Bill Knight column for Thurs., Fri., or Sat., April 16, 17 or 18
CEO pay is up an astounding 937 percent since 1980, according to “The 100 Most Overpaid CEOs,” a report from As You Sow, a shareholder advocacy group that promotes corporate social responsibility.
In Illinois, the average worker’s pay is $44,509 while the average CEO pay is $5,388,298, according to AFL-CIO Executive Paywatch. That ratio is 121 to 1 (regular folks get the 1).
A second report, “The Wall Street Bonus Pool and Low-Wage Workers,” written by Sarah Anderson for the Institute for Policy Studies, found that $28.5 billion just in bonuses paid out to U.S. corporate bosses in 2014 is twice what all American minimum-wage workers together received over the same period.
According to federal calculations, more than 1 million U.S. workers earned the minimum wage last year. Their pay, based on a 35-hour workweek, totaled $14 billion. The Wall Street bonuses of $28 billion estimated by the New York State Comptroller’s office were in addition to their salaries.
The 40-page analysis shows the United States, the U.S. economy and society itself need new curbs on executive excess.
“The system in place to govern corporations has failed in the area of executive compensation,” the As You Sow’s report said.
CEO pay is bad for business, and also lousy for society, add some voices in the church.
Father David Hollenbach, director of Boston College’s Center for Human Rights and International Justice, said, “If society breaks apart into segments in such a way that the growth of the economy does not benefit all but only a handful – especially the handful who are calling the shots at the top – then the advance of the economy is not serving the common good.”
Theologian and priest “Thomas Aquinas said that if people in positions of power use their power to benefit not the common good but just themselves, that such people are ‘tyrants’,” Hollenbach told National Catholic Reporter. “You could say that the people on Wall Street who are using the tools of the economy just to benefit top executives, when there are large numbers of people are suffering as a result, are tyrants.”
This theological point of view blasts enriching CEOs at the expense of workers who produce the goods and services. The moral approach in such criticism is attracting allies, although similar misgivings or warnings are centuries old.
Father Michael Crosby, director of the Wisconsin/Iowa/Minnesota Coalition for Responsible Investment, has led efforts to reform executive compensation through corporate shareholder resolutions at Verizon, Walmart, TJ Maxx’s parent corporation and 17 other companies.
Drawing on data correlating stagnant pay and low retail sales, the coalition filed annual-meeting resolutions demanding corporations compare CEO pay to companies’ average worker wages and make changes.
After Walmart received such a resolution in February, its board of directors told the coalition the matter was being discussed, and weeks later the retail giant decided to increase wages for its lowest-paid employees.
Inequality generally leads to slow economic growth, said Rosanna Landis Weaver of As You Sow, plus the practice essentially is underwritten by taxpayers through a tax code that encourages top-heavy compensation.
Lynn Stout – a Cornell University Law School professor and author of “The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations and the Public” – has discussed the “perverse incentives” in pay-for-performance measures that “dictate 80 percent of CEO pay,” which create “incentives for CEOs to focus on manipulating the performance metrics.
“We now have over 20 experiences that show these incentives lead CEOs to stop worrying about what’s best for the corporation and its employees and its customers, and instead focus on manipulating these numbers,” Stout said.
Different faith leaders have long worried about the injustice exemplified in CEOs benefiting while everyday workers struggle. For instance, Catholic Popes for more than 80 years have disparaged income inequality in general and the CEO compensation practice in particular.
Pope Francis said, “Inequality is the root of social evil”; Pope John Paul II said paying excessively high wages is an “abuse of freedom” that costs the many workers whose freedom is threatened by poverty and systemic marginalization due to low wages; Pope John XXIII wrote that “disproportionately high” wages are unjust, especially when many workers don’t make a living wage; and Pope Pius XI said that “lowering or raising wages unduly, with a view to private profit, and with no consideration for the common good, is contrary to social justice.”
[PICTURED: Illustration from AFL-CIO's "Executive Paywatch."]