This past week, the European Union took a firm stand against chief bankers who are rewarded with multi-million dollar bonuses even as their businesses flounder. In a near-unanimous vote, members of the EU decided that executives’ bonuses could not legally exceed their annual salary, although shareholders are given the discretion to double that amount for a job well done.
The United Kingdom, the country most entangled with the financial industry, was the sole voice of dissent in this decision. Though Reuters estimates that the legislation will only affect 5,000 British bankers, in a sign that these are indeed some very influential people to the British government, the UK has indicated that it will continue to fight the ruling set to go into effect next year.
Meanwhile, Switzerland went a step further. In the country’s own election, over two-thirds of its voters agreed that enormous CEO pay offs needed to be limited. Swiss shareholders will now have the ability to overturn an undue compensation package. The vote made this stipulation not only a law, but part of Switzerland’s constitution.
Expectedly, some economic critics have denounced these decisions, saying it will drive these businesses to other countries. Others, like the author of this Guardian Op-Ed, believe it is silly to think banks won’t invent more loopholes as they always have. “Banks will now study the text of the final legislation and draw up their responses under the radar,” writes Nils Pratley. “Just don’t expect them to tell their high earners to take it on the chin.”
Nonetheless, the public support of the CEO-targeted legislation is strong. Europeans have grown exasperated at seeing company execs who accepted government bailouts for their companies soon after awarding themselves tens of millions for a job well done.
These problems are not unique to Europe – the United States has similar bonus-happy CEOs. In particular, the issue of wealth disparity is gaining renewed attention with a viral video that plainly, yet smartly breaks down the country’s monetary ownership.
Check it out:
The video relies on three charts: how people think wealth should be distributed, how people think wealth is distributed, and then finally how wealth is actually distributed. The massive differences are enough to convince some people who once considered protesting the 1% to be whining about class warfare to give the issue a second look.
Is a law to cap CEO bonuses and salaries a solution in the United States? Considering that no top bankers have gone to jail and corporate lobbyists practically control the government, I have trouble seeing legislation like that passing here anytime soon. However, it is a conversation worth having as more people recognize the absurd extent of monetary hoarding by a handful of people.