The Wall Street Journal reported last week that "Executives and other highly compensated employees now receive more than one-third of all pay in the US... Highly paid employees received nearly $2.1 trillion of the $6.4 trillion in total US pay in 2007, the latest figures available."
One of the questions often asked when the subject of CEO pay comes up is, "What could a person such as William McGuire or Lee Raymond (the former CEOs of UnitedHealth and ExxonMobil, respectively) possibly do to justify a $1.7 billion paycheck or a $400 million retirement bonus?"
It's an interesting question. If there is a "free market" of labor for CEOs, then you'd think there would be a lot of competition for the jobs. And a lot of people competing for the positions would drive down the pay. All UnitedHealth's stockholders would have to do to avoid paying more than $1 billion to McGuire is find somebody to do the same CEO job for half a billion. And all they'd have to do to save even more is find somebody to do the job for a mere $100 million. Or maybe even somebody who'd work the necessary sixty-hour weeks for only $1 million.
So why is executive pay so high?
I've examined this with both my psychotherapist hat on and my amateur economist hat on, and only one rational answer presents itself: CEOs in America make as much money as they do because there really is a shortage of people with their skill set. And it's such a serious shortage that some companies have to pay as much as $1 million a day to have somebody successfully do the job.
But what part of being a CEO could be so difficult-so impossible for mere mortals-that it would mean that there are only a few hundred individuals in the United States capable of performing it?
In my humble opinion, it's the sociopath part.
CEOs of community-based businesses are typically responsive to their communities and decent people. But the CEOs of most of the world's largest corporations daily make decisions that destroy the lives of many other human beings.
Only about 1 to 3 percent of us are sociopaths-people who don't have normal human feelings and can easily go to sleep at night after having done horrific things. And of that 1 percent of sociopaths, there's probably only a fraction of a percent with a college education. And of that tiny fraction, there's an even tinier fraction that understands how business works, particularly within any specific industry.
Thus there is such a shortage of people who can run modern monopolistic, destructive corporations that stockholders have to pay millions to get them to work. And being sociopaths, they gladly take the money without any thought to its social consequences.
Today's modern transnational corporate CEOs-who live in a private-jet-and-limousine world entirely apart from the rest of us-are remnants from the times of kings, queens, and lords. They reflect the dysfunctional cultural (and Calvinist/Darwinian) belief that wealth is proof of goodness, and that that goodness then justifies taking more of the wealth.
Democracy in the workplace is known as a union. The most democratic workplaces are the least exploitative, because labor has a power to balance capital and management. And looking around the world, we can clearly see that those cultures that most embrace the largest number of their people in an egalitarian and democratic way (in and out of the workplace) are the ones that have the highest quality of life. Those that are the most despotic, from the workplace to the government, are those with the poorest quality of life.
Over time, balance and democratic oversight will always produce the best results. An "unregulated" marketplace is like an "unregulated" football game - chaos. And chaos is a state perfectly exploited by sociopaths, be they serial killers, warlords, or CEOs.
By changing the rules of the game of business so that sociopathic business behavior is no longer rewarded (and, indeed, is punished - as Teddy Roosevelt famously did as the "trustbuster" and FDR did when he threatened to send "war profiteers" to jail), we can create a less dysfunctional and more egalitarian society. And that's an important first step back from the thresholds to environmental and economic disaster we're now facing.
This article is largely excerpted from Thom Hartmann's new book "Threshold: The Crisis of Western Culture."
interesting article Dann...
Consider, now that Obama owns Government Motors, Financial institutions and soon (hopefully not) the Healthcare Cash Cow industries and he will be just like a CEO... Only not as a Democracy...
Consider also, that Hollywood and company are shaking in their boots because of the tax burdens being placed on their high incomes and of course the men behind the cameras who promote Hollywood... No more castle buying for Nicolas Cage! lol.
