This will seem like a fairy tale now, but not so long ago, it was actually possible for CEO pay to constitute “an embarrassment of riches.”
How quaint. Today, the riches are massive, but the embarrassment gene seems to have been completely bred out of corporate chieftains. They have no shame at producing negative results and offing thousands of underlings, then wheeling in a front-end loader to haul their own pay to the bank. The head man at Estée Lauder, for example, recently cut 2,000 employees but grabbed a huge salary increase and new stock payments worth more than $24 million.
Are there no adults to supervise these corporate playgrounds and teach such concepts as humility and sharing? Well, technically, the board of directors is supposed to provide corporate governance, including the setting of CEO pay. But who’s on these boards? Mostly other members of the corporate brotherhood who want to keep executive pay levels rising. And, of course, the chiefs themselves sit on their boards, usually chairing them.
The tale of boardroom coziness between directors and the bosses they supposedly govern was vividly revealed in the Wall Street crash of 2008. Far from providing any reasonable restraints, few board members even questioned the casino games the banks were running, and fewer yet objected to giving reckless bankers billions of dollars in unwarranted bonuses.
Now after the collapse, what has changed? Nothing. One survey of nine of the big banks we taxpayers bailed out shows that two-thirds of their failed board members are still there, and, once again, they’re shoveling inexplicably huge bonuses at the same old CEOs.
A system that enriches executive elites while crushing the middle class is worse than an embarrassment — it’s morally untenable.
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