 More Money for ‘Masters,’ None for YouBy MUMIA ABU-JAMALAs the nation’s economy seesaws between bubble and bust, people are becoming more and more aware of the obscene levels of pay between average workers and their chief executive officers.During recent congressional hearings where businessmen begged and politicians lectured, much was made of the costs of private jets used to carry them to Washington.But this was actually a pittance when one considers the rarely discussed issue of executive compensation.When we look at 12 of the world’s most advanced economies, the United States is head and shoulders above all others in pay ratios between CEOs and average workers.In 2006, the average CEO made 364 times more than the average worker. As amazing as this sounds, this was down substantially from 2000, when CEOs made 525 times more than the average worker. In 2007, it was 344 times more than the average worker.As crazy as this sounds, it is normal when one considers the bubble that is the nation’s boardrooms, where buddies look out for buddies, almost completely divorced from the company’s performance.The other reason such arrangements are rarely successfully challenged is that they are based on contracts signed between corporate boards and CEOs, and are often the terms upon which a CEO joins a firm.Contracts are the bedrock of American business, and indeed, among the foundations of the United States. Why is this so?Read the Constitution. There it is: Article I; Section 9: “No State shall ... pass any laws ... impairing the Obligation of Contracts…”So what if the contract guarantees the CEO be paid $30 million a year, and the company lost $200 million in revenues? Fire 25,000 workers! A contract is a contract, right?That’s the American way. At least that’s the way pushed by big business in the last few decades. In 1980, the average CEO made 42 times more than the average worker. By 1990, it more than doubled to 107 times.As the economy was falling like dominoes, Wall Street paid out $33 billion in executive bonuses just in 2007.It’s hard to resist the temptation that business is just a machine — a money-making machine — to benefit the CEO, the board, their cronies, occasionally shareholders — and last of all — employees.It is precisely this machine that built the subprime problems, the foreclosure plague, and the present economic repercussions of the latest bursting bubble of wild, speculative greed, while paying CEOs fortunes fit for kings.Sources: Landy, Heather, “Executive Pay Sparks Outrage,” The Washington Post (Nat’l Wkly. Ed.], Nov. 24-30, 2008, pp. 7-8; Maloney, Brenna and Todd Lindeman, “Behind the Big Paydays,” The Washington Post, Nov. 24-30, 2008, {Nat’l. Wkly. Ed.} (graphic of pay ratios), p.7. Photo: OP-mumia.jpg |