It is also being said that CEO's are quitting their jobs because of what Obama is doing to the very corporations that create jobs... Soon their won't be any Free World CEO's or if Obama has it his way, anymore Free World Doctor's or Surgeons... I wouldn't want to be a doctor under Obama's health plans... No way. Why spend years and money to become a doctor only to have your higher education and services to be dictated by the Government, as to what a doc will be able to make as a result of his services? No one in their right mind! That is the beauty of our Country now. If you work hard and seek a higher education, you reap what you sow... What Obama wants is to reward those who don't have educations and skills by giving them for free what someone else has worked for. That's just plain ignorant.
I say to those who are in favor of Obama's Healthcare fiasco, to let Obama treat you the next time you are sick...
I won't have anything to do with Obama's healthcare system and if he tries to force me against my will, I will sue. It is the only way to stop his maddness and that is to resist against him.
Here is a really heavy article to read... It may be too much for some to understand...
America's Best- And Worst-Paying Jobs
Paul Maidment, 06.04.07, 6:00 PM ET
When we first looked at America's best- and worst-paying jobs a year back, we asked the question, "Why do financially pushy parents want their children to marry doctors?" Our answer then: Because, as Willie Sutton said of banks, that is where the money is. Still is.
The medical profession continues to dominate the top end of our list of the 25 best- and worst-paying jobs in America. Anesthesiologists have flipped places with surgeons to take the top spot, but the next eight places are firmly in the healing hands of various sorts of specialist practitioners.
Chief executives, at No. 10, and airline pilots, at No. 14, are the only two non-medical occupations in the top 15. Even lawyers don't make it. They're No. 16.
At the other end of the scale are jobs in restaurants, hotels and leisure businesses. The lowest paid of all? People who cook, prepare and serve in fast-food joints, followed by dishwashers, busboys and the folk who show you to your seat in coffee-shops and the like.
According to government data, the mean annual salary for America's 29,890 anesthesiologists is $184,340; for its 2.5 million fast-food preparers and servers, $15,230. The mean annual pay for all jobs is $39,190. In all, the lowest-paying 25 occupations employ 15.6 million people in America; the best-paying jobs employ 3 million.
Our numbers are drawn from the U.S. government's National, State and Metropolitan Area Occupational Employment and Wage Estimates. The latest ones available use 2006 data and are based on a national survey of employers of every size and in all industry sectors. They examine 800 occupations.
The survey covers full- and part-time workers who are paid a wage or salary. It does not include the self-employed, owners and partners in unincorporated firms, household workers and unpaid family workers.
It asks about basic pay, incentive bonuses and commissions, but not overtime pay or non-wage compensation, such as stock options.
That helps explain why mean annual wages appear lower than one might have expected at the top end and higher at the bottom, where undocumented workers are unlikely to be counted accurately.
Remember, too, that these are mean salaries and that they give no indication of how distant the outliers at either end of the salary scale for any occupation might be. There are plenty of lawyers that earn a lot more than the average $113,660, and surely there are dishwashers who earn a lot less than $16,190.
The total compensation of the best-paid (salary and bonus excluding stock options) chief executive on our most recent CEO Compensation list, Bob R. Simpson of XTO Energy (nyse: XTO - news- people), was $32.2 million last year, 223 times as much as the average chief executive. And then there was Apple's (nasdaq: AAPL - news- people)Steven P. Jobs, who earned a nominal $1 salary--but, thanks to stock options, earned $646.6 million last year.
Earnings can vary widely for the same job in different industries and in different places. Laundry and dry-cleaning workers employed by the federal government, for example, earn almost two-thirds more than the average for the occupation. Ditto cafeteria servers employed by state governments.
In certain occupations, the discrepancy occurs because they are niche jobs in generally high-paying industries. The handful of souls employed to cook for corporate dining rooms, who make $33,620 on average, earn 50% more than the 647,070 cooks working in full-service restaurants.
Where you live can also have a huge impact on what you make. The states and metropolitan areas in the high-wage Northeast pay top dollar in many occupations, as do employers in similarly pricey Silicon Valley.
Parking lot attendants and fast-food preparers and servers in the San Francisco/San Mateo/Redwood City metropolitan area earned, at $24,620 a year and $21,200 a year respectively, one-third more than the national average. Laundry and dry cleaning workers in Framingham, Mass., did even better relatively, earning, at $28,400, 50% more than the national average.
