I continue to do my part to publicize the abusive CEO pay packages that the current crop of unethical CEO’s, and those sitting on corporate boards have supported (Tilting at Ludicrous CEO Pay 2008 – 2007 post on CEO pay abuses). It does seem there is more anger now at the looting these corrupt CEOs have engaged in; though far too many people seem to think the corruption is some isolated few CEO’s. The widespread failure of ethical standards by an enormous number CEO’s (those taking from corporate treasuries as though it was their own personal bank account) is the problem (not a few individuals). The looters certainly have littered their “courts” with apologists for their egregious behavior. Even with the large amounts they pay such lackeys I am surprised they find such willing apologists, in such large numbers.
|Company||CEO||2008 Pay||2007 Pay||CEO % of 2008 Earnings||total employees|
|1||Motorola||Sanjay Jha||$104,400,000||company lost $4.2 billion||64,000|
|3||Walt Disney||Robert Iger||$51,100,000||$27,700,000||1.2%||150,000|
|4||American Express||Kenneth Chenault||$42,800,000||$50,100,000||1.6%||66,000|
|5||Citigroup||Vikram Pandit||$38,200,000||company lost $27.7 billion||322,800|
|7||Calpine||Jack A. Fusco||$32,700,000||327%||2,000|
This executive pay data is for 2008, from the New York Times article, Pay at the Top. Earnings and employee data for 2008 from Google Finance. I would not pay any of these guys 1% of what they were paid if I owned the company, myself.
These guys and their friends have created a culture where their looting is as accepted as the clothes the emperor is not wearing. We need to wake up and stop letting these people steal the bounty created by the employees, customers, community, suppliers, investors… They want a world where they can behave like nobility – taking whatever they want from the value created by others. And lately they have succeeded in creating such a world. They leave in their wake very weakened companies and societies.
Several of those taking the most from corporate treasuries in 2007, taxed the American public to replenish those treasures (and then proceeded to pay out “bonuses” to their compatriots from those treasuries and re-leveraging themselves with asset purchases). Merill Lynch, Goldman Sachs, American Express and Morgan Stanley and required tens of billions of dollars in bailouts from USA taxpayers in 2008 and 2009. It is hard to argue failing that spectacularly deserves being paid even 1% of what those individuals took from their companies treasuries. And it isn’t a matter of one extravagant year. These people have been looting treasuries at an ever increasing rate for decades.
They hand out loot from the corporate treasury to buy apologists creating a culture of corporate cleptocracy. Buying approval and support from those that value money more than ethics (which we can see is not a small number of people) has worked very well for them, with disastrous results for the economy. Changes in the law have started to expose the massive abuse of just the pay for these CEOs (the looting goes far beyond CEO pay, the culture of corporate cleptocracy has created not just those that see themselves as kings, but many others taking the riches created by the company). The incredible failure of the culture as a whole, that has enabled corporate cleptocracy to become the dominate culture of so many of our companies, is very disheartening.
From my 2005 post on Excessive Executive Pay – “As long as the pay packages were merely large, and didn’t effect the ability of a company to prosper that could continue (slicing up the benefits between the stakeholders is not an exact science). The excesses recently have become so obscene as to become unsustainable. Companies will not be able to compete if they allocate huge portions of the benefits provided by the operations of the company to the few sitting on top of the bureaucracy.”
Drucker on Executive pay: In 1977, Drucker believed executives earned their large pay, and argued it was not excessive. As pay did become excessive, Drucker became a prominent voice against the unjust pay of CEO’s. From the Economist: In the late 1990s he turned into one of America’s leading critics of soaring executive pay, warning that “in the next economic downturn, there will be an outbreak of bitterness and contempt for the super-corporate chieftains who pay themselves millions.”
The looting these unethical CEOs and their apologists do is damaging. But the harm is far far greater than the amount of loot they personally take from the company. They drastically distort the companies they are suppose to lead in order to try and increase the loot they and their friends can take away. Many risk the economic futures of anyone that comes in contact with their company (stockholders, employees, customers, suppliers, bond holders, and whole economies…) in order to loot more for themselves and their friends. That is, and always will be the greatest harm, not the amount of loot they carry away but the damage done by the culture of looting they encourage.
Related: Obscene CEO Pay (with chart) – Unconscionable Executive Pay (at WaMU, not out of business) – Warren Buffett on Excessive CEO Pay – Toyota’s CEO pay under $1 million – CEOs Plundering Corporate Coffers – How Private Equity Strangled Mervyns – Why Pay Taxes or be Honest