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CEOs Being Paid for Poor Performance

Business  (tags: americans, business, CEO, consumers, corporate, corruption, dishonesty, economy, ethics, finance, government, investors, labor, lies, marketing, money, politics, society )

- 1726 days ago -
Over the past two decades, the myth of CEOs earning their runaway pay packages has grown into the ultimate scam.

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Kit B (276)
Wednesday September 4, 2013, 7:56 am
Photo Credit: The CBI: flicker - Micro soft CEO Steve Ballmer

Over the past two decades, the myth of CEOs earning their runaway pay packages has grown into the ultimate scam.

On Wall Street, they’re giving Microsoft CEO Steve Ballmer the bum’s rush.

Ballmer has just announced he’ll soon retire. After his announcement, Microsoft’s shares shot up 7 percent. The wise guys on Wall Street obviously can’t wait to see Ballmer go.

And neither can business pundits. Ballmer’s 13 years at Microsoft’s summit, they seem to agree, have been a huge disappointment.

Evidence certainly does exist to back up that appraisal. Microsoft, once a pacesetter, has become a second-tier presence in the hot new frontiers of mobile and cloud computing. Under Ballmer’s watch, Microsoft’s share price has dropped by about a third.

Meanwhile, Ballmer himself has done fabulously well. The value of his own personal Microsoft stock stash has jumped since 2000 — after years of lavish executive rewards — by more than $3 billion.

Few business observers believe Ballmer merits these billions. But Ballmer’s pals feel he’s performed just fine. On his watch, after all, Microsoft’s annual revenue has almost quadrupled.

And that share price skid? Over the past 13 years, other computing giants have done much worse than Microsoft. Cisco shares have slid 54 percent, Dell’s almost 70 percent.

So what should we make of all this? Has Steve Ballmer performed well or poorly?

You could make a case either way — and that answer doesn’t just go for Ballmer. America’s CEOs, even the most hapless among them, can always point to some “metric” that illustrates how well they’ve “performed.”

Sarah Anderson and her colleagues at the Institute for Policy Studies — of which I’m one — have been tracking this “performance” charade for the past 20 years. Over those years, the Institute’s annual Executive Excess reports have shown repeatedly that America’s CEOs owe their outrageous pay to outrageous behaviors, everything from downsizing to worker benefit rollbacks.

Corporate America, naturally, disagrees. High executive pay, corporate leaders insist, simply reflects high performance.

This year’s just-released, 20th anniversary Executive Excess report puts this claim to the test — by measuring America’s most highly paid CEOs of the past 20 years against a performance yardstick that even the most inventive corporate flack can’t game.

This performance yardstick starts with bankruptcy. CEOs who’ve led their companies into collapse — or only averted collapse because taxpayers bailed them out — have clearly performed poorly. So have CEOs who end up getting fired. And so, as well, have CEOs whose companies have had to shell out significant sums in fraud-related fines and settlements.

No CEO who has been “bailed out, booted, or busted,” as the new Executive Excess report puts it, can possibly be considered a “high performer.”

How many of America’s most highly paid CEOs of the past 20 years fit this “poor performance” definition? The new Executive Excess has done the calculations, using the Wall Street Journal‘s annual lists of America’s 25 most highly paid CEOs as a source.

Of the 500 places on the last 20 of these lists, Executive Excess 2013 finds, nearly 40 percent have been occupied by CEOs who went on to be “bailed out, booted, or busted.”

An even greater share of highly paid CEOs — 100 percent — has enjoyed a subsidy from America’s taxpayers. The more corporations pay their CEOs, under current tax law, the bigger their tax break.

Executive Excess 2013 highlights the pending legislation that would undo this tax subsidy — and also lists other steps that could help rein in CEO pay excess. We could, for instance, deny government contracts to companies that pay their CEOs over 25 or 50 times worker pay.

Back in the 1960s, hardly any CEOs took home more than 50 times what workers did. By 1993, CEOs were averaging 195 times worker pay. The current average differential: 354 times.

“This scares us,” we conclude in Executive Excess 2013. “What scares us even more: the thought that unless regulators, lawmakers, or shareholders do something to stop this madness, 20 years from now today’s corporate compensation will seem as modest as the pay levels of 1993.”

By: Sam Pizzigati | Truthout |

JL A (281)
Wednesday September 4, 2013, 7:56 am
What I hate the most is how many of them do it from government contracts so it is we the taxpayers that are reamed for it even when the company cannot meet the contract scheduled deliverables and do major cost overruns beyond budget/contract amount.

Arielle S (313)
Wednesday September 4, 2013, 11:20 am
Over paid, over blown, overbearing.... just overly most everything. And we all know that it's the administrative assistants who do all the real work....

Kit B (276)
Wednesday September 4, 2013, 11:38 am

Yes, Arielle, about those assistants; underpaid, under-appreciated, and unrecognized. Along the way everything went horribly wrong companies forgot why they are in business and CEO's quickly found that easy money for doing very little was too tempting to ignore.