Remote states, particularly Alaska and Hawaii, also pay well for needed skills. On average, Hawaii pays best for busboys, bartenders and lifeguards; Alaska for short-order cooks, personal and home care aides and parking lot attendants. Oregon pays above average for podiatrists; Maine pays more for dentists.
There was little change in the occupations that make up the 25 best- and worst-paid lists. Astronomers fell off the bottom of the best-paying jobs list, to be replaced by financial managers. Service station attendants replaced some sorts of food preparers on the list of worst-paying jobs.
On average, earnings went up--in the best-paid group by 4.2% and in the worst-paid by 3.2%. Yes, the doctors get richer.
Of course Obama already has the CEO's under his thumb - so the next logical "socialistic thing for him to do is to grab the health care industry. Once he does that, he will be sitting on jump street to do what ever he wants... Car, Banks, healthcare... The country? Just think, if he keeps going, he may take up the notion to stay where he's at whether we have an election or not... Maybe he wants to be the Supreme Leader of the United Socialists States of Amerika? I bet he thinks that sounds just great!
Here is the real CEO status under Obama Dann, just in case you missed it...Obama talks tough on CEO payThe president outlined new rules limiting executive pay for firms receiving government aid.
NEW YORK (Fortune) -- President Obama is having his say on soaring executive pay.
New rules unveiled Wednesday morning will cap annual cash compensation for executives at firms receiving future government aid at $500,000.
The guidelines prohibit payments above the $500,000 threshold in anything but company shares that must be held until the government's investment has been repaid.
The rules will apply foremost to companies that receive so-called exceptional aid from the government in the future.
Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500), General Motors (GM, Fortune 500) and AIG (AIG, Fortune 500) are among the firms that have received exceptional aid in recent months, though the new rules won't apply retroactively.
Current rules bar such companies from taking a tax deduction for compensation above half a million dollars, but don't restrict how much executives can receive in salary and bonuses. In addition, the new rules will increase the bans on so-called golden parachute severance packages available for executives.
But the new rules will also cover the supposedly healthy firms that have received money under the Treasury's Troubled Asset Relief Program capital purchase plan, unless the firms take action to be exempted.
The pay rules come amid a fury in Washington over the huge bonuses handed out by Wall Street firms that were on life support before the government stepped in last fall.
Obama and Treasury Secretary Tim Geithner said at a White House press conference that the moves are necessary to "restore trust" in the financial system. Obama acknowledged that the caps are just "a fraction of the salaries that have been reported recently."
Executives on Wall Street made mind-bending sums in the boom years earlier this decade. Goldman Sachs (GS, Fortune 500), which received $10 billion from the government in October, paid chief Lloyd Blankfein $68 million in cash and stock in 2007. JPMorgan Chase (JPM, Fortune 500), recipient of $25 billion, paid CEO Jamie Dimon $30 million that year. Both men turned down bonuses last year.
The tough terms on companies receiving future injections of so-called exceptional aid could force some execs to take some steep pay cuts.
For example, Bank of America chief Ken Lewis made $24.8 million in 2007, including $1.5 million in salary. Each of BofA's top seven executives made at least $700,000 in salary that year, according to federal filings.
Lewis declined his bonus last year, and according to news reports in recent weeks, the bank is planning to pay some 2008 bonuses out over three years. BofA was not immediately available for comment.
But BofA is certainly not the only bank facing criticism of excessive salaries and bonuses. Compensation survey firm Equilar found that TARP recipients with at least $10 billion in assets paid their CEOs $844,229 in salary, on average, and $2.5 million in cash bonuses for 2007, the latest period for which data are available. Total CEO pay in the survey group averaged $11.1 million, the firm said.
And the New York state comptroller's office said last week that New York City securities industry firms had paid $18 billion in bonuses in 2008 - an average of $109,000 per employee. That's more than twice the national median household income.
Obama called the decision to pay the bonuses "shameful," and Sen. Claire McCaskill, D-Mo., introduced a bill that would cap annual executive pay at firms receiving government aid at $400,000 - Obama's salary.
