CEO pay hikes double

[NeoConsSuck]

NEW YORK (CNN/Money) - The CEO's at the nation's largest companies saw their raises more than doubled in 2003 as the median raise handed out by S&P 500 companies to their top executives was 22.18 percent, according to a study by The Corporate Library.

http://money.cnn.com/2004/07/28/news/economy/ceo_pay/index.htm?cnn=yes

[cthrumatrix]

1. and AWOL is against raising the $5.15 min. wage

[jayfish]

8. I Was Thinking About The Minimum Wage...

last night and a thought occurred to me. Raising the minimum wage to $10.00 per hour could produce the biggest economic boom this country has seen ever. Think about it. What is a person who makes minimum wage going to do with that extra money? He/she is going to spend it. Companies who complain about this "unfunded Federal Mandate" are really being short sited about this (and thats putting it nicely). What they apparently do not realize, or don't care to realize is that they will make up for the wage increase with increased business coming from all of that extra "real" money infused into the economy. Why are the Pugs so insistent on stagnating and in some cases eliminating the minimum wage? What do some of the DU economists think about this theory? Oh... and on the CEO pay thing, were we expecting anything different?

Jay

[Barkley]

50. How about an inflation-adjusted minimum wage?

Since workers are really concerned about the buying power of their
real wage = Min. Wage/ CPI

If the minimum wage does not keep up with inflation then the real wage falls and firms' get a profit windfall and workers buying power declines. That explains in part why repugs are against min. wage increases. Of course elminating the min. wage would be a total bonanza for businesses and complete devistation for workers.

The real minimum wage has fallen 21% since 1979 - 1999 and would be about $7.00 if it had stayed current with inflation.

Conservatives argue that raising the minimum wage increases unemployment since firms cannot hire as many workers at wages above the "market wage".

In truth the when the min wage was raised last (1996) it did not create higher unemployment and 89.4% of surveyed small firms said the change in wage didn't impact their hiring decisions.

States have their own minimum wage, I believe Calif min wage is $6.75. I don't believe that states with higher minimum wages have higher unemployment rates. A strong case for increasing the minimum wage is to allow working people to earn a decent standard of living.

A higher minimum will also encourage greater labor force participation rates since it raises the cost of leisure (e.g. non work activities).

Of course, higher min. wage will contribute to more spending but I have doubts about using it as a 'fiscal policy' expansionary remedy.

One potential problem with "wage increase with increased business coming from all of that extra "real" money infused into the economy" is inflation. If the price level adjust for the $10 increase in the min. wage then these workers are no better off.

And inflation is a phenomenon everyone experiences in the economy -- not just the min wage workers. So the people who did not get an increase in wages (the non min. wage workers) now have their real wages reduced. When their wages adjust they will be back to where they started.

[jayfish]

52. Inflation Could Be A Problem...

if business takes a short-sighted view and raises prices in accordance with the wage increase. For company's in the red increases would seem inevitable, but I'm of the mind that price increases would not be needed. What company's give up from increased labor costs can be made up for with increased volume.

Jay

[NeoConsSuck]

2. Now that we're outsourcing jobs..

there is so much more moolah to reward our red, white and blue, apple pie american CEO's. </sarcasm>

[The Backlash Cometh]

3. Abomination. Simply an abomination.

There should be a law that directly correlates CEO salaries to worker salaries. Cutting jobs and lowing salaries of workers in order to justify higher salaries for CEOs is morally unethical and insane.

[MercutioATC]

5. I don't agree.

CEO saraies and bonuses are set by contract. If you want to place blame, place it on the shareholders who allow the directors of these corporations to offer such generous compensation.

Paying a CEO tens of millions of dollars as no more unethical than paying a sports celebrity tens of millions of dollars. In both cases, it's a contractual business agreement.

[smirkymonkey]

7. The only shareholders with any power to affect

CEO salaries are OTHER weatlhy CEO's and ex-CEO's, among other privileged types. The average shareholder doesn't have a say. Nor do the workers.

