Another survey by Bloomberg News of 250 of Standard & Poor’s index companies gets more specific. Comparing CEO pay to average worker salaries in individual industries, Ronald Johnson’s $53M salary at JC Penney leads the pack with pay “1795 times” the $29,688 average salary for general merchandise stores. (JC Penney has spent the last several years trying to stay one step ahead of bankruptcy, so this salary seems even more extremely unfathomable.) Even Michael Duke, CEO of the oft-villainized Wal-Mart, is “only” #18 on the list with a “611 times” ratio. The entire list of 250 companies makes for some interesting reading.
Even in this era of staggering CEO pay and golden parachute firings – compensation usually set by fellow CEOs with similar salaries and benefits looking out for each other – “331 times” is hard to comprehend, much less “611 times” for a failing company. But when corporate revenues are consistently talked about in multi-billion dollar terms, and profits in 8-9 digit millions, it is hard to connect those numbers to the thousand dollar salaries of real-life people. Then again, when head football coaches make more money than the collective salaries of the state’s governor and the entire cabinet, and baseball players sign $100M contracts, and “celebrities” with little demonstrable creative talent earn fortunes from allowing voyeurs to peer into every moment of their (fictional) personal lives on cable TV, then is it any wonder that we have lost our perspective about the value of real work in this modern American age?
This is not a criticism about individual wealth in America. Certainly not a criticism of personal success, which is one of the historically and wonderfully notable facets of American’s many enviable stories of human creativity. Rather, it is a questioning about how much wealth is “enough,” versus an insatiable accumulation that knows no bounds and ultimately can never satisfy its accumulator. It is a questioning about to what ends one will go in pursuit of that wealth in disregard of ethical and legal boundaries, and the morals of religious teachings. And it is a questioning about recognizing our obligations and responsibilities to others who join us on our career road, the many who make possible the success of the one.
This is also not an argument for “income redistribution.” It is a push to acknowledge that a CEO and his/her employees are all in it together. MUST be in it together. Because in reality, no CEO succeeds unless the workers on the line, the salesman in the field, the receptionist answering the phone, and the product designers in the lab, are successful in their endeavors. Because if the product is bad or unreliable, or the service is unresponsive or uncaring, then all the spreadsheets and strategic plans and organizational skills from the CEO will be worthless in generating company profit.
Greed and ego may drive a CEO to great heights in the short term, but it is a dangerous precipice from which to fall over the long haul. And the employees, shareholders, and customers will be the worse for allowing that kind of self-worldly view to sit at the power pinnacles of America’s companies. And thereby so we see once proud corporate names that once personified America for generations instead falling by the wayside – witness Sears, JC Penney, AT&T, and numerous automobile brands that once personified the power and allure of American industry.
The truth is, CEOs do not make any products, do not sell products to a customer, do not fix them when they are broken. A company only survives and thrives by making a sale – and a CEO does not sell anything; employees do. A CEO’s only real job is ensuring that the right people are in the right place to do the right work for the right people under the right conditions. And then hope that those folks come through because good decisions have been made. If a CEO’s pay goes up, it should only be because the corporate profits went up, and as a result, everyone’s pay should go up in the same proportion. It is not about limiting CEO salaries; it is about sharing that result and reward with everyone who made it possible. CEO wealth by itself does not make them “job creators” or add much to our GDP, and no company (except badly managed ones) ever went broke raising the minimum wage for their employees.
CEOs deserve higher pay because their actions and decisions affect greater numbers of people and corporate outcomes. So all salaries are, and should be, proportional to the scope of an employee’s impact – at all levels. But success and failure is a shared outcome, and should be reflected in shared compensation. When Ronald Johnson at Penney’s makes 53$M dollars, and Michael Duke at Wal-Mart makes $18M, yet many of their employees must rely on public benefits to feed and clothe their families, then the understanding of this “shared responsibility and mutual interdependency” has clearly been lost. And the buying public, who are frequently critical of such CEOs and companies, nevertheless implicitly supports this blind callousness as a result of their continued shopping decisions.
There is a prayer some say at mealtimes in which the diners acknowledge “the ten thousand people” who made that meal possible. That prayer serves to remind us of all the many who came together for our benefit in order to provide that simple slice of bread on our plate. So also the thousands who made possible that CEO’s success, such as one’s parents and family; the friends throughout life; the many teachers, and the taxpayers who funded the free, public education; the mentors, and the good, caring managers who encouraged and promoted; the indirect contributors who provided the raw materials and infrastructure needed by the company; all of the aforementioned employees; and so many forgotten others. We do and should recognize and acclaim the successful go-getter and entrepreneur who creates something from nothing, advances one’s personal status, and achieves great personal triumphs. America has always rightly admired and benefited from such people – the theoretical “self-made person.” But when a CEO forgets where s/he came from, and that “lone rangers” and never truly “lone,” then admiration equally deservedly goes down. Financial failure then lurks around every corner, and spiritual bankruptcy replaces the illusion of “success.” No amount of money can buy back that kind of bankruptcy of character.
“When you drink the
water, don’t forget those who dug the well.” (Chinese
proverb)
© 2014 Randy Bell
2 comments:
once again, great work!
One of your best, thanks for sharing. Keep up the great thinking and writing!
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