To The Moon

Salaries are just amounts paid for employees for their contribution/work to the company. However, if we just look at it from this point of view. There's no real meaning. 

Companies can choose to pay their admin staff $2000 per month or $10000 per month. It's just dollar value. 

Overpaying employees will increase expense and decrease companies' profits. Hence, what matters to investors is more of operating margins.

What's more crucial is how much $ contribution is gained/ per $ spent on employee.

Eg. Employee who can earn $2 for the company while the company pays him $1, is worth the salary. As it's potentially 100% return for the company. However, high salaries alone without any way of comparison against output is just meaningless.

Every company has their own strategy of maximising returns per employee, be it bonus scheme, profit sharing or stock options. At the end of day, it's all about dollars and cents. 

Good companies are about to motivate their employees to produce more than they are paid. And their compensation goes up accordingly. 

I often hear people say, "I am not being paid enough!" "I deserve higher pay!".

However, that perspective is employees'. Business owners will only pay what the employees are worth, and they will tend to underpay to a certain extend. However, employers cannot let the gap widen too much between performance and pay, otherwise the employee will leave. 

Take a look at the tech companies, they are known for paying high and also great working conditions. When they are flushed with cash, they will throw out money like no one's business. However, eventually they have to be held accountable and employees who cannot produce sufficient output to cover their pay are retrenched.

In summary, as investors salaries paid to employees doesn't matter, what matters is the performance of the company as a whole which is measured by profits.

As employees, the next time we want to ask boss to increase pay... it's safer to check against the value in $ sense that is brought to the company through our work... Otherwise [Facepalm]  [Gosh]  [Smart]