On Thursday, as fast food workers across the nation walked off their jobs to protest their low pay, a Kansas City Star report posed the question: Do American CEOs earn their pay? A collective, reflexive “no” is more accurate than not.
We’re not talking about Warren Buffett or Jeff Bezos-type CEOs who run their own companies. We’re talking bailed-out companies, failing companies or those engaged in fraud, whose CEOs earn(ed) amounts that in comparison, make requests to pay fast-food workers $15 an hour seem reasonable.
The Institute for Policy Studies, which has been researching CEO pay for 20 years, found that nearly 40 percent of the men who appeared on lists ranking America’s 25 highest-paid corporate leaders between 1993 and 2012 have led companies bailed out by U.S. taxpayers, been fired for poor performance, or led companies charged with fraud-related activities, the Kansas City Star reported.
The institute report cites Hank McKinnell, for example, who received $198 million in pay and retirement benefits from Pfizer after a five-year tenure during which the pharmaceutical company’s stock price plunged 40 percent.
“America’s most highly paid executives over the past two decades have added remarkably little value to anything except their own personal portfolios,” the institute’s report concludes.
The institute studied 241 CEOs, each of whom had ranked for at least one year among the 25 highest-paid corporate leaders. Of those, 22 percent led companies that died or got taxpayer bailouts after the 2008 financial crash, 8 percent lost their jobs involuntarily and 8 percent led companies that ended up paying sizable fraud-related fines or settlements.
Meanwhile, the pay gap between large-company CEOs and average American employees just keeps growing — from 195 to 1 in 1993 to 354 to 1 in 2012 — according to data published by BusinessWeek and the U.S. Bureau of Labor Statistics. (The United States is the 42nd most unequal country in the world, according to the CIA’s World Fact Book, which ranks countries in terms of how “equally” wealth is distributed. The U.S. ranks behind the European Union and the United Kingdom. It’s also behind Cameroon, the Ivory Coast, Egypt, Tunisia and Yemen, and just ahead of Uganda and Jamaica.)
With such disparity between the top boss and the worker bees at all levels, how can it be said any CEO “earns” his or her “pay”? Especially when the numbers are so mind-boggling: The institute report found that executives who were fired left with an average payment of $47.7 million.
Such economic insanity serves only to foster the ugly, continually growing divide between the “fortunate few” and vast majority who labor for them.