Jul 282010

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Pay for Performance
According to Business Week, the average CEO of a major corporation made 42 times the average hourly worker’s pay in 1980. By 1990 that had almost doubled to 85 times. In 2000, the average CEO salary reached an unbelievable 531 times that of the average hourly worker.

“Pay for performance”, tying executive compensation to the financial success of their company, has become very popular in the past decade. In the face of the largest bull market ever, that isn’t surprising. It also isn’t realistic. What CEO honestly believes that all or most of the appreciation in value of their company is due to their own talent?

ZD Net’s Total Compensation Vs. Total Return To Shareholders chart (no longer online), shows that total return to shareholders was higher for many companies whose CEO compensation was under $500,000 than for companies who paid their CEOs multi-million dollar compensation.

Workers Unite
The AFL-CIO Executive Paywatch site gives people a lot of information about what they consider “the excessive salaries, bonuses and perks of the CEOs of major corporations”. The site features a calculator that shows how your salary increase over the past five years compares to that of a CEO. They also give you tools to “take action to stop runaway CEO pay.”

Is It Justified?
John Mariotti, president and founder of The Enterprise Group, asks “CEO Pay: How Much is Too Much?” and answers the question himself. Citing Derek Bok, he points out that as business becomes more complex, the demand for top executives increases and thus they command greater and greater pay. He also noted that such huge awards do little to motivate these outstanding performers, who are generally more motivated by challenge.

Mike Hughlett, Staff Writer for PioneerPlanet, thinks the reason why CEO pay soars so high is that CEO’s pay generally is set by the compensation committee, usually comprised of other chief executives.

Graef Crystal, writing for the San Francisco Business Times, Uses Steven Jobs, co-founder of Apple Computer to prove his point on CEO compensation: the composition of a CEO’s pay package has nothing to do with his future performance and the CEO may not make all that much of a difference in whether the company is a success or a failure.

In her article “Lowering the Bar”, WSJ writer Joann S. Lublin notes “Pay for performance? Forget it.

Jul 282010
This is the original, 60’s, counter culture, LA Free Press. Today’s Best Alternative View & Our Old Hippie Headlines, Too! A Head Trip for Smart Minds.

Why these items have been brought together in today’s issue of the Los Angeles Free Press

by Steven M. Finger

(A parenthetical note: I figure I am still days away from articulating my changed philosophy as I see it is still taking on new colors.  It is, as it is, reflected, though, in what I’ve gathered here.  With regard to my efforts to arrive at the format that is most interesting, the best I can tell you is that today’s is one more possibility.

Here I have more articles, with links to more info than what they, themselves, present.  I threw in a graph, as I said that giving you quick-look data was an objective, and some with enough sound bites that you can certainly make a remark or two before you leave work today.

And there is still the essence of mission – a conglomeration that, thru its several elements, conveys proof that the culture is indeed achangin’ and, in all, gives a springboard for much additional thought.)

Item [1] begins just as I would have started the piece had I written it myself (now that I, too, have taken my eye off the moment in order to focus on the future).  And it sets on course for this Issue’s theme… are we actually on the cusp (again) of a Worker’s Revolution?

What if every town in America recalled it their ‘management’ not because of the job they were doing, but because of the pay they were taking for doing it?  This is an ‘unfair wage’ issue, yet it is not being argued by ‘employees’ that can be fired, nor one about their wanting more for what they do.  And it is not about the politics of the people put on the hot seat, not whether they voted a certain way, not if they are of one party or another.

This ‘recall’ is powered by a reason few people who have anticipated; it is not the typical recall of poorly produced distributed products, it is one that recalls the producers of the product for not distributing (taking) the dollars that were in excess of a reasonable cost production.  Think about this.  Yes, I’ve used terms that would apply to a manufacturing scenario, but this situation was not a business enterprise… what if it were?

And what if this thinking, this movement, this call to action, this result demanded the same of every capital generating venture.  And went the step further, saying that the money not taken by the head honcho went, instead, back to the ‘citizens’ of the enterprise.

Some further remarks that I believe are significant – I chose this particular article for several reasons – it is not only about the protest and the successful recall of people who are being paid more than they should be for what they provide.  It is, instead, one that questions whether or not a contract for future pay because of that production (or lack thereof) should be paid or not.  Another reason for this article’s choice is its link to the history of the event.

Folks, this may, indeed, be the first of many. It might be a tipping point, and lead to something entirely different.   Find a new name for it, because America’s not likely to like the old one.

Item [2] – look at the date (it arrived at my door more than two weeks ago).  It asked the question of another country… where is that manifestation of frustration?  Someone there, too, knew that something was brewing, but hadn’t yet seen something like this.

Item [3] and Item [4], a focus on what may move this right into the ‘worker’s’ ball park.  When read, it should add to what was the ‘news’ of yesterday – the enormous sums (hundreds of millions to more than a billon dollars) ‘earned’ by 25 Corporate Executive Officers who lead their companies over a ten year tenure.  Even those who lead them straight into the red.  We’ve presented charts and articles in the past of CEO’s pay that were huge multiples of their workers pay (just a small note that you didn’t have to wait for the WSJ to tell you what’s really up – the Free Press does it regularly!).

Item [5] – begs the question: Why stop at the Leaders of Business, and not go onto the Leaders of the World.

Has it actually come time to tie pay to production.  And, again, what should we call that?

Here are the keywords to our thoughts today, hope they are a clue for you as to our thinking:  Society and Culture, Bell City manager, Bell City pensions, Bell City protests Robert Rizzo, anti-capitalist ideology, economic and social crisis, Overpaid CEOs, Pay for Performance, CEO pay, Presidential pay

Links to the items in today’s Los Angeles Free Press:

[1] http://losangelesfreepress.com/citizens-protest-city-manager-resigns-can-anything-be-done-about-600000-public-pensions/

[2] http://losangelesfreepress.com/where-is-the-anti-capitalist-ideology/

[3] http://losangelesfreepress.com/ceos-are-overpaid-ceos-are-paid-too-much-for-what-they-do-too-much-more-than-their-average-worker/

[4] http://losangelesfreepress.com/how-many-workers-can-you-hire-for-the-price-of-one-ceo/

[5] http://losangelesfreepress.com/how-much-a-countrys-leader-is-paid-compared-to-gdp-per-person/

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