Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘CEO pay’

Executive Paywatch 2018: The Gap Between CEO and Worker Compensation Continues to Grow

Monday, May 21st, 2018

CEO pay for major companies in the United States rose nearly 6% in the past year, as income inequality and the outsourcing of good-paying American jobs have increased. According to the new AFL-CIO Executive Paywatch, the average CEO of an S&P 500 Index company made $13.94 million in 2017—361 times more money than the average U.S. rank-and-file worker. The Executive Paywatch website, the most comprehensive searchable online database tracking CEO pay, showed that in 2017, the average production and nonsupervisory worker earned about $38,613 per year. When adjusted for inflation, the average wage has remained stagnant for more than 50 years.

“This year’s report provides further proof that the greed of corporate CEOs is driving America’s income inequality crisis,” said AFL-CIO Secretary-Treasurer Liz Shuler. “Too many working people are struggling to get by, to afford the basics, to save for college, to retire with dignity while CEOs are paying themselves more and more. Our economy works best when consumers have money to spend. That means raising wages for workers and reining in out of control executive pay.”

Here are eight key facts you need to know about from this year’s Executive Paywatch report:

  1. America is the richest country in the world at its richest point in history. And once again, CEOs got richer this year. CEO pay for major U.S. companies was up more than 6% in 2017 as income inequality and outsourcing of good-paying American jobs increases.

  2. Total compensation for CEOs of S&P 500 Index companies increased in 2017 to $13.94 million from $13.1 million in 2016.

  3. The CEO-to-worker pay ratio grew from 347 to 1 in 2016 to 361 to 1 in 2017.

  4. For the first time this year, companies must disclose the ratio of their own CEO’s pay to the pay of the company’s median employee. This change was fought for by the AFL-CIO and its allies to ensure investors have the transparency they deserve.

  5. In 2017, the CEO-to-worker pay ratio was 361. In 2016, the ratio was 347. In 1990, it was 107. And in 1980, it was 42. This pay gap reflects widening income inequality in the country.

  6. Mondel?z is one of the most egregious examples of companies that are contributing to inequality. The company, which makes Nabisco products including Oreos, Chips Ahoy and Ritz Crackers, is leading the race to the bottom by offshoring jobs. New CEO Dirk Van de Put made more than $42.4 million in total compensation in 2017—more than 989 times the company’s median employee pay. Mondel?z’s former CEO Irene Rosenfeld also received $17.3 million in 2017, 403 times its median employee’s pay.

  7. So far for 2017, the highest-paid CEO in the AFL-CIO’s Executive Paywatch database is E. Hunter Harrison, CEO of CSX Corporation. He received more than $151 million in total compensation. In contrast, the lowest-paid S&P 500 company CEO was Warren Buffett who received $100,000 in total pay in 2017.

  8. The toy-maker Mattel had the highest pay ratio of any S&P 500 company. Mattel’s median employee is a manufacturing worker in Malaysia who made $6,271, resulting in a CEO-to-employee pay ratio of 4,987 to 1. Buffett’s company Berkshire Hathaway Inc. had the lowest pay ratio of all S&P 500 companies, just 2 to 1.

Our economy works best when consumers have money to spend. That means raising wages for workers and reining in out of control executive pay. Executive Paywatch is a tool that helps the U.S. pursue those goals.

Learn more at Executive Paywatch.

This blog was originally published at AFL-CIO on May 21, 2018. Reprinted with permission. 

About the Author: Kenneth Quinnell is a long-time blogger, campaign staffer and political activist. Before joining the AFL-CIO in 2012, he worked as labor reporter for the blog Crooks and Liars.

Republican takes aim at your right to know how high CEO pay is compared to typical workers

Friday, February 10th, 2017

As of January 1, companies will have to make public how much their CEOs make compared to what their average workers make. They don’t like that rule so much — enacted thanks to Dodd-Frank — and they might be able to get it killed.

On Monday, the acting chairman of the Securities and Exchange Commission (SEC), Michael Piwowar, called for reconsideration of the rule that went into effect on January 1, hinting that it could be reversed.