Bank of America, which has sold $45 billion of preferred stock to Treasury and taken $118 billion in loan guarantees, came under attack after Merrill Lynch, the struggling brokerage firm it purchased Jan. 1, paid out $4 billion in bonuses in December. Merrill lost $27 billion last year.
But bonuses aren't the only public relations problem on Wall Street. Perks have also become an issue for firms that have benefited from huge infusions of taxpayer funds.
Citi, which is the recipient of $45 billion of federal capital and $301 billion of loan guarantees, was forced last month to reverse plans to buy a new $45 million corporate jet after Geithner signaled his disapproval.
Wells Fargo (WFC, Fortune 500), which got $25 billion in October under the first round of the TARP capital plan, on Tuesday called off a four-day business meeting in Las Vegas after news reports tagged it as a "pricey Las Vegas casino junket." Wells Fargo called such descriptions "intentionally misleading," but still decided to cancel the event.
The tougher terms imposed on future recipients of exceptional aid are no surprise. But the administration's attempt to expand those rules could make truly healthy firms less apt to participate in future federal aid plans. Dozens of banks have turned down TARP money in recent months, citing possible restrictions on how they operate.
"There's a delicate balance between imposing restrictions and making participating in TARP attractive," said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable industry lobbying group.
Talbott said financial services firms have been taking action on their own to shift increasing amounts of executive pay to stock and other forms of compensation that align management's incentives with those of shareholders.
Under Obama's plan, some healthy firms that wish to receive TARP funds may still be able to pay executives more than the $500,000 cap. To do so, however, these companies must fully disclose their pay practices and, in some cases, submit to a shareholder "say on pay" vote, which would give investors a chance to vote for or against proposed executive pay levels.
The uproar over executive compensation and perks is predictable and is "part of the cost of taking bailout money," said George Kaufman, an economics professor at Loyola University Chicago.
The news that former Merrill CEO John Thain spent $1.2 million on a 2007 office renovation after taking over a company that had just posted a multibillion-dollar loss is just one example of execs failing to appreciate how times have changed, Kaufman said.
First Published: February 4, 2009: 11:04 AM ET
March 4, 2009
While many companies hire lobbyists to win earmarks, General Electrics unmatched lobbying force has secured a tax increase or its equivalent in President Barack Obamas budget.
Labeled climate revenues and totaling $646 billion over eight years, this line item in Obamas budget has inspired confidence in GE Chief Executive Officer Jeff Immelt. As Immelt put it in a letter this week, he believes that the Obama administration will be a profitable financier and key partner.
On page 115 of Obamas fiscal 2010 budget is Table S-2, titled Effect of Budget Proposals on Projected Deficits. The chart forecasts the costs of Obamas spending proposals and the added revenue of his proposed tax increases. It also forecasts, beginning in 2012, billions of dollars a year in climate revenues. This budget line, which has struck fear into some lawmakers from coal-dependent states, could spell salvation for GE in these times of uncertainty.
How can Obama generate climate revenues? By forcing companies to pay for the right to emit greenhouse gases such as carbon dioxide.
A tax on greenhouse gas emissions could accomplish this, but Obamas preferred policy and the approach embraced by a few congressional bills in recent years is called cap and trade. In short, cap and trade requires businesses to spend credits to pay for their emissions. Businesses can buy or sell these credits, and the market not the government would directly set the price of a credit. Government would initially auction them off, generating revenue.
GE a member of the U.S. Climate Action Partnership, which advocates cap and trade leads the push for greenhouse gas restrictions.
In the fourth quarter of 2008 as the companys stock fell 30 percent, GE spent $4.26 million on lobbying thats $46,304 each day, including weekends, Thanksgiving and Christmas. In 2008, the company spent a grand total of $18.66 million on lobbying.
Reviewing their lobbying filings, you might think you were looking at Al Gores agenda. GEs specific lobbying issues included the Climate Stewardship Act, Electric Utility Cap and Trade Act, Global Warming Reduction Act, Federal Government Greenhouse Gas Registry Act, Low Carbon Economy Act, and Lieberman-Warner Climate Security Act.