In the case of sports celebrities, millions of people are not being deprived of their livlihoods so that they can get richer. Personally, I think there should be a salary cap for all of them.

[MercutioATC]

9. Granted, but I still don't agree with salary caps.

Federal regulations that encourage corporations to keep jobs in the U.S.? Yes. Protecting the workers' right to unionize? Yes. Mandating safe working conditions? Yes.

I don't believe the government has any business telling companies what levels of compensation they can offer. If you want to protect workers, take the direct route and provide incentives for corporations to value their employees. Limiting CEO salaries is an indirect solution without guaranteed positive results (beside the fact that's it's overly intrusive).

[primavera]

13. How about progressive taxation?

I also don't see much point in setting a cap on salaries, because companies will simply find ways around them, through bonusses and stock options and alternative forms of compensation which skirt the issue. But how about following Europe's example, i.e., the more you earn, either through direct or indorect forms of compensation, the higher your tax rate goes? In Europe, at least, I think it's done a commendable job of leveling compensation: what point is there in granting yourself an eight figure income when, if you pay yourself that much, the government's just going to get 90% of it anyway? I think the results speak for themselves: in Europe, the average CEO compensation is between 10 and 15 times (depending upon the country) that of the average worker's compensation; in the US, it's over 400 times that of the average worker's. You'd be amazed by the kinds of wages and benefits you can offer employees if your corporate budget doesn't include a $50 million/year line item for your own personal compensation.

And is earning 15 times more than the average worker really such a poor inducement? I mean, if you could increase your salary from $30K to half a million, wouldn't you feel motivated to work harder than the next guy and exert yourself for the company's future? Would you really need to make 12 millions for it to be worth the extra effort? Strange, it doesn't seem to be a problem for CEOs in European countries.

[MercutioATC]

14. I feel it's contrary to the economic freedom this country is built on.

We cannot all be "haves".

That doesn't mean that basic things shouldn't provided to all Americans, though...like universal health care, safe working environments and a realistic living wage.

[primavera]

18. Why not?

This is the wealthiest country in the world, why is it so anathema to suggest that those most directly responsible for that wealth should benefit from it? Don't get me wrong, I'm not suggesting a communist style control economy, that's been tried and it obviously didn't work. But Sweden has a capitalist eocnomy too, as does Germany, as does Japan, they're just regulated capitalist economies. It doesn't seem to have killed them, why are we so certain that it will kill us?

I was listening to NPR a few weeks ago and a commentator raised what I thought was an interesting point about America's notions of meritocracy. On the one hand, it sounds like a cool enough idea, this notion that if you have vision and drive, you can succeed even if you weren't born into an aristocratic family. But the darker flip side is that it attaches value to success or lack thereof: if you're successful, surely you must be a person of merit; if you're not, surely you must be a deadbeat and a loser, after all, this is the land of opportunity, right? And yet, empirically, what we find is that the statistical probability of individuals in this country becoming the next Bill Gates or Donald Trump are actually less than the chances of a peasant rising to the aristocracy in feudal times. The income inequality coefficient in the US today is actually higher than it was during feudal times: as a percentage of overall GDP, the rich are richer and the poor are poorer. Admittedly, the poor are much richer than they were then because the economy is so much larger and stronger, but the divide between the rich and the poor is actually greater.

You speak of economic freedom, what freedom would that be? The freedom of rich people to get richer at the expense of poor people getting poorer? Sorry, I don't share your perception that that's a freedom worth protecting.

[The Backlash Cometh]

27. economic freedom assumes that the top echelons are playing

on an even playing field. But, we've learned from the multiple SEC investigations that that isn't the case. They don't even get taken down hard when they are found guilty.

[MercutioATC]

33. That's an argument for stricter enforcement, not salary caps.

I agree there are issues. Let's deal with them.

I don't think salary caps for CEO's deal with anything.

