April 27th / 28th, 2013
"Greedy CEOs Getting Richer"
It seems like every week we read about another CEO receiving a huge raise or an obscene bonus. In fact, such blatant avarice has become so commonplace that I fear we might be growing apathetic to it. I hope that’s not the case, because these so-called 1 percenters continue to make quality of life worse for those of us in the 99 percent. It didn’t used to be that way. Top executives have always enjoyed wealth, but not so disproportionately to the people they employed, as they do today.
Citing US Bureau of Labor Statistics and salary.com, the AFL-CIO reports that in 1982, the average ratio of CEO compensation to worker pay was 42 to 1. By 2012, that ratio was 354 to 1 (the Institute for Policy Studies estimates it is even higher, at 364 to 1). These latest figures are based on an average worker pay of $19.77 per hour. That’s a far cry from $8,000 per hour earned by some CEOs.
According to the AFL-CIO’s website, such pay disparity can hurt employee morale, reduce workplace productivity and lead to increased employee turnover. The union also cites concerns by SEC Commissioner Luis Aguilar who warns, “The relative pay... ratio between CEO compensation and median [worker] pay, can also create risks to an enterprise, including the risk of employee, customer and shareholder discontent.”
Something tells me a lot of CVS employees are discontent these days. Last year they lost a lawsuit in which they were fighting for the right to sit down at work. Then, last month they were notified by management that they must submit to a health screening and reveal their weight and BMI, or else pay a “fine” of $600 to cover the cost of their company medical insurance. You’d think CVS could afford to waive the fine, but maybe not. Last March, then-CEO Thomas Ryan, who had been making 456 times the salary of his average worker, received a $58 million pension. I wonder what HIS weight is when he’s carrying around that bundle.
Closer to home, Brad Wilson, CEO of Blue Cross Blue Shield of North Carolina, just received a 37 percent raise, including a $1.7 million bonus. In fact, BCBS gave huge bonuses to all of its top executives, the least of which amounted to $232,788 — all of this while raising premiums on individuals at a time when high medical bills remain the No. 1 reason for bankruptcy. Last month, BCBS CFO Gerald Petkau told BizJournals.com that executive salary increases “had no bearing on rate increases.” Come on Gerald, don’t piss down our backs and tell us it’s raining. Perhaps salaries and premiums are not directly related, but it is arrogant and insensitive for insurance executives to make obscene amounts of money off of other people’s misery, especially in these times.
And then there’s Rich Noll, CEO of Hanesbrands, who last year earned more than $9 million. His shareholders continue to reward him for his cost-cutting expertise, which includes knowing how to close a dozen US plants and lay off thousands of American workers. That, in turn, allowed Knoll to open new plants in third-world countries, where he can pay slave wages. So instead of making 300 times the salary of American workers, Noll now makes about 3,000 times the salary of his lowest-paid foreign employees.
This culture of individual and corporate greed hurts our economy and hampers our ability to deliver services to the least among us. Says the AFL-CIO, “Multinational corporations park their profits overseas and shrink from their responsibilities as taxpayers.”
Clearly, something must be done to curb excessive CEO pay. Charlie Crystal, founder of Pennsylvania-based Mission Research, proposed that corporations cap CEO pay at seven times the company’s median salary. Unfortunately no one in our government has embraced Crystal’s proposal, but there are a handful of good guy executives who have voluntarily agreed to various types of caps and reductions.
One of them is Lord Wolfson, CEO of NEXT clothing. Last week Wolfson announced that he was giving his $3.7 million bonus to his employees. Meanwhile, Bank of South Carolina CEO Fleetwood Hassell has agreed to cap his salary at four times that of his employees, who earn on average about $48,000 per year. And last month, 68 percent of voters in Switzerland passed the “Popular Initiative Against Abusive Executive Compensation,” which bans golden parachutes either at the point of recruitment or severance.
We could all learn a lesson from these folks, and from author Matt Taibbi who warns, “In a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.” I guess it’s time for the 99 percent to get organized.