“[I]t is my understanding that some issuers have begun to encounter unanticipated compliance difficulties that may hinder them in meeting the reporting deadline,” he wrote. So he called for a new period of public input over the next 45 days, after which he will direct the SEC staff to “reconsider the implementation of the rule based on any comments submitted and to determine as promptly as possible whether additional guidance or relief may be appropriate.”

Translation: Companies don’t want people to know how much more their CEOs make than the median worker, and rather than admitting that they don’t want people to know that, they’re calling it “unanticipated compliance difficulties.”

This rule isn’t something Republicans can just kill off immediately, but that’s clearly the direction they’re headed. Businesses have a lot to hide, after all. Like how CEOs make 276 times more than typical workers, while the corporate world lobbies against policies that benefit workers, like paid sick leave, paid family leave, or increased minimum wage.

Meanwhile, Donald Trump is stocking his cabinet with former CEOs.

This article originally appeared at DailyKOS.com on January 28, 2017. Reprinted with permission.

Laura Clawson is a Daily Kos contributing editor since December 2006. Labor editor since 2011.

Five Causes of Wage Stagnation in the United States

Tuesday, January 13th, 2015

Kenneth QuinnellA series of recent reports from the Economic Policy Institute (EPI) make clear the case for why wages have stagnated in the United States.

Before digging into the details, it’s important to note a few things. First off, wage stagnation is not a small problem, it’s something that affects 90% of all workers. As one of the authors of these reports, Lawrence Mishel, says: “Since the late 1970s, wages for the bottom 70 percent of earners have been essentially stagnant, and between 2009 and 2013, real wages fell for the entire bottom 90 percent of the wage distribution.” Second, while the Great Recession made things worse, the problem goes back 35 years. And third, and most importantly, wage stagnation is a matter of choice, not necessity.

Here are five real reasons why wages have stagnated in the United States.

1.  The abandonment of full employment: For a variety of reasons, policy makers largely have focused on keeping inflation rates low, even if that meant high unemployment. A large pool of unemployed workers means companies are under less pressure to offer good wages or benefits in order to attract workers. Since the Great Recession, austerity measures at all levels of government have made this problem worse. EPI says excessive unemployment “has been a key cause of wage inequality, since research shows that high rates of unemployment dampen wage growth more for workers at the bottom of the wage ladder than at the middle, and more at the middle than at the top.”

2. Declining union density: As extreme pro-business interests have pushed policies that lower union membership, the wages of low- and middle-wage workers have stagnated. Higher unionization leads to higher wages, and the decrease in unionization has led to the opposite effect. The decline in the density of workers covered by collective bargaining agreements not only has weakened the ability of unionized workers to fight for their own wages and benefits, but also their ability to set higher standards for nonunion workers. EPI notes: “The decline of unions can explain about a third of the entire growth of wage inequality among men and around a fifth of the growth among women from 1973 to 2007.” Read much more about the connection between the decline of collective bargaining and wage stagnation.

3. Changes in labor market policies and business practices: EPI argues: “A range of changes in what we call labor market policies and business practices have weakened wage growth in recent decades.” Among the numerous changes they describe include: the lowering of the inflation-adjusted value of the federal minimum wage, the decrease in overtime eligibility for workers, increasing wage theft (particularly affecting immigrant workers), misclassification of workers as independent contractors, and declining budgets and staff for government agencies that enforce labor standards.

4. Deregulation of the finance industry and the unleashing of CEOs: The deregulation of finance has contributed to lower wages in several ways, including the shifting of compensation toward the upper end of the spectrum, the use of the financial sector’s political power to favor low inflation over low unemployment as a policy goal, and the deregulation of international capital flows, which has kept policy makers from addressing imbalances, such as the U.S. trade deficit. EPI adds: “Falling top tax rates, preferential tax treatment of stock options and bonuses, failures in corporate governance, and the deregulation of finance all combined to increase the incentive and the ability of well-placed economic actors to claim larger incomes over the past generation.”