[The Backlash Cometh]

35. Sometimes the threat of one resolves the other.

Don't get in the way of open discourse.

[MercutioATC]

36. Oh, we're talking politics now?

I thought we were talking economic theory.

Yes, threats can be used to gain an advantage at times. I'm not sure it could be effectively used in this instance, though.

[The Backlash Cometh]

44. snort

I'm looking for results, not academic masturbation.

Look at it this way. The theories based on supply and demand forget that something is spurring the "Demand." Social or political pressure is indeed a factor that can affect "Demand." Even your attempt to limit social or political pressure has an effect on the results. If you prevail, CEOs continue their one-sided economics and the consumer base eventually dries up as there are fewer laborers who can afford to buy widgets. LackLuster Inc., which sells the widgets, goes belly-up because it finally reaches a point of anorexia where there are no more laborers to lay-off to justify CEO pay.

If I prevail, consumers continue to buy widgets and the company survives for at least another quarter and can actually thrive once it gets a CEO which actually has an inspired idea besides laying off workers in order to improve the bottom line.

Oh, I'd say that social outrage would be a very important factor in any economic theory.

[MercutioATC]

47. I don't think it'd work. We'd be farther ahead dealing with the issues.

Protect workers. Give them a living wage. Preserve their right to organize. These are concrete goals and have concrete solutions.

To believe that imposing salary caps on CEOs or excessive progressive taxes on the wealthy will solve problems is, in my estimation, foolish.

[The Backlash Cometh]

51. I call it...

...a bargaining chip. I'll be willing to leave it on the table if we get everything else we ask for.

[smirkymonkey]

48. Thank you! I think we are about to

see how supply-side economic theory does NOT work in the long term. As usual, Republicans in their typical short-sightedness have ignored the long-term implications of this model in favor of short-term profits.

I beleive that if this continues to go unchecked, the once economically healthy USA will go third-world. I am amazed that more people do not see the danger inherent in this sorely misguided econmic "model".

[The Backlash Cometh]

26. How about social outrage?

It works in England. Why don't we as a people have a right to protest about the situation just like the british have a right to question a CEO in England when he got something like a $400,000 perk? That's peanuts by American standards.

Outrage is part of the formula. If we allow others to silence us, then there's nothing that will put things back to kilter.

[Randers]

38. "the Backlash Cometh"

yeah - it seems like it's time.

Sure the CEO's have a "right" to their money and everyone else has a "right" to protest. And I think they should.

[TahitiNut]

46. An "entitlement" is not a "right."

While there may be an underlying "right," an 'entitlement' is a function of a contract or other legal/legislative/regulatory action. There are some who would subordinate a 'right' to an 'entitlement.' The right of privacy, for example, is often anachronistically cited as subordinate to one's property (i.e. "a man's home is his castle"). Well, what about the homeless?

[w4rma]

54. I do now. Cap those bastards' salaries, or at least tie their salaries to

the salaries of their employees.

This is out of control and when something is as out of control as this, maybe something drastic should be done.

[Fovea]

58. Why not?

if the CEO is that good, then the rest of the company's employees should benefit from the good decision to pay them more as well.

If they are not that good, why are all the small investors forced to pay them more? This brings the playing field back to a realistic valuation between the head and the rest of the body.

[Fovea]

11. 10 times the pay of the lowest paid worker.

and the exact same health benes for all employees.
This needs to become law. You want to be really really rich,
start a private company, not a public one.

As the last 5 years has shown quite well, there is absolutely no relationship between executive compensation and performance anyway.

[MercutioATC]

12. What do you mean "a public one"?

Publicly held? Why should that make any difference? "Private" and "Public" in this case are just a difference of which individuals own the company. There's no "public interest" as far as society as a whole is concerned.

