Blue Mass Group

Reality-based commentary on politics.

Executive Compensation Ratio?

By

In all the uproar about The Globe, I seem to have missed a hugely important factor: the Executive Compensation Ratio (ECR).

What is the ratio of executive pay to “average” worker pay at the Globe? While I understand that none of those numbers are exact, surely we can still see whether the number is closer to 40-1 (as it was in the US in 1980) or 400-1 (as it has been during the Cheney/Bush era).

If the Executive Compensation Ratio is in the vicinity of 40-1, then I suggest that all parties batten down the hatches, get their foul weather gear on, and work together to get their enterprise through this hurricane.

If the same ratio is in the vicinity of 400-1 (or more), then I suggest that it’s time to examine the size of the resulting excess compensation pool, and ask how far that wealth will go in helping weather the storm.

I submit that a 40-1 Executive Compensation Ratio is already generous for the executives. I submit that the unions should not budge a penny until the executives have calculated the total excess amount they’ve bled from the company.

The executives should then deposit, from their own wallets, that amount. They should reset their own executive compensation packages to line up within the 40-1 constraint, before any further concessions are demanded from the workers.

Then, and only then, should labor and management together address the question of what changes to compensation structure, from today onward, might or might not be needed to weather the storm.

Please share widely!
fb-share-icon
Tweet
0

Comments

  2. No executive compensation should be more than 100x that of the lowest paid worker in the same company.  No need to whine that we’re punishing success.  Executives can be as successful as they can; all I ask is that they acknowledge their employees role in their success and share the wealth.

      • But where are the regulations we were promised by Geithner want to bet such a limit will never be included even a 300 to 1 ratio

        <

        p>As Usual just my Opinion

        • Progressives can take a stand on the questions surrounding the future of the Boston Globe whatever happens at the federal level.

          <

          p>If we are able to speak with a united voice from a consensus at the local level regarding a local issue, surely our voice becomes more credible when we address federal issues.

          <

          p>Neither the management nor the workers at the Boston Globe need federal regulations to do the right thing. Both communities, however, do need our support when they try.

          • I think the executive compensation has become so out of control that the only way it will change is through Federal Regulation.

            <

            p>Let me ask one question name one fortune 500 corporation who has reined in executive compensation since the economy imploded?

            <

            p>NYT is a member of the Fortune 500

            <

            p>With stock prices generally in the gutter other then Edward Liddy working for $1 a year how much is his staff getting paid and I am not talking about the Executive Secretary, But the Executive management team in AIG. How about Citigroup who has taken more cash in Bailout then GM or maybe BofA second only to Citigroup in Bailout cash. Then lets look at some who have not taken federal taxpayer dollars like GE or Caterpillar or NYTimes?

            <

            p>As Usual just my Opinion

            • I enthusiastically agree with you that federal limits are required.

              <

              p>I mean only that we can still aggressively advocate for similar limits at the local level — specifically, regarding the NYT/BostonGlobe.

    • No executive compensation should be more than 100x that of the lowest paid worker in the same company.  No need to whine that we’re punishing success.  Executives can be as successful as they can; all I ask is that they acknowledge their employees role in their success and share the wealth.

      <

      p>Note well that this would not preclude any CEO (or other executives) from pocketing massive paychecks: it only brings the employees along with him/her.   Seems alright to me…

      <

      p>

  3. From CEO John Mackey:

    “Fewer things harm an organization’s morale more than great disparities in compensation,” he says in an interview at the company’s Austin headquarters. “When a workplace is perceived as unfair and greedy, it begins to destroy the social fabric of the organization.”

    How much money have the Board of Directors of the NYTimes Corp. taken the past two years?  17 Directors times $250,000 per year (a guess) would be over $4 million a year… a pretty hefty chunk of that $20 million Management is demanding from people who write, edit, print and deliver the Globe.

    <

    p>

    • You are also correct the rank and file is the Paper and it is being asked to share an unfair burden. NY Times management team though is not likely to care in this case they will simply shut it down and live out their days in New York. Which is why if we had legislation the playing field would return as it stands they will sit in the Ivory Tower in NewYork and stomp their feet like the spoiled rich kids they are and say you know how much it costs to live on Park Avenue. Unfortunately the rank and file has a tough dicission to make and little back up to lean on.

