Moral OR Immoral???

[_Roger Morrison]

Are CEOs worth 364 times more than the average Joe/Jane? From recent stats:

September 05, 2007
In recognition of the just-completed Labour Day weekend, I'd like to offer a salute to American workers, who the United Nations just reported are second only to Norway's labourers when it comes to productivity.
And now, a bit of bad news for those same workers: You're not getting credit for that productivity. Instead, top executives at your companies are reaping the rewards in the form of increasingly fat paydays.
Here's a quick look at four ways in which workers are being short-changed by their bosses.
No. 1: The chief executives at the biggest U.S. companies last year made as much money in a single day as the average American worker made for the whole year.
Top execs at Fortune 500 companies averaged US$10.8 million in total compensation in 2006. The average worker, meanwhile, made US$16.76 an hour, which worked out to US$29,544 for the year. Those numbers come from a report called "Executive Excess 2007: The Staggering Social Cost of U.S. Business Leadership" (.pdf file). The report was released last week by the Institute for Policy Studies and United for a Fair Economy.
And it's not clear that all of their CEOs were earning their keep. Take the top earner last year, then-Yahoo (YHOO.O) CEO Terry Semel. He got US$71.7 million, chiefly in options grants. He also cashed in US$19 million worth of options. That's a lot of loot. From a shareholder perspective, it's tough to argue that Semel earned it.
Yahoo's stock is lower now than it was at the start of 2004, while the Standard and Poor's 500 index ($US:INX) has advanced more than 30% in the same time period. Semel stepped down as CEO in June because of shareholder dissatisfaction with his company's performance.
No. 2: The managers of the 20 top hedge funds and private-equity shops made more every 10 minutes last year, on average, than the average American worker made for the whole year.
The top bosses at the top 20 investment shops earned an average of US$657.5 million for the year, according to data cited by the "Executive Excess 2007" report. Renaissance Technologies' James Simons led the way, earning US$1.5 billion. Steven Cohen at SAC Capital and Kenneth Griffin at Citadel Investment Group ran neck and neck for second place. Each got US$1.2 billion.
"We are back to the gilded age of a hundred years ago," concludes John Cavanagh, the director of the Institute for Policy Studies and a co-author of the report.
No. 3: True, many workers got a break on July 24, when the U.S. federal minimum wage was increased to US$5.85 from US$5.15 -- the first increase in the federal minimum wage in 10 years. But the minimum wage is still 7% below where it was 10 years ago, adjusted for inflation. Meanwhile, CEO pay has gone up 45%, adjusted for inflation, in the same period, according to the "Executive Excess 2007" report.
No. 4: U.S. CEOs enjoy super sized advantages in pensions and perks, too.
Thanks to generous contributions from their companies, CEOs at S&P 500 companies retire with an average of US$10.1 million in their supplemental executive retirement plans, according to the Corporate Library. In contrast, only 36% of American households headed by someone over 65 even had a retirement account in 2004. Those accounts had an average value of US$173,552, according to the Congressional Research Service.
The top U.S. CEOs enjoyed perks worth an average US$438,342 in 2006, according to data cited in "Executive Excess 2007." They got money for everything from personal travel on corporate jets, to reimbursement for country club fees and taxes on bonuses.
An extreme example: Ryland Group (RYL.N) chief Chad Dreier got US$6.9 million worth of perks last year for benefits that included private use of his company's jet and a US$5.7 million "tax gross-up" to cover the taxes on his stock options.
Why the gap?
Apologists for highly paid CEOs argue they are merely getting the pay they deserve for their talents. Their pay is determined freely by the laws of supply and demand in the marketplace. Right?
There might be more to it than that. For one thing, U.S. execs make three times as much as their European counterparts, even though these European bosses manage companies that are 40% bigger. (The top 20 highest-paid execs at U.S. public companies made US$36.4 million on average last year, while the same group in Europe got just US$12.5 million on average.)
Yet, presumably, companies on both continents draw from similar talent pools in terms of education, work experience and cultural background. If that's true, it's hard to accept the notion that rich pay in the U.S. is the result of a scarcity of talent.
Next, CEO pay in the U.S. has grown to become 364 times the average worker's pay. It was just 40 times the average pay in 1980. It's hard to imagine that top leadership skills have grown so much scarcer in the past 37 years.

What do You think? Is there inconsistancy in THE Christian Country, that "Trusts In God," to be so amorous with Mammon? Might the fact of LDS wealth be more of an indictment than Joseph Smith's visions and sex-life? Warm regards, Roger

[Analytics]

There might be more to it than that. For one thing, you.S. execs make three times as much as their European counterparts, even though these European bosses manage companies that are 40% bigger. (The top 20 highest-paid execs at you.S. public companies made US$36.4 million on average last year, while the same group in Europe got just US$12.5 million on average.)
Yet, presumably, companies on both continents draw from similar talent pools in terms of education, work experience and cultural background. If that's true, it's hard to accept the notion that rich pay in the you.S. is the result of a scarcity of talent.