5. Globalization policies: Decades spent in pursuit of policies that prioritized corporate interests over worker interests led to lowering of wages for middle- and lower-income workers in the United States. EPI concludes: “International trade has been a clear factor suppressing wages in the middle of the wage structure while providing a mild boost to the top, particularly since 1995.”

This blog originally appeared on aflcio.org on January 15, 2015. Reprinted with permission.

Author’s name is Kenneth Quinnell.  He is a long-time blogger, campaign staffer and political activist.  Before joining the AFL-CIO in 2012, he worked as labor reporter for the blog Crooks and Liars.  Previous experience includes Communications Director for the Darcy Burner for Congress Campaign and New Media Director for the Kendrick Meek for Senate Campaign, founding and serving as the primary author for the influential state blog Florida Progressive Coalition and more than 10 years as a college instructor teaching political science and American History.  His writings have also appeared on Daily Kos, Alternet, the Guardian Online, Media Matters for America, Think Progress, Campaign for America’s Future and elsewhere.

SEC Issues Rule on CEO-to-Worker Pay Ratio Disclosures

Thursday, September 26th, 2013

secunda-paulLast week, the Securities and Exchange Commission (SEC) released a rule requiring companies to disclose the CEO-to-worker pay ratio.  Despite objections by many corporations, the rule covers all employees including seasonal, international, and part-time workers.  The SEC provides companies the option of using the entire workforce or a representative sample in the calculation.

There will now be a 60-day comment period.  The SEC voted for the rule 3-2, with the two Republican Commissioners who voted against the proposal calling it a special interest provision and proclaiming “shame on the SEC.”

Proponents of the rule argue that it will give shareholders and other stakeholders a clear line of sight into human capital management and worker pay.  For instance, CalPERS, the California State Pension Plan, has issued a release, welcoming the rule as a valuable tool which will “help shareholders to keep management accountable” and “shed light on an element of pay which is currently shrouded from view.”  John Liu, the NYC Comptroller, stated that the rule would allow “shareowners to make informed decisions about compensation and may rein in excessive corporate practices.”

Numerous news outlets have covered this story, including the Wall Street JournalBloomberg, and the New York Times.  Things are only going to get more interesting from here on out.

From my point of view, and quoting Justice Brandeis, “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”

This article was originally printed on Workplace Prog Blog on September 23, 2013.  Reprinted with permission.

About the Author: Paul Secunda is an associate professor of  law at Marquette University Law School.  Professor Secunda is the author of nearly three dozen books, treatises, articles, and shorter writings. He co-authored the treatise Understanding Employment Law and the case book Global Issues in Employee Benefits Law.  Professor Secunda is a frequent commentator on labor and employment law issues in the national media.  He co-edits with Rick Bales and Jeffrey Hirsch the Workplace Prof Blog, recently named one of the top law professor blogs in the country.

It’s Lucrative at the Top

Monday, July 11th, 2011
Image: Bob Rosner

According to a recent study commissioned by the New York Times, CEO pay is up 23%.

Okay so the suites are doing well. Damn well.

How are the rest of us faring? Non executive pay increased .5%. Yes, less than inflation. While CEOs race onward and upward, our pay shrinks.

I heard an interesting segment on the radio this weekend, the pay of the average worker hasn’t increased in 40 years.

Which leads me to a simple question. Is greed good?

Yes, that sounds familiar, it was the popular refrain from the movie Wall Street in the 1990s. Gordon Gekko, that Oliver Stone is a subtle guy isn’t he, made that a catch phrase for an entire generation.

We have a major problem in terms of unemployment in our country. At the same time we have CEO’s lavishing on themselves such extreme pay packages that they alone could cut the country’s unemployment rate in half just by making their pay packages more reasonable.

Marie Antoinette when told that her people were starving famously said “Let them eat cake.” It gave some small indication of how out of touch she’d become.

But if we were to try to come up with a similar phrase for today’s gilded class of CEOs I feel like the phrase would have to be let them eat dirt.

Okay, that was harsh, but I’m still flummoxed by the fact that no one has gone to jail after the financial shenanigans of the banks that caused our most recent recession.

