This video from the USA is called The Rich Get Richer – New Facts.
By David Brown in the USA:
US CEO pay continues to climb
28 May 2012
Two recent studies on executive compensation show a marked increase in the pay of America’s top business figures.
A report by the Hay Group, a consulting firm, picked up by the Wall Street Journal, showed that CEO compensation in the US increased 2.8 percent last year to a median of $10.3 million. Total compensation for the 301 CEOs examined amounted to $3.9 billion and ranged from “only” $842,400 for Walter Robb of Whole Foods to $376.2 million for Tim Cook of Apple.
The other study, by the Associated Press (AP), came up with the smaller median of $9.6 million by excluding CEOs who had been employed for less than two years, most notably Cook, hired in the wake of Steve Jobs’ death.
In addition to vast quantities of stock and cash, many top executives are receiving perks worth millions. Louis D’Ambrosio, the CEO of Sears Holdings Corp., for example, received a jet allowance of $793,224 last year, so he could make the commute from his home in Philadelphia to Sears headquarters near Chicago. Les Moonves, CEO of CBS, received $69 million in compensation, including $500,000 to build a room for screening television shows and movies at his home, dubbed a “dedicated work area.”
The unbridgeable gulf between CEOs and working class Americans is readily apparent when the executives’ pay and perks are compared to the national median income of $39,312, or the minimum wage income of $15,080.
The highest paid executive in the AP survey is David Simon, who made $137 million in 2011, equivalent to 9,084 years for a minimum-wage worker and 3,484 years for someone earning the median income. The AP report’s median CEO income for one year amounts to 636 years working at the minimum wage and 244 years, or about five lifetimes of labor, for the average worker.
Both the AP and Journal attempt to sidestep the implications of this vast inequality and present the trends in CEO pay in a positive light. Unlike 2010, in 2011 there was actually more of a correlation between CEO pay and company stock performance, and both reports credit the Dodd-Frank bill with restoring executive accountability. But what does this “accountability” consist of?
One of the “constraints” that the Dodd-Frank Bill puts on publicly traded companies is that they must allow their shareholders an advisory vote on CEO pay. The vote is non-binding, but, according to the AP, “shame has proved to be a powerful motivator.”
How little shame there is within the boards of directors can readily be seen by the shining example of corporate conscience represented by Hewlett-Packard. In 2010 shareholders voted against the compensation package for former CEO Mark Hurd, who resigned amid allegations of sexual harassment. Now, the current CEO, and former California gubernatorial candidate, Meg Whitman, is being paid only $1 a year in salary, but she receives given stock options potentially worth $16 million if HP’s stock price goes up.
This may have made Whitman more accountable to the shareholders, but it clearly has not made her accountable to her employees or society at large. Earlier this month Hewlett-Packard announced that it would eliminate 27,000 jobs, its largest round of layoffs ever, in order to “increase efficiency.” HP made over $7 billion in profits last year.