[mbperrin]

21. That's not quite right.

The first major declaration of macroeconomic policy goals for the U.S. government was contained in the Employment Act of 1946, 15 U.S.C § 1021:

"The Congress declares that it is the continuing policy and responsibility of the Federal Government to use all practical means consistent with its needs and obligations and other essential considerations of national policy, with the assistance and cooperation of industry, agriculture, labor, and State and Local governments, to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining, in a manner calculated to foster and promote free competitive enterprise and the general welfare, conditions under which there will be afforded useful employment opportunities, including self-employment, for those willing, able, and seeking to work and to promote maximum employment, production, and purchasing power."

http://www.drfurfero.com/books/231book/ch03g.html

"maximum employment, production, and purchasing power" for those "willing, able, and seeking to work"

It's not just a wishful thought, it's the law and has been for 58 years. Requires all players to play.

[MercutioATC]

23. "in a manner calculated to foster and promote free competitive enterprise"

...that's in there, too.

"free competitive enterprise" are the three words I'm stressing.

[primavera]

29. Read Adam Smith

The government has "...the duty of erecting and maintaining certain public works and certain public institutions which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society." - Wealth of Nations, pp. 180-1.

Even Smith, that great advocate of free enterprise, acknowledged that a market economy required an active regulatory role on the part of the government to provide for public goods and moderate its harsher effects. Why do we in this country alone persevere in this extremist conviction that the free market can go unregulated to everyone's gain?

[MercutioATC]

30. Smith isn't contradicted here.

The spirit of Smith's beliefs is still active (yes, to a debatable degree with the current administration) in this country. We DO have "public works and...institutions" that exist for the enrichment of society as a whole, rather than that of the individual. I don't believe, however, that Smith intended ALL business dealings be held to this standard.

As I said, I support a reasonable living wage, universal health care, workers' right to organize and regulations assuring safe working environments. It's my interpretation that we agree in theory, just not in scope.

[Fovea]

57. Yes

I mean that sole proprietorships, where John Doe owns a company, and is legally liable for its operation.

If these kinds of companies want to make uncle Fred rich as Croesus, fine with me. But not Enron, not Halliburton.. no no no.

[Norquist Nemesis]

34. Don't forget retirement and leave agreements.

The lowest paid employees get 2-4 weeks salary at best when they get fired. Yet a CEO gets fired and they pay them millions.

Retirement agreements continue the same philosophy. Pay in for 10, 20, 30 years and you might get a small pension as an average employee. Retire as a high ranking executive and you get to negotiate your own package to take care of you, your family, and children for generations to come!

[Trillo]

43. Retirement programs are some of the largest shareholders,

and they dwarf individual stockholders in amount of stock held.

To me it's interesting that the retirement plans have no obligation to pass on the concerns of its shareholders to companies they're shareholders of, only a fiduciary duty to act in their shareholders best (monetary) interest.

All they care about is money.

If this wall can be broken down, i.e., capital aggregators, such as pension plans and funds were required to pass their voting rights (in companies they own) on to their (bottom of the pyramid) individual shareholders, I believe some of this outrageous conduct of corporate america can be stopped.

[w4rma]

56. That sounds like a good idea to me. They dont get a raise until their

employees get one first.

[jayfish]

10. A CEO Is Not Directly Responsible For The Income...

of a given operation. A pro-athlete or actor or salesman or assembly worker is. Without them the company would not run period. Without a CEO... :shrug:

Jay

[74dodgedart]

16. Its unethical for CEO's to recieve big pay increases

while they cut employee benifits, send jobs overseas, close down pension programs, eliminate emloyees, etc

[primavera]

20. And we're about to give them tax credits as well

Evidently it's not enough that we aren't penalizing corporations for firing US workers and opening up sweatshops overseas, we now need to give them tax incentives for doing so as well.

GE Molds Tax Bill
Washington Post, July 12 2004

<snip>

But in a two-year campaign, fueled as much by brains as political brawn, GE has shaped the legislation that would replace the old export-promotion law in ways that would allow it to save as much, if not more, in taxes, according to both GE lobbyists and congressional aides. In pursuing its financial interest, the company may also have turned the U.S. corporate tax code away from domestic manufacturing and toward expansion of operations abroad.

