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CEOs cornered into pulling in big bucks

Jack Markowitz
By Jack Markowitz
3 Min Read June 5, 2014 | 12 years Ago
| Thursday, June 5, 2014 12:01 a.m.
It would be too easy to jump all over the country’s chief executive officers for getting paid too much.

But has it occurred to anyone they might not be able to help themselves?

The median pay package for CEOs of Standard & Poor’s 500 companies hit a record last year — $10.5 million.

That was up 8.8 percent from 2012, the first breach of the $10 million barrier. It was kind of embarrassing, actually, especially if a company had any layoffs during the year.

The people at the top have to know how bad it looks to come across as greedy guys, out for themselves, oblivious to the rank-and-file. It can’t be good for company morale or even for free enterprise as an institution. The left’s favorite stick to beat capitalism with nowadays is income inequality.

The median CEO is now pulling down 257 times the average worker’s check stub. In 2009, it was 181 times; a few decades ago, just 30 or 40 times, back when $1 million was real money.

Last year an obscure Texan, Anthony Petrello, earned $68.3 million, the highest paid CEO, at Nabors Industries, an oil service firm. But nine others drew between $65.6 million and $31.4 million, respectively, at CBS, Freeport-McMoran Copper & Gold, TripAdvisor, Viacom, Regeneron Pharmaceuticals, Disney, Discovery Communications, TimeWarner and Comcast. The totals included salary, bonus and options, the preponderance in stock in 2013’s rising stock market.

Some CEOs, who are basically hired managers, probably can’t believe how much they’re making. (Over the years, two CEOs actually told a reporter they felt overpaid.)

But what’s a fellow to do?

Say he goes to his board of directors and informs them that executive compensation has got way out of hand. Cut him in half, and he’d still feel amply remunerated. Would it do any good?

Probably not. Boards always check anyway with independent consultants; the competition for talent is so fierce. If this company paid less than that company, all the best people would gravitate to that company. Disaster.

Look at it this way. A board’s fiduciary responsibility is to make sure the company is managed right up there with the best. Otherwise, they’re not worth their directors’ fees, which not uncommonly total a quarter-million a year these days. Because elite executives often serve on each other’s boards, some might suspect a mutual back-scratching society, even a racket. But stifle that thought. Competition is the killer.

A truly conscience-stricken CEO might meet with his peers and all agree to cut pay and perks to less laughable levels. But even if they got down to just 100 times the average worker’s take-home, or 50 times, the left would still yell “income gap!” And the government would land on them in a minute for price-fixing.

So they’re trapped. Fishy as it looks, there’s nothing CEOs can do about the trend towards getting paid like rock stars. A little compassion might be in order.

Jack Markowitz is a Thursday columnist with Trib Total Media. Email jmarkowitz@tribweb.com.


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