CEO Pay Charts

Sources: CEO Compensation: Business Week annual executive pay surveys. S&P 500 Index: Standard and Poors Corporation, quoted in 2000 Economic Report of the President. Corporate Profits: Bureau of Economic Analysis, National Income and Disposition of Personal Income Data. Average Worker Pay: Bureau of Labor Statistics, "Average Weekly Earnings of Production Workers, Total Private Sector." Series ID: EEU00500004. Inflation: Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers.

Source: Business Week, annual CEO Pay issues.

CEO pay greed soars out of control while workers earn less

Don't laugh. That's what American Express CEO Henry Golub got in 1997.

The average CEO pay went up 35 percent in 1997 to $7.8 million, according to Business Week's new executive pay survey. That comes to $150,000 a week.

Average worker pay went up 3 percent last year - all the way to $424 a week. Workers still earn less in wages, adjusting for inflation, than they did in the 1970s.

The average CEO made 326 times the pay of factory workers last year, up from 209 times factory workers' pay in 1996. Back in 1980, when many more workers were unionized, the wage gap was much smaller: CEOs made 42 times as much as factory workers.

Additionally, the richest families in America (those making $560,000 and more) have had their taxes reduced by almost $16,000 since 1977 while the average working family is paying $287 more in taxes that same period.

CEO greed inflation is out of control

The 1997 pay survey doesn't "even reflect the largest single option sale ever," say Business Week. In December, 1997, Disney CEO Michael Eisner exercised 7.3 million stock options worth more than $400 million. But, since the sale came after the close of Disney's fiscal year, Eisner's windfall won't show up until next year's pay survey. Eisner has more stock option fortunes to come.

That's not the case for the families who save for years to visit Disney World, or the workers paid pennies an hour to make Disney toys in China and Vietnam.

Corporations are increasingly paying multimillion-dollar "retention bonuses" to CEOs who have no intention of leaving. "From huge signing or retention bonuses to perks such as tax planning and jet use in perpetuity, to exit packages that guarantee big bucks even if an exec. is chased out of office, financial risk is virtually eliminated,," say Business Week.

The former head of Apple Computer, Gilbert Amelio, is a great example. As The Wall Street Journal noted in its executive pay report, Apple lost nearly $2 billion during Amelio's brief tenure of 17 months. About 3,600 employees lost their jobs. Amelio's golden parachute included $6.7 million in severance pay plus other compensation. Amelio wasn't satisfied. He said the Apple package "didn't protect my downside as well as I had hoped it would."

Wall Street executive Julian Robertson says it well: "Everybody here is overpaid, knows they are overpaid and is determined to continue to be overpaid."

Right now, taxpayers help pay for outrageous CEO salaries because corporations can deduct them as a business expense. The Income Equity Act, introduced by Representative Martin Sabo, D-Minn., would cap the deductibility of executive compensation at 25 times that of the lowest paid full-time company worker. The act now has more than 45 co-sponsors.

Good God. The last thing this country needs is another government mandate deciding who can earn what. Wow, I can strike back at the greedy CEO by taking away something from him. Right. When has another law that supposedly was going to help the "average American" ended up doing anything but further miring him in government regulation and increased taxation. The cost is your liberty, one piece at a time. I can imagine the collectivist-statist manifesto delivered in front of the Continental Congress, "I know not what course others may take, but as for me give me equality or give me death." Right. Another step to put us all on the government plantation.

Consider that income taxation is a major player in soaring CEO salaries. If the CEO salary and package wasn't deductible, then the incentive to payout the big bucks would be considerably less. Perhaps bonuses could then be predicated on actual performance . . . amazing concept. Without the artificial profitability of tax avoidance this would likely come into play. The fact is that a tax system based on confiscation of income as ours is, functions to subsidize over-payment of CEO's through their salaries being a deduction against adjusted gross income. By the way, a flat tax on income would not eliminate this subsidy.

The commentary regarding shipping jobs off to countries where labor is cheap is the minimum wage law coming back to bite us in the butt. This artificial "worth" for employees strikes hardest at the unskilled low end worker. No longer does an unskilled worker have the option of saying, "look, I don't know how to do this, but I'm willing to learn, and while I'm learning I'm willing to take a lower wage till I become more valuable." By the way, do you shop only Made in America goods? If you don't, then you have no gripe against companies who use out of country labor. Also, the regulations for hiring and maintaining employees are legion and punitive.

Your government punishes your employer by coercing him or her to pay for having the audacity to be a business owner. The owner is forced to function as a slave government tax collector, filling out endless forms for taxation and regulation at his own personal cost and to pay half of your Social Security Ponzi Scheme while personally paying double what you do.

A bill to control wages, benefits etc. is a giant step further down the slippery slope to despotism. Collectivism, Socialism, can only be effective when the economic basis of a society is totally controlled. Then the march to serfdom is rapid and the worker is soon completely subservient to the lord (state). One of the most powerful steps that Hoover took to exacerbate the Great Depression at its onset was to try to enforce wage controls at a higher level that the market would bear, and then to increase the income tax rate on top of it.

Do you really believe that government, given its history, would better decide the wage earner/management differential than the market? If so, you have some history to study. Bill Clinton was right in one statement he made "government would mess up a two car parade."

The article I read specifically made reference to a bill that would mandate that CEO's could be paid a maximum of 20 or 25 times what their lowest worker earned. This is government in business big time. We in health care are watching the creeping socialism that, unchecked, will also mandate what a maximum reimbursement yearly for a doctor would be.(this has been the case in Canada) I see no difference. It is still socialism. It is still government control. It is still despotism.

If CEO's are overpaid then it is up to stockholders (the company owners) to hold their board of directors to a higher standard. Elimination of the government subsidy for this (income tax deduction for the payout to a CEO) would call this practice into question by stockholders. This is the only way to do this and maintain any semblance of liberty. To put the government into this much control would be the final coffin nail into the rights of private property and our liberty along with it. Private property ownership is the foundation for a free society. The act of huge CEO payouts may be offensive to you or I, yet to mandate through government control something we find offensive is tyranny (even if we are in the majority).

I believe that the spate of overpaid CEOs is another example of the hidden costs of direct income taxation on the average American. The solution is to eliminate taxation on individuals or business income. The subsidy then disappears by causing the CEO's salary to be deducted from the bottom line directly without any secondary benefit.

Should a bill be passed that would mandate CEO salaries, we would likely see many companies flee from the confines of our borders to avoid this restriction along with American jobs at an even greater rate.

My bottom line is this. I do not argue the disparity in income between some CEOs and their workers. I do find the Pope, in a totalitarian country that has mandates religion as an evil, attacking the one system that has done more to give men the liberty to worship as they please to be surrealistic. The Pope, after all, is the head of state of a society that is a remnant of feudalism. What your piece called for was "corporate morality" to be legislated. As many from the left, center, and right have expressed, "you can't legislate morality."I do feel, with considerable historical backing, that government intervention is always the wrong way to accomplish anything other than fighting a war.