This isnt altruism or public relations. GE has started a joint venture called Greenhouse Gas Services, which invests in and hopes to manage the trade in greenhouse gas credits. But these investments and this trading floor are of basically no use and nearly no value without government restrictions on greenhouse gases.
Hence the lobbying, buttressed by generous campaign contributions: Employees and executives gave $1.35 million to politicians in the past election while GEs political action committee shelled out $1.55 million. About 64 percent of this $2.9 million went to Democrats, with Obama easily the top recipient of GE money.
Obamas budget includes the payoff, promising to start a multibillion-dollar greenhouse gas industry by 2012. In a letter this week, GES Immelt told shareholders that current events present an opportunity of a lifetime, because capitalism will be reset.
Immelt wrote: The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner.
In short, GE plans to get rich by being one of the governments closest partners which it has always been, thanks to its unmatched lobbying efforts.
The environmentalist at this point might respond, Well, good for GE. if they can get rich while helping the planet, more power to them. But this ignores important issues. First, restraining greenhouse gas emissions will cost Americans dearly. Gas, electricity and heating prices will all go up. The prices of manufactured and shipped goods will go up. A Clemson University report on similar cap-and-trade proposals forecast a 1 percent decline in he U.S. gross domestic product by 2015 if they were implemented.
There are environmental costs, also, to such a focus on greenhouse gases: Ethanols damage to water supplies, soil health and air quality are the fruit of government pushing the product as a climate-friendly fuel.
When the lobbying fingerprints of GE and other well-connected firms are considered, its not hard to conclude that the policy that will finally emerge wont be the one that is best for the planet and least bad for the economy, but the one that is best for General Electric
in tying in the Health Care Hullabaloo to the this compensation issue.
Look at one paragraph in the original WSJ article and you'll realize that its not just the fat cat CEOs, but just anyone making over $100,000 including doctors as both employees and owners of small corporation.
"Social Security data show that 6% of wage earners have pay that exceeds the taxable earnings base, and that their "covered earnings" above the taxable maximum totaled $1.1 trillion in 2007. Adding the portion of their pay below the taxable wage base, $991 billion, totals $2.1 trillion."
There's that 2.1 trillion $, right? Right! And nearly a trillion is taxable (we're talking the Social Security limit here ONLY!!). That means we're talking an average $200,000 - $250,000 . Sound familiar, campaign trail, redistribution, Joe the plumber, etc etc.
We have 2 million millionaires in this country. That doesn't mean all of them get a million every year. Its net worth, sometimes counting real estate depending on whose doing the stats. Doctors are millionaires as are most professionals and successful self-employed, but their value is in their business.
So its not even that 2 million are generating a million income to get to 2 trillion. Its that 8 million are generating an average 150,000 (lets say in a range of 100000 to 500000) for 1.2 trillion. And .5 million are generating average $ 1 million (range of 500000 - 5 million) income for .5 trillion, and say 50000 are generating (range of 5 million to billion) 10 million income for .5 trillion.
So that last chunk of real fat cats will only get the socialists maybe a few hundred billion (and don't depend on the wealthy keeping it available to the IRS every year) which is now a drop in the bucket to the trillion dollar plans twinkling in their eyes.
This defines Obama to a T!
- Having the characteristics of a sociopath.
- Unconcerned about the adverse consequences for others of one's actions.
Obama does not give a shittt as to what he does and to whom he does it to. That is obvious to all the damage he has done and to the people he has hurt. And he ain't done yet...
Below are more good articles regading our insane President and how he destroying our Country...More from Timothy P. Carney
- The business of Detroit is producing lobbyists
- Worn down by feds, Whole Foods turns to lobbying
- The Obama era brings boom times for lobbyists
- When going green means making green
Robert B... it is obvious that Obama has painted himself into a corner and his brain is working double time trying to figure out how to fix all the things he has broken.
It only stands to reason that he is going to start robbing from Paul to pay Peter... which in the long run means absolutley nothing when it comes to paying off the debt he is creating,...
He is targeting all the biggies in American Capitalism's profit making sectors to screw up the economy even more.
Honestly, the man needs to be stopped and held accountable for his actions thus far...