But we’ve got to stop coddling these executives. Its not like Hollywood stars who had huge paychecks, CEOs only profit by taking the money that we’ve earned through our hard work.

Yes, I’m frustrated. You could say that I’m mad as hell.

I’m tired of seeing people suffering. We need to hold executives accountable. Now.

About the Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. Check the revised edition of his Wall Street Journal best seller, “The Boss’s Survival Guide.” If you have a question for Bob, contact him via bob@workplace911.com.

Too Much Money Can Make the Boss Mean

Tuesday, January 25th, 2011

Image: James ParksHere’s another reason to do away with runaway CEO pay.  A study shows bloated CEO pay can make the boss mean.

The study examined the corporate behavior of 261 companies and found a close correlation between pay inequality and poor treatment of workers. In companies where CEOs made much more than their average workers, the companies were more likely to underfund pensions or cut corners on health and safety. Often, according to the study, the bosses engaged in a cost-benefit analysis, calculating that a fine would be a cost of doing business, compared with the profits they could make.

“You end up basically thinking of those at the bottom as numbers,’’ Sreedhari Desai, a Harvard research fellow who co-authored the study, told The Boston Globe columnist Joanna Weiss. “You feel somehow that they aren’t even worthy of the normal people that you’d meet. They’re disposable.’’

Writing about the study last summer for the Campaign for America’s Future, Sam Pizzigati sums it up this way:

The…data and the lab games, in the end, would both generate findings that point to the same conclusion. Wide pay gaps between executives and workers…enhance the sense of power executives feel and cause them to “objectify lower level employees.”

Or, to put the matter more plainly, “executives with higher income treat employees more meanly.”

Click here to read the study, “When Executives Rake in Millions: Meanness in Organizations.”

This article was originally published on AFL-CIO Now Blog.

About the Author: James Parks had his first encounter with unions at Gannett’s newspaper in Cincinnati when his colleagues in the newsroom tried to organize a unit of The Newspaper Guild. He is a journalist by trade, and worked for newspapers in five different states before joining the AFL-CIO staff in 1990. His proudest career moment, though, was when he served, along with other union members and staff, as an official observer for South Africa’s first multiracial elections.

Time For More Executive Hard Time?

Monday, November 1st, 2010

Image: Bob RosnerAngelo Mozilo, co-founder of Countrywide Financial, a.k.a. No-Income-is-too-Small-For-Us-to-Give-You-a-Mortgage, agreed to pay $67.5 million dollars to avoid a federal civil fraud suit about to go to trial.

I know what you’re thinking, let’s hold a bake sale for Angelo. He clearly must be hurting. But chances are slim that you’ll see him at any soup kitchen, because he pocketed many times that amount of money in salary and perks before he drove his company into the ditch.

But it does raise an interesting question: Why isn’t the government going after Lehman, WAMU and other high flying executives from corporations that went into the toilet over the past few years? Especially when top executives pocketed so much cash from the deception and fake profits?

We’re not talking Salem Witch Trials. I’m simply suggesting that we start skimming off some of the cash that these executives skimmed off of all of us. I know this sounds drastic, but the top guys from Enron actually went to jail for their misdeeds.

Why are we suddenly so timid when it comes to the billions that these fat cats are sitting on?

This is especially confusing to me because of the rush by State Attorney’s General to sue over the recently enacted health care reform bill. Why aren’t our public officials going after the banking swindlers for the huge stockpiles of money that they extracted from all of us?

I would have thought that Attorneys General would at least understand the Willie Sutton rule. Mr. Sutton, the famous bank robber was asked why he robbed banks. He replied, “Because that is where the money is.”

Isn’t it time that we went where the money went? Anything short of a major offensive here sends a simple message to all that crime pays. That would be the worst message to come out of the pain of the past few years.

About The Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. Check the revised edition of his Wall Street Journal best seller, “The Boss’s Survival Guide.” If you have a question for Bob, contact him via bob@workplace911.com.

