"We Track the Financial Collapse For You, so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Safeguard your financial future. Get our crucial, daily updates.

"We Track the Financial Collapse For You,
so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

The Next Populist Political Issue Emerges: CEO Pay

It’s always been understood that corporate executives make a lot more than rank-and-file workers. But the gap between top and bottom was hard to calculate, and therefore hard to turn into media sound bites, so it didn’t play much of a role in the US political process.

But this year, for the first time, corporations are being required to calculate and publish a more accurate version of their “pay ratio” – what their CEO makes relative to employees. In other words, now there’s a number – the years (or centuries) of work it would take the average employee to earn what the CEO does in a single year – that people can understand. And it’s not pretty. From last week’s New York Times:

Want to Make Money Like a C.E.O.? Work for 275 Years

A Walmart employee earning the company’s median salary of $19,177 would have to work for more than a thousand years to earn the $22.2 million that Doug McMillon, the company’s chief executive, was awarded in 2017.

At Live Nation Entertainment, the concert and ticketing company, an employee earning the median pay of $24,406 would need to work for 2,893 years to earn the $70.6 million that its chief executive, Michael Rapino, made last year.

And at Time Warner, where the median compensation is a relatively handsome $75,217, an employee earning that much would still need to work for 651 years to earn the $49 million that Jeffrey Bewkes, the chief executive, earned in just 12 months.

These stark illustrations of income inequality are revealed in the Equilar200 Highest-Paid C.E.O. Rankings, which are conducted annually for The New York Times by Equilar, an executive compensation consulting firm. As economic uncertainty roils the country, the gap between top executives and everyday employees grows ever wider.

“It’s grotesque how unequal this has become,” said Louis Hyman, a business historian at Cornell University. “For C.E.O.s, it’s like they are winning the lottery year after year. For a lot of Americans, they don’t have any savings. When they lose their job, they lose everything.”

Live Nation and Time Warner did not reply to requests for comment. After publication of this article, Walmart said it was increasing wages for low-paid workers.

The pay ratio rule, part of the 2010 Dodd-Frank banking regulation law, has been left untouched by the effort to roll back parts of Dodd-Frank now making its way through Congress.

As glaring as the ratios may seem, they tell an incomplete story. Some companies reported very low ratios and relatively high median incomes, but rely on outsourced labor for important tasks. Other companies that reported very high ratios employ many workers overseas where pay is far lower than in the United States. And not all companies have reported their pay ratios.

“As much as these numbers reveal, they also hide,” said Mr. Hyman, who in August will publish “Temp,” a book about gig workers and the proliferation of part-time labor. “It all depends on who you consider to be an employee in this new economy.”

For example, Mattel, the toy company, owns its factories overseas and employs thousands of low-paid workers in Asia. As a result, Mattel reported the second-highest ratio on the Equilar list: The chief executive’s pay was 4,987 times that of the median employee.

Contrast that with Incyte, a drugmaker with the lowest ratio on the Equilar list. The chief executive of Incyte made just 64 times what the median employee earned. But unlike Mattel, Incyte outsources its factory work, allowing it to keep its work force small and its median pay high.

CEO Pay

In 2017, the median pay for the 200 highest-paid chief executives was $17.5 million, and they received an average raise of 14 percent, compared with 9 percent in 2016 and 5 percent the year before that. Equilar calculated that the median pay ratio disclosed by these companies was 275 to 1.

And while chief executives are among the highest-paid people in the country — the 200 chief executives on the Equilar list, almost all of them white men, were awarded some $4.4 billion last year — they are not alone in enjoying lavish pay. Others who don’t hold that exact title also did well in 2017.

David T. Hamamoto, a former C.E.O. who until January was the executive vice chairman of Colony Northstar, a real estate company, was awarded $53 million last year. Larry Ellison, the founder, chairman and chief technology officer of Oracle, was awarded $41.3 million, adding to his net worth of some $57 billion.

“The top layer of management live like kings and queens while the people at the bottom are scrabbling for a decent existence,” Ms. Gordon said. “We should not have that in a society where equality and fairness supposedly matter.”

Some thoughts
The birth of this corporate aristocracy can be traced back to Richard Nixon’s 1971 decision to break the final link between the dollar and gold, which handed the power to create money to big banks via the Federal Reserve. The banks – and their favored corporate clients – grew powerful enough to capture the regulatory process and cut themselves an increasingly sweet deal. Like all the other pathologies related to fiat currency, this one should have been obvious to anyone with a passing knowledge of human nature.