"The bill is truly amazing," said Michael J. McIntyre, a tax law professor at Wayne State University and an expert on international corporate tax issues. "We had an incentive for exports that was illegal and had to be repealed. Now Congress takes the money saved by the repeal and uses it to reduce taxes on the income earned by U.S. companies in foreign countries, thereby making foreign investment more attractive than U.S. investment."

http://www.washingtonpost.com/wp-dyn/articles/A45064-2004Jul12.html?nav=rss_business

[The Backlash Cometh]

25. Shareholders don't have all that much power.

They are slow as molasses to move because most of them don't have information given to them in a timely manner, and certainly the board and the CEO won't give them the kind of information that will give shareholders a reason to question their decisions. In most American corporations, shareholders don't even have the right to decide on the accounting firm that the board chooses.

As long as the board and CEOs control the information, they also control the decision-making. And boards, btw, are composed of CEOs of other firms. Therefore, it pays to keep it in the family.

[jpgray]

31. Were CEOs criminally underpaid in '80 or were workers criminally overpaid?

In 1980, the average CEO made 42 times what his worker did, whereas in 2000 the average CEO made 541 what his worker did. So which is it? CEO pay is even more bloated now. This is just evidence that if you give corporations government aid, the cut costs won't go to new jobs, they will go to enriching the elite and nabbing higher and higher profits.

[leftofthedial]

40. yes. an abominable contractual agreement

CEOs and compensation committees on boards (who set executive compensation, not shareholders) at large corporations comprise an old-boy's network. It is incestuous, insidious and unethical at its core. putting it into a contract doesn't change that.

There oughta be a law.

[TahitiNut]

49. Executive management are AGENTS of the owners.

As such, I believe they should be compensated from after-tax profits only. Consider a Subchapter S Corporation as an example. All profits accrue to the individual/owner and are taxed at ordinary income rates. No profits? No compensation.

An equitable tax and accounting treatment would be to require that the compensation of corporate officers and executive management come from after-tax profits - even if to increase losses. In effect, they would be employees of the owners, NOT of the (taxable) "corporation".

[wishlist]

4. Other top executives are given big bonuses for laying off and outsourcing

according to a close relative of mine who is a corporate VP for a major corp. He gets bonuses of a quarter million to half a million dollars a year when he downsizes and outsources personnel. When this started happening to him during the Clinton years, he became a Republican because he didn't want as much taxes on his huge salary and bonuses. He resents his taxes going to subsidize health care for less affluent Americans.

[The Backlash Cometh]

28. They can call themselves rich, but they can't call themselves

Christians. That's not a normal response for a Christian.

[RobertSeattle]

6. Haven't you heard? The Demand for CEOs is quite high and Supply limitted!

Yeah Right!

[sadiesworld]

15. I'm ready, pitchfork in hand.

:evilfrown:

[leQ]

17. can someone explain why these people need tax cuts?

n/t

[74dodgedart]

32. How else can they afford Hum Vees and Private jets, etc etc

Being wealthy is more expensive than you think

[bloom]

19. This is one of my main pet peeves. I think it is an outrage....n/t

[tom_paine]

22. It only stands to reason that the pace of Wealth Inequity in Amerika

would begin to sharply rise after the Rise of Totalitarianism, which essentially CELEBRATES the inequities of life, like the Nazis or the Italian Fascisti.

Same as it did on the other side of Totalitarianism, the Sovioets and ChiComs, who preached Total Equality, but who's Literal Wealth Inequity between Commie Stooges (not much different than Bushevik Stooges at this point) and the Citizenry was probably much greater still than 2004 Imperial Amerika.

In either case, this is a natural outgrowth of Impeial Bushevik Policies.

And, even if he is ousted from the Imperial Throne in November, we haven;t seen ANYTHING yet.