Outsourced: No Laughing Matter

Wednesday, September 29th, 2010

Sarita GuptaLast week, NBC launched a new show that tries to find comedy in the all-too-real conditions of outsourcing. While the first episode was witty—making light of age-old cultural clashes and stereotypes, there is nothing funny about the reality of outsourcing and the impact it has both on the American worker and their counterparts around the world.

For decades, big companies like the one portrayed in “Outsourced” have been engaged in a global race to the bottom, constantly seeking to maximize their profits by cutting wages, benefits and working conditions.  Corporations have learned to avoid local worker bargaining power by organizing themselves globally and exerting a downward pressure on wages along the supply chain that brings goods from manufacturing to consumers.

Meanwhile, there are currently 15 million unemployed workers in the United States. And the situation is not much better overseas, where many scrape by on substandard conditions and wages that have been outlawed for centuries in the United States.

Going back to the first episode, the angry, American workers who have just been laid off are portrayed only by a stack of bricks thrown through the boss’s window. This is then juxtaposed against the hapless, comedic and cheaper Indian workers who have taken over the call center.

But the bosses are all smiles because by pitting laid-off U.S. workers against workers overseas (and immigrant workers forced to look for work in the United States), companies like the novelty business portrayed in the show get rich while workers around the world, our nation included, struggle to feed their families, access health care and stay in their homes.

Still laughing?

It is hard to find humor in the need for good jobs, fair wages and humane living and working conditions.

So, as not to leave NBC hanging (we at Jobs with Justice are solution oriented, after all), how about another idea for a new NBC sitcom called “Good Jobs, Fair Pay.”  In this innovative new show, U.S. workers would have full and fair employment—all paid for courtesy of a small sales tax on Wall Street, otherwise known as a financial speculation tax.

Workers in other parts of the globe would join U.S. workers in having a standard minimum wage with equal purchasing power.  Multinational corporations would have no incentive of moving from country to country, forcing workers into increasingly lower wages and conditions. And for comedic relief, CEOs would actually pay taxes like the rest of us and share their annual bonus with the workers in the plant.

And the Emmy goes to?

This article was originally posted on AFL-CIO Now Blog.

About The Author: Sarita Gupta is executive director of Jobs With Justice, a national network of more than 40 local coalitions of labor, community, student, and faith organizations, working together to built a broader global movement for economic and social justice.

What Do You Believe About Work That Is Wrong?

Monday, October 12th, 2009

After fifteen years of writing Workplace911 and its predecessor Working Wounded I’ve concluded that there are a lot of myths about work. I thought it would be fun to tackle some of the bigger ones in this week’s blog. Check out my list below and send me some of your favorites.

It’s impossible to be overpaid when someone else signs the paycheck. Let me offer a short translation of this rule—as long as someone is willing to pay you a ridiculous amount of money to work for them, then you aren’t overpaid because they have established a market for your services. I disagree. Corporate salaries are absurd. Cost cutting, layoffs and a myriad of other organizational sacrifices should float more than just the boats of the CEO and a few top executives. I’m no Marxist, CEOs do deserve a big paycheck when they are successful. But this escalator only seems able to go up.

Greed is good. The biggest problem here is that when Oliver Stone came up with this mantra for his Gordon Gekko character in the movie Wall Street it was meant as parody. Yet I hear some variation of it whenever I talk to traders, salespeople, etc. Henry Ford, hardly a commie himself, once said that only a fool holds out for the last dollar. I think wretched excess is a terrible way to run a company.

The bigger the jerk, the better the boss. Probably my favorite quote on management came from President (and General) Dwight Eisenhower. He once said, “Hitting people over the head isn’t leadership, it’s assault.” Sure jerks do get your attention and possibly results over the short term. But most employees will flee at the first chance they get. There are just too many sane bosses out there to continue to slave away for a jerk.

You’ve got to be first to market. Microsoft seems to me to be the only company that consistently puts second-rate products on the market and lives to tell the tale. The rest of us have to pick our spots and often the first to market position can’t justify launching a crappy product. So it often pays to wait.

