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from the because-when-they-mess-up-they-only-have-a-golden-parachute...wait-a-minute dept.
Why are CEOs of U.S. firms paid 320 times as much as their workers?:
Last August, Jamelle Brown, a technician at Research Medical Center in Kansas City, Missouri, contracted Covid-19 while on the job sanitizing and sterilizing rooms in the facility's emergency department. Luckily, his case wasn't severe, and after having quarantined, he was back at work.
Upon his return, Brown was named Employee of the Month in his unit and given a gift voucher for use in the hospital cafeteria. The amount: $6.
"That stung me to the bone," said Brown, who makes $13.77 an hour and has worked for almost four years at the hospital, owned by the corporate giant HCA Healthcare. "It made me sit back and say, 'This place doesn't care for me.'"
Research Medical's owner, HCA Healthcare Inc., is a profitable, publicly traded network of 185 hospitals and 121 freestanding surgery centers in 20 states and England. Even in the year of Covid-19, 2020, the company generated $51.5 billion in revenue and increased its pretax earnings by 3.6 percent. Its shares are up by 14 percent this year, versus 10 percent on the Standard & Poor's 500 index.
That performance helped boost the total compensation HCA's chief executive, Samuel N. Hazen, received last year to $30.4 million, a 13 percent rise from 2019, documents show. Although Hazen's salary was 5.8 percent lower in 2020, the total worth of his compensation package equaled 556 times the compensation received by the median employee at HCA — $54,651.
The figures highlight the growing CEO pay gap, a problem among many public companies according to some investors and workers and even a few CEOs. In 2019, for example, the average pay ratio among 350 large American companies was 320-to-1, according to research by the Economic Policy Institute, a left-leaning think tank in Washington, D.C. In 1989, the average was 61-to-1.
(Score: 4, Insightful) by Rosco P. Coltrane on Monday April 12 2021, @10:51AM (15 children)
Do CEOs (or other power critters) have skills that are so rare and so essential that they're worth paying that much? Or said another way, does the company fare better overall despite the financial burden of the CEO's salary than without it?
Of course not. Yes, good CEOs are hard to come by and are in high demand. But they're not 300x to 500x more valuable than the low-level grunts. What we're seeing here is the rich class getting richer, and it's nothing new. Many studies indicate it was the major cause of the Roman empire's downfall for instance.
(Score: 1, Funny) by Anonymous Coward on Monday April 12 2021, @11:27AM (3 children)
I think I understand your sentiment. however, poor people in the time of the roman empire were much poorer than poor people today: they were literally slaves, who had no control over their own lives.
in fact, poor people today have better food and healthcare than rich people from the roman empire. they also have better access to education, entertainment, and their lives are safer. plus a number of various improvements.
would you give up your computer and phone for the life of a rich roman? ok, fucking the young slaves may be fun for a while, if you're into punishment-free rape, but I personally find the prospect of dying from a cut getting infected absurd. by the way, they didn't have viagra back then, either.
(Score: 4, Funny) by pe1rxq on Monday April 12 2021, @05:47PM (1 child)
So we are supposed to be ok with it because slaves a few thousend years ago had it worse?
You set a pretty low bar....
(Score: 1, Interesting) by Anonymous Coward on Tuesday April 13 2021, @05:53AM
yes. you are supposed to recognize that the word "poor" today refers to people who are richer than the rich of even a couple of hundred years ago. I have to work for a living. and yet, I got to travel the world, I have read hundreds of books before my 40th birthday, I have two healthy kids that my wife and I chose to have (and my son didn't lose his arm when a finger cut got infected). and a number of other things, I'm not going to list them all.
apparently it's true that in the US there has been a recent increase of inequality. but that shouldn't be a problem in itself. the thing to strive for is raising the standard of living of the poor.
one "solution" would be to take from the salary of the CEOs and give to the salaries of everyone else, which is what this article seems to be about. ok. that's an opinion. but the original poster of this thread was arguing that the current state of affairs is similar to Roman times, in particular to the decay of the Roman empire. I wanted to point out that things were worse in Roman times for the poor and the rich alike.
(Score: 0) by Anonymous Coward on Monday April 12 2021, @11:41PM
Mixing slaves up with the White citizens of Rome is dumb, and what did Rome in as well.
