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Outsource CEOs, Not Workers
by Holly Sklar
www.dissidentvoice.org
May 2, 2004

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American companies are busily outsourcing workers when they should be insourcing CEOs from other countries. U.S. CEOs are way too expensive.

U.S. CEOs make 23 times as much as CEOs in mainland China, 10 times as much as CEOs in India and 9 times as much as CEOs in Taiwan, according to the latest Towers Perrin worldwide survey.

European and Japanese CEOs run many of the world's leading companies for a lot less pay than Americans. U.S. CEOs make five times as much as CEOs in Japan, four times as much as CEOs in Spain, three times as much as CEOs in the United Kingdom, France, Italy and the Netherlands, and twice as much as CEOs in Germany and Switzerland.

U.S. CEOs have put American factory workers, computer programmers and engineers in a race to the bottom with workers around the world while keeping themselves in a rigged race to the top.

"Supersize me" remains our CEO pay mantra. CEOs on Business Week's Executive Pay Scoreboard of 365 major U.S. companies hauled in an average $8.1 million in 2003 -- up 9 percent from 2002 -- including salary, bonus and long-term compensation such as restricted stock and exercised stock options. That's more than $22,000 every day of the year.

The average CEO made $6.7 million more in 2003 than in 1980, when they made $1.4 million, adjusted for inflation. The average full-time production and nonsupervisory worker made $31,928 in 2003 and $31,769 in 1980, adjusted for inflation -- a gain of $159. CEOs often spend more than that on dinner.

CEO pay skyrocketed 480 percent during 1980-2003, adjusted for inflation, while domestic corporate profits rose 145 percent, worker productivity rose 61 percent and worker pay stalled. If CEO and worker pay had increased at the pace of worker productivity, CEOs would have made $2.3 million in 2003 and workers $51,148.

CEOs made 44 times as much as workers in 1980, and 254 times as much in 2003. British CEOs make just 28 times as much as workers. You'd think the Brits were the ones who rebelled against royalty, not us.

American CEOs are paid like kings when they are hired, fired, retire and expire. Cendant CEO Henry Silverman provides an obscene example. On top of his $54.4 million in 2003 pay, he has more than $287 million in stock options not yet cashed in. In retirement, he'll get a lavish pension and perks such as use of company cars and aircraft. When he dies, his heirs will collect his company-provided $100 million life insurance policy.

Why are workers and shareholders earning less so descendants of CEOs can live like aristocrats for generations to come?

Colgate-Palmolive's Reuben Mark was the highest paid CEO in 2003 with compensation totaling $141.1 million. He was also on Business Week's list of CEOs who gave shareholders the least for their pay; shareholder return for 2001-2003 was a negative 19 percent.

The poster child for mad cash disease is Disney CEO Michael Eisner. His compensation averaged $121.2 million a year over the last six years, reports Forbes, while Disney shareholders had an annualized total return (including dividends) of negative 5 percent. Eisner's average yearly pay was 3,796 times as much as the average worker's and 300 times as much as the U.S. president's.

Overpaying CEOs is bad business. Compensation experts Joseph Blasi and Douglas Kruse analyzed executive pay at more than 1,500 top U.S. companies from 1992 to 2002. Corporations with significantly higher than average shares of employee stock options going to the CEO and the next four top executives had lower average total shareholder returns for the decade.

"Too many boards of directors think that only the top executives make a difference in the company's value, and the rest of the employees are just static factors of production like machinery," Blasi and Kruse observe in a new report. "But a growing body of evidence shows that regular employees can really make a difference." Research shows that "broad-based stock option plans, employee ownership plans, and profit sharing plans are associated with future improvements in total shareholder return."

You'll know compensation policies have changed for the better if CEO pay goes down while worker pay goes up.

Holly Sklar is coauthor of Raise the Floor: Wages and Policies That Work for All Of Us (www.raisethefloor.org). For reprint permission and other correspondence, contact: hsklar@aol.com. Distributed by Knight Ridder/Tribune News Service Copyright 2004 Holly Sklar.

Other Articles by Holly Sklar

* Wealthy Taxpayers Bank on Bush
* Don't Get Duped Out of Your Social Security
* Bush's Budgets Make us the Irresponsible Generation
* An Urgent Apollo Project Here on Earth 
* Two Americas Ring in the New Year
* Deadly Tunnel Vision in Iraq
*
Raw Deal for Workers on Minimum Wage Anniversary

* CEO Pay Still Outrageous

* Working-Class Soldiers, Upper-Class Tax Cuts

* Racial Gaps Still Wide This King Holiday

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