      <

      p>Maybe we could interest them in the Pitch fork deal I am working on with Home Depot!!!!!!

      <

      p>ok, ok, a shameless capitalistic plug—- I am ashamed!
      I hope we can all come together and support them with as much energy as we have shown here on BMG

      <

      p>As Usual just my Opinion

  4. The Jay Leno or Bill Maher show (Jay vs a secretary?), how about Manny Rameriz vs the guy selling hot dogs in the stands, Sean Penn vs the lunch guy on the set…  

    <

    p>The market works just fine at this.

    • Though I would point out a couple things.

      <

      p>Leno and Maher I believe are themselves employees.  I’m not exactly sure what Maher’s situation is, but I’m pretty sure Jay Leno works for NBC.  Therefore, I would be asking to compare the president of NBC to their lowest paid staff assistant.  We might go further and say the CEO of General Electric vs. the lowest paid of the entire corporation; I actually haven’t decided how I would want to address that.  I couldn’t disagree more with your final statement.  To me, the fact of the large gap is proof positive that the market by itself is a long way from working “just fine”.

      • The market is not only not doing “just fine”, in fact the wheels have come off, the engine has exploded, and bystanders have been injured and killed by flying debris.

        <

        p>During the past twenty years, since the Reagan administration, the “free market” (manipulated by increasing unrestrained and unmitigated greed of the wealthiest 1%) has been responsible for an enormous and largely undocumented transfer of wealth from the poorest to the wealthiest elements of our society.

        <

        p>The very act of “balancing the federal budget” is an example of policy that nobody seriously questions and that plays an enormous role in driving the wealth transfer. How has the federal government attempted to “balance the federal budget”?

        <

        p>By slashing services provided to the lower and middle class. Across the board. Transportation infrastructure, education infrastructure, federally-funded health care, food inspection, financial regulation, consumer protection, the EPA — across the board. Who feels the impact of these cuts? The poor and middle class.

        <

        p>Meanwhile, who benefits when the government pays off federal debt? T-bill holders. How many poor and working-class people own T-bills?

        <

        p>Consider tax policy. What group has had their effective tax rates slashed? The wealthy. What group has had their effect tax rates increased? The middle and lower classes.

        <

        p>How many of us have looked at the mean (as opposed to median) household wealth? How many us understand that the two are not the same? Why do you suppose corporately-dominated government and media encourage us to keep our focus on the median?

        <

        p>I’m sure that it’s pure coincidence that the median household wealth (the number where half the population has less and half has more) remains relatively stable while wealth is transferred from the bottom to the top.

        <

        p>The median net worth of the US is, according to variety of sources, in the vicinity of $60-70K. The median net worth of the top ten percent — the point at which half of the top-ten have more — is an astounding $833K — more than ten times as much. The very top end — the top one percent — is way up in the stratosphere.

        <

        p>The rub in all this is that all that wealth doesn’t buy anything unless it moves around, and in order to move around a lot of people have to have some wealth. By the end of the Cheney/Bush administration, so few people had any wealth that the entire engine ground to a halt and the momentum of the vehicle caused everything to blow up.

        <

        p>The credit bubble, fueled by the real-estate bubble and the sub-prime mess, hid the unfortunate reality that the US consumer is flat broke, and has been for years. The wealth is virtually all in that top 10%.

        <

        p>The middle-class was, since WWII, the goose that laid the golden eggs. The unmitigated relentless greed of the topmost 1% has strangled that golden goose.

        <

        p>The astronomical ECRs are just one easily measurable symptom of this underlying malaise. There are many others.

        <

        p>When all 20-30 people in the extended family are sitting around the holiday dinner table, and two gluttons at the end have systematically emptied the contents of every serving dish in the building into their own voluminous satchels (far more than they can eat, by the way), everybody else is going to be hungry.

        <

        p>The lie that “The market works just fine at this” is exposed anytime any of us takes a walk around the block.

Archives