[TahitiNut]

37. EVERY American should become familiar with the Gini Index

The higher the index, the more inequitable the distribution of income. The United States has become a banana republic with a Gini Index around 0.45 and rising.

Costa Rica has a Gini Index of 0.46. Ecuador is at 0.44. The Dominican Republic is at 0.47. Mexico has a Gini Index of 0.53. These are the economies we're emulating.

Japan has a Gini Index of 0.25. Sweden and Denmark are also at 0.25. Canada is at 31.5. Germany has an index of 0.30. Norway is at 0.26. Switzerland (not noted for economic equity) is at 0.33.


On edit: Not surprisingly, the child poverty rates follow the Gini Index. The rate in the US is 22.4%, while Canada (15.5%), Japan (12.2%), Germany (10.7%), France (7.9%), and Denmark (5.1%) are all HUGELY better.

Mexico has a child poverty rate of 26.2% ... and we're overtaking them!

[progressivebydesign]

24. Do the low and middle wage Republicans get it yet??

The GOP is NOT their party.. I feel sorry for people when I see their beat up car and crappy job and know that they are republicans. Talk about working against yourself... poor suckers.

[tom_paine]

39. No, they are enslaved mentally by Goebbels v2.0 and all that entails

[madmom]

41. more people on food stamps than ever before......

heard that on a clear channel station this morning so it MUST be true.

[Media_Lies_Daily]

42. Record bankruptcies and foreclosures, as well as rampant....

....unemployment, and these guys get record raises.

Disgusting.

[BiggJawn]

45. And I got a whompin' 2.01%....After a GLOWING review.

Any wonder I have to psych myself up to get out the door some days?

Shit is immoral, should be illegal.

Can somebody tell me WHAT a CEO does that is worth so fucking much money? Hell, Ken Lay testified he didn't know shit about the day-to-day ops at Enron...

[Nimrod]

53. You and me both

I got a big fat zero after a five-star review for the third year in a row. Actually, let me amend that, I recieved 30 stock options that went underwater two days later.

And here's the kicker:

Thanks to our beloved President, the company I work for was legally allowed to put an indefinite blackout on all stocks held by employees except those in the executive level. This means that I can hold all the stock grants and stock options I want, but they will never vest until the company says they're allowed to. This applies even if I straight out purchase any shares as long as I'm employed with the company. Meanwhile, the top 1% of the company gets to cash in their stocks without worrying about us Joe Lunchpails driving their value down by trying to get enough money to pay the rent.

So our buddy Bu$h sent me $300 dollars, and directly cost me over $7,500.

This is not even counting the money I've lost due to the job market being so horrid that companies can get away with overworking and underpaying their few American employees. And now he's abolishing overtime pay for people living below the poverty line already.

People as me why I hate Bu$h and I can answer honestly "Because he apparently hates me."

[Randers]

55. I think the whole Percentage business

for figuring raises is messed up, anyway.


How much better it would be it if everyone doing a good job got $1000 or $2000 or $3000 or whatever the company could afford instead of the person making $200,000 getting $8000 and the person making $20,000 getting $800.


But heaven forbid - then salaries would get closer together instead of farther apart. :eyes:

[BiggJawn]

60. Yes, it is.

But around here, the guys making 200 kilobucks get about 5% (or more) and the guys making 20 kilobucks get 1.5%. The powerhouse crew got LESS than 1%, and when the lights went out last month, they were OUT for FIVE hours...But I think they bought them all cheap T-shirts with a stupid slogan on them, so that should have inspired them, right?

[stevebreeze]

59. We KNOW that CEO pay is only high because they earned it!

We know that the since the CEO's of today earn 500 time that pay of an average worker it only reflects their true value to the corporation. Of course this meant that since CEO's in the 70's only earned 50 times that average worker, they must have been some real slackers then. Thank GOD we have CEO's today that are worth so much more! <sarcasm off>

[moondust]

61. After all, they are holding up the sky.

It's a big job.