Some corporations have discovered a way around the perception of massive pay disparity: Just outsource low-paid work to firms in other countries and keep only highly-compensated marketers, computer programmers and engineers on the actual payroll. Expect this trend to spread in the future, allowing corporate marketing departments to tout their “progress” on pay equity.

For companies that can’t run this kind of scam, the Bernie Sanders of the world now have understandable numbers with which to bludgeon them in campaign speeches — thus guaranteeing that the populist wave that swept Donald Trump into the White House will continue to rise.

Ironically, among the policies that will be sold as remedies for inequality will be easy money and higher government spending, which will make the problem much worse.

The result: Political turmoil begets financial turmoil begets political turmoil for as long as the current monetary system endures.

 

Emigrate While You Still Can

6 thoughts on "The Next Populist Political Issue Emerges: CEO Pay"

  1. “…….for as long as the current monetary system endures”

    Whilst I agree that a change in monetary policy would assist in the issue of inequality in pay and I agree with the article’s thrust, I have long been a supporter of workers (labour) sharing in the rewards currently inequitably allocated to capital within our current politco/economic regime.

    The problem is grossly exacerbated by the extreme use of loans to company’s for the purpose of buying their own shares, which allows those connected managers to participate in enhanced share option schemes, which is where most of their pay originates.

    The current corporate structure almost eliminates their employess from participating in the profits of limited liabilty companies, although some organisations offer modest schemes such as John Lewis and Partners, that function toward a more equitable distribution of profits. I wonder what the ratio of executive pay to workers is in John Lewis? Or National Carriers even.. Perhaps a full-blown cooperative is going too far, unless we wish succumb to a 100% socialist state, God forbid.

    I foresee a much enhanced, national scheme for workers’ share participation in the profits of corporations, supported by legislation, which would redistribute these vast sums of executive pay across a broader mass of workers. The workers, after all, are significant producers of the wealth that at present is leaking away to small cliques of insider executives and owners of capital.

    Can anyone offer more input on this proposition? I have ruled out Union-type arrangements as they have proven to have failed miserably in their original objective and devolved to grovel at the same trough as their bosses.

  2. As I see it, the main reason for excessive executive compensation is
    basically the same for the excessive size and power of the state and
    federal governments: failure of voters to reign them in, or more
    specifically, allowing themselves to be bribed.

    Here’s a true example. My mother was once a major stock holder for Blockbuster Corp.
    She was “in love” with Wayne Huizenga (CEO) and trusted him as an
    investor implicitly. One day she asked me to escort her to an annual
    stock holder meeting. It was a circus show literally and figuratively
    with music, dancing, the whole bit. Near the end Wayne introduced some
    of his “star” executives who were up for promotions (i.e., raises.) I
    remember a guy named Steve (somebody) who was the CFO and everybody knew
    who he was because he always wrote a little bit in the annual report
    and was credited with increasing revenues, the rising stock price and
    dividend payouts. I remember Wayne asking the audience of stock holders
    if they agreed that his salary should be raised another $5 million or so
    as “compensation” for all that work! The crowd howled with approval.
    “Hell, he’s worth twice that if you ask me,” some dumb-ass yelled out.
    And so it went for Wendy (this) and George (that), etc. That’s how it
    happened there and I’m sure every corp. is pretty much the same.

  3. At least CEOs pay taxes.
    Real estate investors pay 0% in taxes by borrowing the Fed fueled equity out of their properties tax free. It’s why virtually every politician is a real estate investor and nobody in the MSM ever complains.

  4. Amazing article, thank you, thank you! Most of these criminal CEOs are sociopaths or worse, psychopaths, without a spark of empathy for the thousands of people who literally act as their personal “salves”. Consequently, there is no hope that these people will ever come to see the immorality of their conduct. In Venezuela the kleptocrats who destroyed the county are becoming increasingly worried about being identified at she-she restaurants and hangouts for fear of reprisals from the “hoi polloi”. When the US economy finally falls off the cliff, a similar anger will be turned against US CEOs and the people they bribed (the US Congress) to enact laws to further enrich themselves. We are fast returning to a medieval economy of potentates and serfs. Lau Tzu wrote “There is no calamity greater than lavish desires. There is no greater guilt than discontent. And there is no greater disaster than greed.” I would ask all of the world’s debauched oligarchs to answer one simple question: “How much is enough when it derives from others’ labor?”

Leave a Reply

Your email address will not be published. Required fields are marked *


Zero Fees Gold IRA

Contact Us

Send Us Your Video Links

Send us a message.
We value your feedback,
questions and advice.



Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.

This field is for validation purposes and should be left unchanged.