I have heard that European and US work hours are different (depending on the European country. That is to say that Europeans may tend to work less hours. Furthermore, the social programs in Europe are different than here such as medicine. That means a greater tax burden. For all we know it is big corporations that are taxed directly on their profits before CEOs get their hands on them. Finally, it mentions 40% larger, but that can be deceptive. Perhaps on average they are, but it may be that there are quite a few US companies who are larger while there may be several smaller corporations that skew the size stats down. Why doesn't it skew wage stats down too? Perhaps because of the way the averages were calculated. I have no idea how. I'd have to see the raw data myself.

Next, CEO pay in the you.S. has grown to become 364 times the average worker's pay. It was just 40 times the average pay in 1980. It's hard to imagine that top leadership skills have grown so much scarcer in the past 37 years.

Perhaps not, but I can imagine that corporations have grown much larger.

Personally it comes down to this: I don't care how much CEOs get paid so long as I get paid decently (and I make enough if I am wise in savings and spendings, and I have good benefits) and so long as my company does what's necessary to attract and retain good, talented CEOs.

Is there inconsistancy in THE Christian Country, that "Trusts In God," to be so amorous with Mammon?

Not necessarily. Maybe CEOs tend not to be Christian. Maybe they are more beholden to non-Christian shareholders abroad. Heck, why not calculate how much more workers would be paid if CEOs only made 40 times average pay. I'd imagine that in huge corporations that all the extra CEO money would be quickly diluted among all the workers. In fact, I think that maybe earnings put into shares as dividends may be another culprit--possibly larger than CEOs. And let us not forget taxes which have likely increased over the years and perhaps legal fees as people sue McDonalds for millions for making 'em fat or for coffee that's too hot.

Might the fact of LDS wealth be more of an indictment than Joseph Smith's visions and sex-life? Warm regards, Roger

LDS wealth? I thought they were always going bankrupt or something. Are you speaking of the church proper? In that case I think it has to do with careful management of funds--something the common man should work harder at rather than always wanting a new car. I bus to work to save money.

The wealthy do not bother me. All I care about is getting food on the table for my family. I could hardly care less if the Jonses are doing better than me.

[_huckelberry]

Roger, I am not sure of the best solution to your puzzle. You know you are in Mormon land when the solution proffered is, perhaps there are two many taxes. Bit of a nonsequtar to my ears but I am out Old Testament the Mormon loop.

[_The Nehor]

I still say we need to come up with an effective measurement of how much a human works physically and mentally. Might mean the end of capitalism though.

[_asbestosman]

Roger, I am not sure of the best solution to your puzzle. You know you are in Mormon land when the solution proffered is, perhaps there are two many taxes. Bit of a nonsequtar to my ears but I am out Old Testament the Mormon loop.

I don't believe I said it's because there are too many taxes. Rather I suggested that it might be because there are more taxes--not whether there were too many. I offered no opinion as to whether this was good or bad. In case you wonder, I'd probably be about as happy living in Europe as I am here in the USA.

I lean more libertarian than I do republican or democrat.

[_asbestosman]

I still say we need to come up with an effective measurement of how much a human works physically and mentally. Might mean the end of capitalism though.

Perhaps so. I actually wish people would be satisfied with less. It's not so that I can have more or cheat them. Rather it's that I strive not to be bothered with comparisons to the wealth of others and think that such a strategy is best for happiness, health, and in my opinion success. Healthcare is something I think our nation needs to work on, but I do not think taxes will be sufficient. I hear Romney had something interesting in Mass., but I'm not sure if it works nor if it'd be enough for me to think him a competent president.

[_The Nehor]

America's biggest problem is that despite our high standard of living the gap between the rich and everyone else is constantly increasing. I'm convinced the only reason we have not had some mass revamp of society is our new opiate of the masses: entertainment. If all forms of television and the Internet were lost for a year I expect we might see civil war. But I'm a pessimist in these matters. :)

[_asbestosman]

America's biggest problem is that despite our high standard of living the gap between the rich and everyone else is constantly increasing.

By why does that gap matter--at least so long as everyone else has access to education, healthcare, and in general a reasonable shot at becoming wealthy with a good idea, some hard work, and a bit of luck?

[_Chap]

America's biggest problem is that despite our high standard of living the gap between the rich and everyone else is constantly increasing.

By why does that gap matter--at least so long as everyone else has access to education, healthcare, and in general a reasonable shot at becoming wealthy with a good idea, some hard work, and a bit of luck?

"everyone ... has access ... to healthcare"

See http://en.wikipedia.org/wiki/List_of_co ... expectancy

Which country is number 38? The world's richest country. Hmm. Maybe that country has a large number of people who aren't getting all the health care you might expect, based on the total amount of money there is around?

[_asbestosman]

"everyone ... has access ... to healthcare"

See http://en.wikipedia.org/wiki/List_of_co ... expectancy

Which country is number 38? The world's richest country. Hmm. Maybe that country has a large number of people who aren't getting all the health care you might expect, based on the total amount of money there is around?

And as you'll recall, I stated that the US needs to improve on that. I think that can be done without worrying about whether the wealthy are making 50 times what we make or 1000 times what we make.