Isn't it cheating if you pay yourself more than you deserve?

An article on the rising salaries of CEOs in India says that this is a "healthy trend". " Regardless of what the critics say, rising salaries at the top almost always lead to an equivalent downward percolation, besides enforcing stringent performance goals," he writes. " If you were making Rs 20 crore a year, chances are you would work pretty hard to protect that package." That is not the experience in western countries. In 1965 a CEO would earn 20 times the average earnings of workers in the company. In 1978 they earned 30 times more, between 1990 and 2000 the difference jumped to over 300 times. CEOs get ludicrous salaries, not because they deserve to, or because they have magical abilities to increase profits of the companies they head, but because they appoint the board which decides on their compensation. " Firstly, CEO salaries are on a tear even though corporate profits haven't kept pace," he writes." Which is why Tata Motors is paying top dollar salary to its new CEO and managing director Gunter Butschek in an effort to lift the company out of its poor run over last so many years." Isn't it amazing. CEO salaries rise if they make profits and rise even more if they are making losses. Heads I win, tales you lose. Trouble is CEOs are not punished if they cause huge losses to the company and to shareholders. Daimler's acquisition of Chrysler was a disaster and the company had to sell it off at a huge loss. Nine years back Tata spent $12 billion buying Corus Steel in the UK. Now they are desperate to give the company away for free but can find no buyers because steel prices have fallen and no one wants to take on the pension liabilities. Unlimited salaries increase greed, leading to criminal behavior. The recent Volkswagen scandal, where it was found that the company was faking its emission results, is one example. GlaxoSmithKline paid $3 billion in fines for healthcare fraud. P&G was fined in Belgium for price fixing. Barclays, along with other banks, was fined for fixing London Interbank Offered Rate, or Libor, which is the international interest rate for banks to borrow from each other. " If you ain't cheating, you ain't trying," said one trader. It maybe a good thing if a CEO earns more than owners of the company because they get paid dividend as other shareholders. Apparently if a CEO is sacked the company's share price will drop which reduces market capitalisation. If share prices are high despite low profits then that is a bubble and will cause problems for the economy at some point. High private sector salaries result in knock-on effects on public sector salaries, which results in wasteful expenditure of government revenues. Undeserved compensation is immoral and borders on corruption. No one should be paid more than they deserve.