It's been a big week here at The Excess Files as The Wall Street Journal released its annual compensation survey. There's so much in the report it feels like Christmas in May.
But let's stick to the big headline: The median pay for the CEOs of America's 300 largest publicly traded companies hit $11.4 million in 2013, the Journal reports -- that's up 5.5% from 2012 and roughly 257 times the average worker's pay.
The widening gap between CEO and worker pay is at the heart of the income inequality debate in America today. But what's really amazing is the Journal found a widening pay gap among the CEOs themselves...the three highest-paid CEOs -- Oracle's Larry Ellison, CBS' Leslie Moonves and Liberty Global's Michael Fries took home a combined (and mind-boggling) $188 million last year -- or more than the 50 CEOs at the bottom of the list.
And the 30 highest-paid CEOs took home 23% of the total compensation, leaving the other 270 execs to fight over the scraps like a pack of well-dressed hyenas.
Notably missing from the Journal's ranking of highest-paid CEOs was Anthony Petrello of Nabors Industries, who made $68.3 million in 2013, The Associated Press reported in its own and slightly different CEO pay survey. Petrello's pay ballooned as a result of a $45 million lump sum that the company paid him to buy out his old contract (presumably, the Journal left him out because this was a one-time event). Ironically, Nabors was forced to buy out Petrello's contract because of pressure from shareholders about excessive compensation for its executives. (Cue Alanis Morissette)
It's Good to be the King
In a recent Yahoo Finance poll, 63% of you said CEO pay should be capped. I don't support caps on CEO pay but I do support tying it to performance -- but many CEOs are raking in big bucks even when the corporations they oversee are struggling: None, not one, of the companies with the 10 best-paid CEOs in the Journal's 2013 survey ranked in the top 10% for stock performance.
Even more problematic, many firms are gaming the accounting system by asking investors to focus on non-GAAP earnings, which exclude stock-based compensation; thus, big pay packages can be "hidden" in plain sight.
Cheniere Energy, which has already faced criticism for excessive pay packages, this week proposed issuing 30 million shares - currently worth $1.9 billion -- to set aside to pay its executives. If approved, shares dedicated to paying executives would be more than 25% of Cheniere's public shares, The WSJ reports.
"Simply put earnings at many U.S. companies are overstated," writes Bellpointe Capital's David Nelson who calls stock options "the cocaine of Wall Street."
100% pure Colombian cocaine, no doubt.
Still, some members of the 1% are sympathetic to the struggles of American workers.
One well-meaning billionaire has been leaving envelopes full of cash around San Francisco and giving clues to its location on Twitter with the handle @HiddenCash. The anonymous benefactor has left up to $10,000 in cash and reportedly feels bad about the wealth gap in San Francisco.
"I have been overwhelmed with the hundreds of emails asking for financial assistance," the person behind @HiddenCash wrote Friday, saying the concept came from "my desire to give back to the community which I love and has given me so much, and to do it in a fun way."
Meanwhile, also Christmas came early in Milwaukee this week as Herb Kohl sent $500 checks to employees the BMO Harris Bradley Center. Kohl recently sold the Milwaukee Bucks, which play at the arena, for $550 million.
It was a nice gesture by the former US Senator and heir to the Kohl's Department store empire but, for the record, $500 per employee vs. $550 million equates to a CEO-to-worker pay ratio of 1.1 million-to-1 which is extreme, even by U.S. corporate standards.
Still, we haven't seen this kind of trickle down economics since the Middle Ages, when English monarchs washed the feet of beggars and presented gifts and money to the poor on the day before Good Friday.
Happy 'Maundy Thursday' everyone, and to all a good weekend.
Previously on The Excess Files:
- The Excess Files: Mulally and Buffett and Souki...oh my!
- Target's big pay-out, Apple backs up the truck, and college tours for the 1%
- Chipotle co-CEOs can buy a TON of burritos but CVS's Merlo is #1!
- There's a least one happy worker at McDonalds: Amid wage protests, CEO gets big payday