According to a survey from the AFL-CIO, many CEOs’ pay actually rose in 2008. Um, last I heard, 2008 was a pretty bad year for many companies (and their shareholders). And, um, it was a pretty bad year for many workers, too, who were laid off or subjected to pay cuts.
But hey, I guess it was a good year for some folks, eh? There’s something seriously wrong with this picture.
Bad year? Good for some CEOs
This survey, which used data from The Corporate Library, runs contrary to other recent surveys that showed CEO pay decreased last year. And the truth is, it stands to reason such results might be inconsistent depending on the companies included, but let’s not be naive; it's not surprising that some CEOs made out like bandits.
According to the AFL-CIO’s survey, median CEO salary rose by 7% in 2008. In addition, CEO perks rose by nearly 13% to an average value of $336,246. Those are some serious “perks,” indeed.
The survey, which included data from The Corporate Library, a independent corporate-governance research firm, included 946 companies from the Russell 3000 index, and showed that 480 individuals got pay raises and 463 experienced pay cuts.
A Reuters article on the survey called out Citigroup’s
None of us are strangers to outrage over CEO pay these days; AIG’s
And of course, when taxpayer money’s on the line, it’s very difficult to justify big payouts, particularly for poor performance (not to mention being a continual money-suck). Meanwhile, the government removed General Motors
Pay in a vacuum
Even beyond companies that have recently become government welfare cases, though, there has been an ongoing and serious logic disconnect when it comes to the lucrative pay corporate America seems to expect for the “superstar” CEO position.
Here’s just one example, and granted, there are many. ExxonMobil’s
I’m sure the argument I’ll hear is that macroeconomic problems caused the stock to drop with the broader market and it wasn’t Tillerson’s fault (and granted, ExxonMobil’s profit did increase to $45.2 billion). However, since CEOs work for shareholders, one might think a little prudence on pay could have been in order. (Note that there are shareholder proposals regarding executive compensation and “say on pay” in Exxon’s most recent proxy statement, including the lovely factoid that while most CEO’s pay is 344 times that of the average worker, Tillerson’s pay in 2007 was 541 times that of the average worker.)
Meanwhile, people who defend outrageous pay for garbage performance might want to, um, just freakin’ grow up. Lots of people these days are taking a financial hit for outcomes that aren’t technically their fault. For example, when companies resort to mass layoffs due to the poor economic climate, it certainly isn’t the workers’ “fault.”
And I have to wonder how many companies could have saved some money -- and some valuable employees -- if CEOs and boards had been willing to have a more reasonable approach to high-level compensation in hard times, where everybody makes some sacrifices to keep things running smoothly. Come on, people, there’s no “I” in team.
A reality check is sorely needed
Thankfully, there are beacons of reason and true entrepreneurial spirit out there. Costco’s
Furthermore, I recently outlined a few companies that did the right thing and pared down CEO salaries, a few of whom did so simply because of the nasty economic environment and not because of specific performance at all. Hmm, that sounds like a concept called “prudence.”
Sometimes, making sacrifices is just the right thing to do when times are tough. (In fact, I recently called out Starbucks
The fact that government’s had to intervene in some cases on compensation, and some people want it to intervene more, is utterly pathetic, too; shareholders need to keep agitating, and boards of directors should have put a stop to the excesses and logic disconnects in CEO pay a long time ago and had better wake up and start hitting it now.
Is it really that hard to have a sense of ethics, inspired more by business excellence than their own pocketbooks? It’s time for more individuals at the highest levels of corporations to do some serious soul-searching and remember to do the right thing -- or at the very least, the logical thing, when performance isn’t there and other stakeholders are taking a beating.
Not outraged yet? Read on: