Washington Post Special Report: Breakaway Wealth

[YankeeFan]

Corporate executives make too much money!

With executive pay, rich pull away from rest of America

It was the 1970s, and the chief executive of a leading U.S. dairy company, Kenneth J. Douglas, lived the good life. He earned the equivalent of about $1 million today. He and his family moved from a three-bedroom home to a four-bedroom home, about a half-mile away, in River Forest, Ill., an upscale Chicago suburb. He joined a country club. The company gave him a Cadillac. The money was good enough, in fact, that he sometimes turned down raises. He said making too much was bad for morale.

Forty years later, the trappings at the top of Dean Foods, as at most U.S. big companies, are more lavish. The current chief executive, Gregg L. Engles, averages 10 times as much in compensation as Douglas did, or about $10 million in a typical year. He owns a $6 million home in an elite suburb of Dallas and 64 acres near Vail, Colo., an area he frequently visits. He belongs to as many as four golf clubs at a time — two in Texas and two in Colorado. While Douglas’s office sat on the second floor of a milk distribution center, Engles’s stylish new headquarters occupies the top nine floors of a 41-story Dallas office tower. When Engles leaves town, he takes the company’s $10 million Challenger 604 jet, which is largely dedicated to his needs, both business and personal.

The evolution of executive grandeur — from very comfortable to jet-setting — reflects one of the primary reasons that the gap between those with the highest incomes and everyone else is widening.

http://www.washingtonpost.com/business/economy/with-executive-pay-rich-pull-away-from-rest-of-america/2011/06/13/AGKG9jaH_story.html

 

[Baron Scicluna]

Well, they do.

Let's take a car, for example. A car needs a good engine. But if the wheels are falling off, the body's rusted, and the muffler's dragging on the ground, I doubt anyone would say that it is a good car.

Executive compensation is the same thing. It's great and all that the CEO is making money hand over fist. But if no one else is, eventually, things will grind down to a halt.

 

[joe_schmoe]

Gee Washington Post....thanks for your hard hitting story telling us we live in a free enterprise society! Next week special report: Homeless people don't sleep in as comfortable beds as those with homes!

 

[dixiehack]

If you want to look at it from a free enterprise standpoint, overcompensating C-suite execs - thanks largely to the board of directors being in bed with them - has been a massive screw job for stockholders.

 

[YankeeFan]

I'm not sure your comparison makes much sense.

The guy profiled run a Fortune 500 company that is 10 times larger than it was 40 years ago. He makes 10 times (adjusted for inflation) what the guy who ran its predecessor company did 40 years ago.

That sounds fair.

Only 500 people runs Fortune 500 companies. What's the 500th best baseball player make?

Not that many people can do these jobs.

His average employee makes $23.00 an hour. That sounds pretty good. And, I bet they could fill those jobs for less on the open market.

What's so silly about this article is how it tries to turn it into a moral question. The previous CEO would be spinning in his grave! CEO's of the 70's weren't robber barons like today's CEOs are!

Bull****.

There's nothing immoral about wealth.

 

[YankeeFan]

If you want to look at it from a free enterprise standpoint, overcompensating C-suite execs - thanks largely to the board of directors being in bed with them - has been a massive screw job for stockholders.

If you want to look at companies that are unresponsive to shareholders, the New York Times Company & the Washington Post are exhibits 1 and 1A.

 

[dixiehack]

I wouldn't disagree. But they are at least upfront in telling investors they get no say in running the ship. That gets priced in.

 

[YankeeFan]

Makes both of them imperfect evangelists for corporate reform.

 

[dixiehack]

The last perfect man ascended skyward just shy of 2000 years ago, and he doesn't write much these days. Do you suggest no one else try to point out flaws they see in the system?

 

[Baron Scicluna]

I'm not sure your comparison makes much sense.

The guy profiled run a Fortune 500 company that is 10 times larger than it was 40 years ago. He makes 10 times (adjusted for inflation) what the guy who ran its predecessor company did 40 years ago.

That sounds fair.

Only 500 people runs Fortune 500 companies. What's the 500th best baseball player make?

Not that many people can do these jobs.

His average employee makes $23.00 an hour. That sounds pretty good. And, I bet they could fill those jobs for less on the open market.

What's so silly about this article is how it tries to turn it into a moral question. The previous CEO would be spinning in his grave! CEO's of the 70's weren't robber barons like today's CEOs are!

Bull****.

There's nothing immoral about wealth.

From the story:

"Over the period from the ’70s until today, while pay for Dean Foods chief executives was rising 10 times over, wages for the unionized workers actually declined slightly. The hourly wage rate for the people who process, pasteurize and package the milk at the company’s dairies declined by 9 percent in real terms, according to union contract records. It is now about $23 an hour."

So in other words, in real money, while the company has grown huge, the people doing the actual work hasn't made more money. They've made less.

 

[YankeeFan]

The people "doing the actual work" aren't doing 10 times the work.

He's running a company 10 times larger with much greater profits.

They have a union representing them.

I'm also betting that at $23.00 per hour, Dean's employees are some of the best paid in Harvard, IL.

If they were able to fill those jobs based strictly on supply & demand, I'd bet they could fill them at a much lower pay.

 

[Armchair_QB]

The people "doing the actual work" aren't doing 10 times the work.

He's running a company 10 times larger with much greater profits.

They have a union representing them.

I'm also betting that at $23.00 per hour, Dean's employees are some of the best paid in Harvard, IL.

If they were able to fill those jobs based strictly on supply & demand, I'd bet they could fill them at a much lower pay.

They're also probably better compensated than your average sportswriter. Even those who work at a Guild shop.

 

[sgreenwell]

The people "doing the actual work" aren't doing 10 times the work.

He's running a company 10 times larger with much greater profits.

They have a union representing them.

I'm also betting that at $23.00 per hour, Dean's employees are some of the best paid in Harvard, IL.

If they were able to fill those jobs based strictly on supply & demand, I'd bet they could fill them at a much lower pay.

I'm positive they could fill that CEO position for much less too, but I doubt it's ever going to hit the market as an open job.

 

[sportsguydave]

The people "doing the actual work" aren't doing 10 times the work.

He's running a company 10 times larger with much greater profits.

They have a union representing them.

I'm also betting that at $23.00 per hour, Dean's employees are some of the best paid in Harvard, IL.

If they were able to fill those jobs based strictly on supply & demand, I'd bet they could fill them at a much lower pay.

So by that logic, when a company sheds jobs and shrinks in size ... as many companies have been doing here for years ... then the CEO's pay should shrink by a corresponding amount. Since he or she is running a much smaller company, with much smaller profits, they should get paid less.

That sound fair?

 

[dooley_womack1]

Wealth can sure in the hell be immoral. It can be quite moral, too. And amoral, for that matter. Wealth of itself is nothing, meaning-wise, without intent and effect.

 

[Baron Scicluna]

The people "doing the actual work" aren't doing 10 times the work.

He's running a company 10 times larger with much greater profits.

They have a union representing them.

I'm also betting that at $23.00 per hour, Dean's employees are some of the best paid in Harvard, IL.

If they were able to fill those jobs based strictly on supply & demand, I'd bet they could fill them at a much lower pay.

The CEO isn't doing 10 times the work, either. There are only 168 hours in a week.

And if there's more profits, it stands to reason that the company can afford to pay more. They choose not to.

True, it's negotiated with the union and the company can go get other people. But how well would the company operate then if they only paid $12 an hour with constant turnover? In this case, the company's good wages retain employees, who have a stake in seeing the company grow.

Problem is, those wages should be better. Part of that is on the union, which should be hammering the company on this in the next contract negotiation. But the company should also be rewarding the people who are making it possible for them to grow 10 times.

You hear of companies cutting wages when profits are down. Well, if profits are up, wages should be up, too. Only in this case, a worker who has been at the company for 40 years is actually worse off now than when they started.

 

[YankeeFan]

The people "doing the actual work" aren't doing 10 times the work.

He's running a company 10 times larger with much greater profits.

They have a union representing them.

I'm also betting that at $23.00 per hour, Dean's employees are some of the best paid in Harvard, IL.

If they were able to fill those jobs based strictly on supply & demand, I'd bet they could fill them at a much lower pay.

I'm positive they could fill that CEO position for much less too, but I doubt it's ever going to hit the market as an open job.

Of course you could fill it at a lower salary, but could you fill it with someone who could grow the company like the current CEO for a lessor salary?

Top CEOs are in demand.

And, while everyone has their own skills -- we've all seen shows like Undercover Boss, where the boss struggles in the lower paying jobs within their company -- I'm betting that I could hire and train someone to, "process, pasteurize and package the milk," pay them less than $23.00, and not show much of a difference in the work.

 

[dooley_womack1]

"10 times the profit, thus 10 times the work" is a howler. It could be market and consumer trends that have nothing to do with the abilities of the CEO. It could be HR hiring a great crop of underling that are not his hiring bailiwick. It could be a ****-ton of things that have nothing to do with the CEO's skills. See "causation vs. correlation."

 

[YankeeFan]

The people "doing the actual work" aren't doing 10 times the work.

He's running a company 10 times larger with much greater profits.

They have a union representing them.

I'm also betting that at $23.00 per hour, Dean's employees are some of the best paid in Harvard, IL.

If they were able to fill those jobs based strictly on supply & demand, I'd bet they could fill them at a much lower pay.

So by that logic, when a company sheds jobs and shrinks in size ... as many companies have been doing here for years ... then the CEO's pay should shrink by a corresponding amount. Since he or she is running a much smaller company, with much smaller profits, they should get paid less.

That sound fair?

Yes -- especially if profits are shrinking.

Now, they'll pay games and say they still "outperformed" their goals. That's often a crock of ****.

Some CEOs have masterfully guided companies through bankruptcy and on to success. They do deserve credit and pay for saving jobs and putting the company on solid footing.

But CEOs who drive their companies into the ground should not flourish.

 

[dooley_womack1]

What about CEOs who farm out American jobs as part of that tenfold increase? Oh never mind, I know that's fine by you.