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Ten Years Gold

Jun 23, 2007 music cassettes
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Ten Years Gold

In the Greed Olympics, American CEOs take the gold medal. Back home they take the gold-lots of it.

A good Chief Executive Officer deserves to be paid well. But does any CEO deserve to be paid more each day, including weekends, holidays, and vacations, than an average employee of the company is paid for a full year? Reality is even more outrageous. On average, American CEOs earn 411 times what their employees earn. Some CEOs earn more than 1000 times what their lowest paid workers earn.

According to Rich Clabaugh at the Institute for Policy Studies, Mexican CEOs trail for the silver medal with a distant 61 times employee pay. Brazilian CEOs with a ratio of 60 get the bronze medal. Equally successful CEOs in other countries share more of the company's profits with employees, and thus have lower ratios of CEO pay to employee pay: China 36, Britain 32, Canada 23, France 23, South Korea 23, Germany 20, and Japan 11. The stark compensation differences between American CEOs and CEOs in other countries reveal that extreme CEO greed is uniquely American.

Why is the ratio of CEO pay to employee pay in America 37 times more than it is in Japan--which also has many large, successful international companies? Why did the annual CEO compensation of American oil companies average $33 million when the CEO of BP (British Petroleum), the second biggest oil company in the world, made $5.6 million and the CEO of Royal Dutch Shell, the third biggest oil company, made $4.1 million in a recent year?

The answer is that greed is acceptable, even honorable, in American culture. CEOs and professional athletes in the United States epitomize that greed. And they are proud of it.

The Board of Directors sets CEO compensation with all of its complicated deferrals, contingencies and stock options. Four factors influence their decisions. The first is the general American culture of greed. The second is the mistaken assumption that there are only a few good candidates for CEO positions. The third is that, despite recent legislation, the Boards include too many insiders (present and former members of the executive leadership). Fourth, and most importantly, the independent Board members are co-opted by retainer fees and meeting fees that on a per day basis may even exceed the compensation of the CEO. In return they feel obligated to dish out largesse to the CEO.

There are many examples of CEOs getting large pay increases even in years when the company lost money. Perhaps it is time for CEO pay to bear some relationship to the performance of the firm. Perhaps it is time for CEO pay to recognize the importance of the roles of the rest of the employees. A company, that is making a good product(service) that is selling well, can pay all its employees well and pay a good dividend to stockholders.

Since it is unlikely that Boards of Directors will slash compensation or that American CEOs will request pay cuts for themselves, legislation is required to rebalance the extreme inequity in compensation and restore ethics in the setting of executive pay. A Maximum Wage Law would protect professional and skilled workers like the Minimum Wage Law protects the lowest paid workers. In most companies pay for all employees would increase. If no one in the company could make more than ten times the average, the leadership of the company would have a big incentive to make the company successful so it could raise the average compensation.

A Maximum Wage Law is consistent with the basic principle of capitalism that compensation increases should reward good performance at every level of an organization in order to encourage future productivity of the company.

During tough times, like those in the auto and airline industry in recent years, when employees are asked to take a pay cut to save the company, the CEO and perhaps other highly paid members of the management team would have to take a proportional cut as well. If everyone bears some pain, employee morale would not suffer as badly during those tough times. Good employee morale is essential for a sick company to recover.

Employees will be more enthusiastic about the company if they know that the boss' compensation can't go up unless their compensation goes up too. As employee pay goes up, the CEO's compensation can also go up-at a handsome multiple. A CEO, who is able to improve quality, reduce costs and increase sales with the help of employees, can also take the two other actions that will make the CEO truly successful and ethical-share the rewards with employees and stockholders.

A Maximum Wage Law would address the gross inequities in compensation between American CEOs and their employees. After a phase in period of ten years, a Maximum Wage Law would cap compensation to the CEO, or any other executive, at ten times the average compensation of all employees in that company. Shouldn't employees of American companies be treated as well as employees of Japanese companies where the compensation ratio is eleven?

Under a Maximum Wage Law, compensation for the CEO would be based on the performance of the company and the ability of the company to provide reasonable compensation to of all employees as contributors to that performance. That would be capitalism at its finest -- providing rewards, in reasonable proportion to responsibility, to everyone who contributed to the economic success of the company.

Lowell L Klessig

Emeritus Professor of Integrated Resource Management

University of Wisconsin-Stevens Point

715/824-2490

lowellklessig@hotmail.com

Lowell Klessig is Emeritus Professor of Integrated Resource Management at the University of Wisconsin-Stevens Point. In addition to articles in professional journals, he has authored numerous Extension publications in non-technical terms for adult audiences. He served as Executive Director of the Wisconsin Rural Leadership Program. He has travelled to 47 countries and taught in six foreign countries. He writes a monthly column for a Midwestern weekly newspaper and does occasional magazine features. (A one page bio summary is available electronically upon request.)

please help me find the quote engraved on a necklace from argos that argos old years ago!?

my dad brought me a neacklace for my birthday when i was little it was a heart with i think " always together forever apart" wrote on it he kept one half and i had the other.my dad died when i was nine this was ten years ago and im now getting a tattoo.this is the only thing ive ever wanted tattooed on me.the words he gave to me on the necklace.i cannot fined the exact words or a picture or anything and i dont want to get it wrong.does anyone remember or still have the necklace ?or can find out.it was gold (not proper gold i dont think) please help me this is not just a silly question it means so much to me.thankyou

sorry i dont remember this but im sure it should say Allways together never apart..good luck.

Beck: 10 Years of Mellow Gold Part 2b

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