Monday, July 14, 2008

Startling Statistic About CEOs' Salaries

Posted by Jarvis Holliday On 7/14/2008 No comments
Charlotte CEOs have been making the news a lot lately. After firing CEO Ken Thompson last month, Wachovia hired Bob Steel away from the U.S. Treasury Department last week to run—and hopefully save—the suddenly struggling bank. (You can read a blog I posted a couple of months ago about why I especially want Wachovia to survive.) And a couple of weeks ago, news broke that United Way of the Central Carolinas CEO Gloria Pace King was paid $1.2 million last year, with about $800,000 of that said to have been for underpaid pension payments.

During this currently struggling economy, people are paying a lot more attention to all things financial. In the past when we would hear of CEOs' astronomical salaries (I remember a couple of years ago Bank of America's CEO Ken Lewis's salary for the year including bonuses topped $20 million) we would usually say things like "I wish I made that kind of money." But now we're more outraged, as we see people losing their homes and gas escalating above $4 a gallon.

Last night I was watching Meet the Press (it originally airs Sunday mornings on NBC, but I was watching the rebroadcast on MSNBC) and I heard a startling statistic. The first half of the show featured surrogates for presidential candidates Senators John McCain and Barack Obama. Sen. Claire McCaskill of Missouri is the national co-chair for the Obama campaign and this is what she said as she spoke about the changes that are needed in how the economy is being run:

In America, CEOs at big companies make 400 times more than their employees. In Japan, CEOs make ten times more.

When Meet the Press host Tom Brokaw asked McCaskill what Obama would be able to do about that she said he would support legislation that required shareholders to approve CEO's salaries. I'd never heard of that, but I would certainly support it. At most large companies and organizations, such as Wachovia and the United Way, the board of directors approve CEO's pay. So you have 8-12 people in a boardroom who have fat pockets themselves making the decision, all the while they're hollering how their biggest responsibility is to their shareholders. Okay, so let the shareholders approve the salaries and see if they give the top brass golden parachutes while they, themselves, are just trying to stay afloat.


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