Mitchell D (87)
Wednesday September 4, 2013, 11:56 am
But, but...I thought the "ultimate scam" was the reports about global warming!! I mean, just ask that jackass in the House of Reps.
This crap about huge retirement packages simply being part of what is needed in order to entice quality people to CEO, and similar positions, is, at bottom, just more euphemistic blather that simply seeks to rationalize the "we got ours, we'll spread it around, at the top here, if you don't mind, oh...and screw you" attitude of the Plutocratic class.

Kit B (276)
Wednesday September 4, 2013, 12:04 pm

Ya got that right, Mitch.

Barbara K (60)
Wednesday September 4, 2013, 12:40 pm
We need to end this "screw the consumer" mentality, even if it means no shopping for a week.

Sheryl G (360)
Wednesday September 4, 2013, 1:06 pm
Back in the 1960s, hardly any CEOs took home more than 50 times what workers did. By 1993, CEOs were averaging 195 times worker pay. The current average differential: 354 times.

It needs to return to some sanity. This isn't sustainable and our entire society suffers because of it. Indeed that is what it's been Barbara, Screw U Economics, it only works for a few.

Mary Streaker (0)
Wednesday September 4, 2013, 1:42 pm
make them live on what they pay the workers,then hear them scream

Carole M (0)
Wednesday September 4, 2013, 1:50 pm
There ought to be a law....

Kit B (276)
Wednesday September 4, 2013, 1:52 pm

There is, "the law of the concrete jungle" and they have won.

JL A (281)
Wednesday September 4, 2013, 2:00 pm
I'd like to enhance the rule of maximum pay in statute and regulation for contractors to include performance and other bonuses and stock options. And then also require it not be more than 49 times the median pay in their company or ineligible for government contracts.

David C (131)
Wednesday September 4, 2013, 2:08 pm
....well Congress keeps getting re-elected and paid by "We the People" despite doing awful work, too.....

Joanne Dixon (38)
Wednesday September 4, 2013, 2:53 pm
And you thought the only profession in which you could be wrong half or more of the time and still keep your job was meteorology.

Aurea Aurea Walker (226)
Wednesday September 4, 2013, 3:43 pm
The book "the Peter principle" clearly showed that this would happen, among other things. If the average hourly employee performed their jobs the way these CEOs do, they would now be standing on the unemployment line! The United States ranks THIRD in the world for the disparity of rich to poor and our quickly shrinking middle class. As the great singer Arlo Guthrie sang "hang down your head and cry, hang down your head and cry Tom Dooley" just as true now as then.

Lois Jordan (63)
Wednesday September 4, 2013, 4:49 pm
Noted. Thanks, Kit. This really grates against my last nerve, too. The title of the book written by Arianna Huffington awhile back keeps running through my brain: "Pigs At The Trough." Other countries have made laws capping CEO pay. For this to continue, in my mind I hear the last gasps of a dying empire that used to be the U.S.A.

Sheila D (194)
Wednesday September 4, 2013, 5:37 pm
It's downright depressing, especially since it's been We, the People who bailed out some of these (censored!).

Bryna Pizzo (139)
Wednesday September 4, 2013, 7:07 pm
When I think of the workers who are underpaid the CEO's, it just makes me so mad that I could spit nails! Thank you for the news, Kit. Wow! This is one hell of a roller coaster ride, and I don't like roller coasters! LOL

Roger G (154)
Wednesday September 4, 2013, 8:20 pm
noted, thanks

reft h (66)
Wednesday September 4, 2013, 11:25 pm
who else gets bonuses for screwing up a company

Kim Ireland (23)
Thursday September 5, 2013, 1:59 am
this is something that happens world wide - they can run the business completely into the ground staff loose their jobs etc but the ceo gets a performance bonus worth thousands sometimes even millions - its crazy anybody else would be charged with theft

Rehana VN (0)
Thursday September 5, 2013, 11:06 am
All CEO's pay must be capped. Spiralled completely out of control & just gets worse. Extremely high salaries, "performance " bonuses even if there was a loss, free shares, etc In the event that they were not performing well & were asked to resign/leave they demand a golden handshake just to go away. They suck voluptuous amounts from the companies & leave nothing for the people that really do all the work.The more they get the more they want ,Greedy gluttons!

Winn A (179)
Thursday September 5, 2013, 12:44 pm
Seriously???????? This is so wrong on so many levels it boggles the mind.

Melania Padilla (122)
Monday September 9, 2013, 1:27 pm
Believe me, this happens in my country and everywhere!!

Roseann d (178)
Thursday January 9, 2014, 1:14 pm
Just like Congress. They are being paid for poor performance too. Let's end that! Results oriented performance that puts constituents first, or we end their pay and their political career.
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