Where Have You Gone Jack Welch? CEO Pay Rises While Stature Fades
The Institute for Policy Studies released a report Wednesday that shows many large companies pay more to CEOs in compensation than they did in corporate income taxes to the federal government in 2010.
Of the 100 top paid CEOs, 25 of them earned more than their companies' tax bill, including the CEOs of Bank of New York Mellon, Verizon, eBay, GE and Boeing. And astonishingly, the report found that the gap between CEO and average U.S. worker pay rose from a ratio of 263-to-1 in 2009 to 325-to-1 last year.
The release of the report has helped contribute to a highly toxic environment for CEOs — worse than I've seen in twenty years of covering business.
Because they are problem solvers, CEOs are frequently welcome in public life. Not now.
Steve Pearlstein, normally mild-mannered Washington Post business columnist, uncorked a scorcher against America's executive class, blaming them for the Tea Party, the debt ceiling debacle, poor infrastructure — everything but Hurricane Irene.
Over the past decade, the main problems they seem to have been working on are increasing their own compensation and reducing the amount of taxes their companies pay. CEOs get paid a lot because they work so hard to deliver for shareholders. But America's shareholders have received a big helping of nothing from public companies in the past decade.
The S&P 500, as this very long-term chart shows, is basically where it was in the fall of 1998. We're frequently told we must be sensitive to CEOs' prerogatives because they're the ones who create jobs. But in July 2001, there were 109.156 million private sector payroll jobs, down from 110.737 million in July 2001. And every time CEOs ask for a specific policy that tells us will enhance growth — like the big foreign earnings tax amnesty in 2004, or financial deregulation — it doesn't quite turn out.
They hold themselves out as the pie enlargers, but eat most of the pieces themselves, leaving everybody else with crumbs. When columnists or politicians point this out, they complain that they're being persecuted.
Quick. Name a widely admired CEO -- besides Apple's Steve Jobs, whose resignation last week caused outpourings of admiration, including from me. Jobs enriched common shareholders who had the foresight to buy shares at $8 in the fall of 2002 hung on for the rise to near $400. And he did it for much of the time while taking home $1 a year in salary. Look at the most recent proxy, and his compensation for each of 2007, 2008, and 2009, was precisely one dollar — no bonus, no options, no nothing.
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