Innovation is the middle name of American corporations. Despite rising productivity, I believe that corporations in the U.S. are running on fumes. Don’t believe me? Listen to most people talk about the management of their companies. It’s not a pretty sight. I see far more innovation right now coming from abroad and from the not-for-profit sector and I think it’s time that corporations started walking their talk.

Corporations are drowning in regulation. Tyco, Enron, WorldCom, etc. left in their wake Sarbanes Oxley and a host of other regulations. Undoubtedly Lehman, Goldman Sacks, etc. will leave their mark too. There is a lot of talk now about how corporations are being held back by senseless regulations. I hate filling out government forms as much as the next guy, but these laws came into place because of abuse by corporations. And in order to maintain the trust of the average investor these regulations need to remain in effect, no matter how much whining you hear from big business.

The bottom line isn’t just the bottom line. If I’ve learned one thing as an observer of business and the founder of four corporations, it’s that there are many bottom lines for a business. In addition to economic there are also social and environmental considerations. The financials really only are a part of the picture. The sooner that corporations take a broader view of the bottom line, the sooner they’ll begin to fully reach their potential.

About the Author: Bob Rosner is a best-selling author and award-winning journalist. His web site, workplace911.com, contains a comprehensive archive of strategies for surviving today’s workplace. He is a fan of Workplace Fairness and can be reached via bob@workplace911.com.

Rule of Law Makes a Comeback

Monday, August 3rd, 2009

Remember when President Reagan was shot and Al Haig famously burst into the White House and said that he was in charge? Okay, it might not have been as over the top as Howard Dean’s scream, but Haig did become the poster boy for an “Era of Executive Testosterone Overload.” An era that seems to have come to an end. Finally.

Executives-in-charge, no that doesn’t sum it up adequately. Executives as rock stars is more like it. For much of the last decade the line between CEO and celebrity blurred. Some weeks there seemed to be more CEOs on magazine covers than supermodels. And gossip columns were full of tidbits on their lavish lifestyles.

In the future if they try to carbon date the exact moment when the “Era of the Executive” ended, remarkably it didn’t involve a “perp walk,” with a shamed executive being led away in handcuffs.

It ended with Hamdan vs. Rumsfeld. In this Supreme Court case, the justices held that the President of the United States is not beyond the law and must follow certain legal principals and the Geneva Convention—even in wartime.

This case is definitely the icing for the end of the unquestioned executive, but the cake has been rising for a long time. Enron, WorldCom, Tyco—executives learned the hard way—via hard time—that Leona Helmsly was wrong. It’s not just the little people who have to pay taxes. The rules are for all of us.

Consequences. What a concept.

Like it or not, we all need to get ready for more and more restrictions and rules surrounding executive behavior. Sarbanes-Oxley (SOX for short) is just the start. The reason that more regulations and restrictions will be right around the corner? Because people are tired. Tired of guys (yes, mostly guys) who earn millions of dollars in salary, with a boat load of options (backdated of course) and then still manage to justify having employees not covered with health care or on food stamps. Hollywood long ago learned that corporate executives are the perfect movie villain, can politicians be far behind?

Don’t get me wrong, I hate the idea of acres of staff having to be hired to fill out forms for the government. The problem is that SOX is necessary because executives couldn’t police themselves. Just like the Labor Union movement in the first part of last century, once again executives moan about a logical response to their greed run amok. What is always overlooked by executives and the often toothless business press is the wretched excess that preceded Unions, SOX, etc.

Sure there are good guys and gals out there in the executive suites. Warren Buffett immediately leaps to mind. For him to give a gift approximately 5 times the size of Carnegie and Ford is indeed worthy of sainthood. For that alone I promise to take back two-thirds of the Nebraska jokes I’ve made through the years. But it’s not good enough to give back some of the gain, the public is demanding that executives do the right thing from the very start. And I don’t think that’s too much to ask. Even from the Oil Industry.

Enjoy your slice of humble pie, Mr. Corporate Executive. You earned it.

About the Author: Bob Rosner is a best-selling author and award-winning journalist. For free job and work advice, check out the award-winning workplace911.com. If you have a question for Bob, contact him via bob@workplace911.com.

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