At what point do we the people say "enough" and can we say it to a President that we are not even sure is an American citizen?
The real point is that you all need to go to reading a reading comprehension class.
Your "points" have nothing to do wit the article I posted. Not that this is surprising. but alas, it is why it is nearly impossible to have a sentient conversation with any of you.
Pay corresponds with 'destroy[ing] the lives of many other human beings'?
The pay is high because they are among a select group that pays itself.
The disregard for other aspects because of a proposed efficiency, read, more money for cost, does not lie just with top managers.
Nor with just large companies.
It is certainly a myth, or supposed truth, and one might bet that someone may get farther ahead quicker, but would they last?
And what of culture?
Some madman cannot buck all of society~ at least, not particularly long.
Buying every thing on credit was a wide spread problem. Was every individual suffering some disease?
A person can certainly make a difference.
Just insist and keep moving forward.
Yes, aside from that birth certificate...
As for health care...
After fifty years, it needs to be done August?!
Of course, Obama said that was not the point, the point was to be working on it.
It is unfortunate that the Opposition has be reduced to rhetoric. Rather than working to find solutions. I mean, save it for philosophy class. Or something. It is pointless in the real world.
We want people who know what they are doing and doing it. Not a bunch of belly~achers. And there are those who are attempting to work on things...
And then, there are these distractions with what point?
The commies are coming?!
Dann Dogg, not only did I read and re-read the article from Commondreams, but I find it hypocritical. Which is why I posted what I posted as an effort to bring reality into the mix.
The idiot Thom Hartmann not only goes on a tangent about how much CEO's make and what bonus' they get, but he goes on to try to make it look immoral.
Now tell me why Obama is taking over banks, automakers and is currently working on taking over healthcare... Why does he vacation on taxpayer money and cap the wages of the CEO's of the companies he has taken over?
Oh yeah, I read your article and ... and am not impressed with the hypocrisy.
Private business should be left alone by the Fed. Period. CEO's of productive and profitable companies are entitled to bonus'... It is what makes America the best Country in the world... Free Enterprise...
Robert the Cat - lol The commies are here!
One of the worst unsung CEO disasters comes from Mark Hoffman. First at a private company APS, he supervised the destruction of hundreds of millions of dollars. Then, just before APS was forced into bankrupcty, he jumped to Corporate Express. This second company never recovered from his "leadership" and was eventually sold to Staples at a discount. Despite having degrees from the University of South Alabama (in finance) and an MBA from Harvard, Mark Hoffman's mark has been the destruction of shareholder value. Despite his Republican leanings, Mark Hoffman is the capitalist's enemy.
His style fits the public image of CEOs -- strong, tall, handsome, decisive -- but completely removed from the impacts of his decisions. That describes a Trojan Horse CEO and a disaster for billions of dollars of shareholder wealth and for the lives of thousands of employees. For owners and workers caught up in this man's cold, even sociopathic behavior that helped him appear worthwhile to boards of directors, also prohibited him from effectively managing his organization due to his void of empathy and inability to sense the needs of customers and employees. A true trainwreck waiting for the next company that is seduced by looks, patter, and a false sense of security.
This post was modified from its original form on 21 Aug, 1:35
Evidently, the CEOs of large, outsourcing corporations are HUGE sociopaths.
and none of us should rest
until all of those tax stealing
gangster/parasites are in maximum security prisons for the rest of their useless lives.
Let's start with the banks and mortgage lenders.
This post was modified from its original form on 21 Aug, 10:28
The really evil criminals never get caught because they are truly pathological. The planet is ruled by just such monsters. They have a stranglehold on the finances of the whole world and love wars. They are laughing all the way to their banks. There’s a greater margin of profit on ordinance than any other commodity. It costs a fraction of a penny to produce a bullet and the taxpayers turn over several dollars per round without asking any questions. Millions of bullets are fired in an hour. The worst criminals have positioned themselves properly for this bonanza for several hundred years now. There is no more lucrative and faster way to pull in obscene amounts of ready cash than by slaughtering human beings.
Best description of the military industrial complex I have ever read, Sarvo.