions/billions of dollars vanish from the IRS. What they do is shuffle the profits around between their sub-companies. Say you sign a contract with Universal Pictures to get 20% of the profits of the movie. Now Universal Pictures takes a loss on the movie by moving all of the profits to Universal DVD Distribution or some other company under the "Universal" umbrella. So that other corp has record profits, while the one you hold the contract with reports a loss. [ The money can be 'moved' between companies by just charging exorbitant prices for their services rendered. E.g. Universal DVD Distribution charges huge amounts of money to Universal Pictures for the DVD production. ]
My point was that the money goes somewhere. They move things around through sibling corporations, so that if you have a contract for a percentage of profits with one of them, then they move the profits to another sibling corp that you don't have a contract with. It doesn't have to specifically be the DVD production/sales that they are moved around through.
He's also going against a basic economic motivator:
"The ugly truth is that your boss is probably overpaid--and it's for your benefit, not his. Why? It might be because he isn't being paid for the work he does but, rather, to inspire you. In other words, we work our socks off in underpaying jobs in the hope that one day we'll win the rat race and become overpaid fat cats ourselves. Economists call this 'tournament theory.'"
I've heard this theory again and again and as someone who works in a (non-tech) industry where it is the norm for people at the bottom to work very hard for very little,while the bosses travel the world and live in huge beautiful homes, this does NOT seem to be the case in reality. Myself and my colleagues find it hard not to become bitter about it and to stay motivated to work hard. I only graduated 6 months ago but about half of my class has already become so discouraged by this system that they are thinking about - or already have- switched careers.
On the other hand, in my previous job the boss paid us As much as he could afford to ($17/hr, not bad for retail) and in his life was by no means rich at all. He drives a beat up car and wears second hand clothing. We all respected him so much and felt much more motivated to do well, and also felt like we were an actual part of his company and took it personally how well the company was doing. In my position now, and my colleagues agree, we feel totally cut off from the company and have no interest in how well a collection does (I work in fashion.)
Basically I feel like this theory only works if the CEO is overpaid and the workers are fairly paid. But in the end I think feeling part of a team is better for the company than feeling like you are in a tournament.
I would also like to add that 90k is hardly embarrassingly low. That is quite a comfortable wage that many people will never see in their life.
Your post reminds me of some statistical data I saw a while back that says that Americans have a very poor view on the actual economic status of those around them and the rest of the country.
An important factor is how much you feel in control of your fate (whether the control is real or imaginary is less important). Tech startups feel it's much more up to their skills and creativity to make it than a lowly employee working for the Man in a big bureaucratic multinational, even if statistically they have about the same chance. It's similar to why most people are more afraid of flying than driving, even though the former is much safer statistically.
I would still prefer not to be in a company that ran economic motivation in this way even if it did encourage my employees. It seems like a bad company culture to be in.
Maybe he just understand the concept of "enough", something many CEOs fail to grasp. $90/k is a decent salary, at least in US. What if he simply believes in his company and wants to put more money in developing it, rather than let it stockpile in some Swiss account? Does that decrease his "worth" as a leader? I don't think so.
Well... he is the boss so, yes, at the top of the responsibility ladder.
BUT the article says he is paid less than the ''pilots''. Flying a plane is not necessarily a dangerous job, but is has risk, requires skill (with reasonable initial investment in training etc.) and comes with a ''personal and immediate responsibility for a number of lives''.
So when you balance the job descriptions; who should get paid more?
My logic was definitely relying on the premise that how much someone is worth to a company isn't or at least shouldn't be unrelated salary.
As other other people have already said, it may be the case that this was actually the boss's value to the company (given its low profits and eventual bankruptcy). This would make it a lot better, but it's not how the motive comes across in the article.
But why? The salary should certainly be lower than what someone is worth for the company but I can’t think of any reason why it could be too low if the employee has no problem with it.
If it's the former, the airline should hire a new CEO.
If it's the latter, it's a petty pretense aimed at petty people. And a self-respecting "ordinary" person who has a sense of the value of her time would consider it a slap in her face if her boss doesn't see fit to apply the same sorts of standards to his time.