(Score: 2) by crafoo on Monday April 12 2021, @11:31AM (5 children)
This is a good question. Of course, the _only_ factor that matters when determining someone's pay is how difficult is it to find their replacement? Pay is simply a measure of how many other people are in the market for your job. Supply of your skills vs. demand for your skills. Not how hard you work, or how difficult the work is, or how special it makes you feel, or how necessary and vital your work is. If being a doctor were easy and everyone just loved doing it, we would pay them dogshit.
I think many skills required for a CEO's job are artificially limited to select clubs. I believe it is a quite difficult job, and has more to do with showmanship than most people acknowledge (or are capable of).
(Score: 1, Informative) by Anonymous Coward on Monday April 12 2021, @12:05PM
It's always funny how you talk about 'skills' while the reality has nothing to do with the skills.
CEO is just another version of a sales manager. If these managers delegate badly, you end up with a shit company very quickly. They sell the company to investors, btw, and guide product development and priorities. But it doesn't take some extraordinary person to do this.
(Score: 2) by sjames on Monday April 12 2021, @03:56PM (3 children)
There's a whole world full of CEOs used to working for a fraction of what American CEOs make, why not hire them?
(Score: 5, Insightful) by Anonymous Coward on Monday April 12 2021, @06:37PM (2 children)
Because they're not in the club.
There's an entire social strata in the U.S. that consist of what are usually loosely referred to as 'the elite'. These are the old money, trust fund families, whose kids go to the private schools none of us schlubs have even heard of, the ones who get into Harvard and Yale as a matter of course. Occasionally some up-and-comer who makes billions via some tech firm are permitted entry, to keep the money and power amongst the elite, but for the most part if you ain't born into it, you ain't getting in.
This is where the CEOs come from. They sit atop their firms and extract money, and sit on the boards of other companies and help those firms' CEOs extract money. If someone makes an oopsie at one firm, they shuffle the chairs around for a while and make sure the one who hath transgressed is taken care of. Sure, there aren't enough spots for everyone to be a C-level exec at a company -- that's what politics is for. The ones going into politics help the ones in the companies retain economic control, while the companies help the politicians retain political control. Administrations change and one set of club members take over while the other set cools their heels in a C-level spot, or one of those think tanks that exist to keep money flowing to them while they await another shuffle of the chairs.
Yes, yes, of course there are a few "outsiders" given the top spots at some of the high-profile companies for a few years. You know their names. That's why they're there, for you to know their names, and thus think that the system is as advertised and if you only work hard enough and long enough, you too can climb that ladder.
The actions of these CEOs and the rest of the elites, are far better understood if you assume that they have little desire for more money. They've already got money, any more money for them is just like one of us running up the score against our buddies in the bowling league. They are colluding with each other to maintain their control. As long as they have control, they'll never need to worry about money. That's why so many companies are appearing to behave in a manner inconsistent with the idea that companies exist to make money, and will act in ways as to make more money. No, the people in control of the company have other goals, and the company is merely a tool to use for those goals.
(Score: 0) by Anonymous Coward on Monday April 12 2021, @11:44PM (1 child)
this guy gets it.
(Score: 2) by edinlinux on Tuesday April 13 2021, @03:22AM
+5 to the above..
It is exactly like this..I have been there and seen it first hand..
(Score: 0) by Anonymous Coward on Monday April 12 2021, @03:39PM
Just for fun, I like to calculate the hourly rate that these CEOs are "earning". So, suppose that a CEO "earns" 1 million dollars per year. Just for simplicity, let us suppose that this hypothetical CEO is working 365 days a year (no days off), 16 hours per day (the guy is a hard worker!). What would his hourly wage then be?
$1,000,000/365/16 = $171.23/hr
Can any of you think of anything you might do for a job that would be worth that kind of dough? Could you even imagine demanding from the boss that kind of compensation? About the only thing I can think of that would be worth that kind of money is disarming bombs. (And I'm pretty sure that the guys who do that line of work earn substantially less than $171 per hour.) I'm also quite sure that CEOs are much easier to come by than you apparently suppose. I'm not going to bother to look it up again but I seem to recall that CEO pay is, in some cases at least, inversely correlated with the bottom line performance of the company.
The root cause is that the CEOs get to decide how much they get paid. C'mon! Be honest: you would certainly at least double or triple your compensation if it was your call to decide, wouldn't you?
(Score: 1) by khallow on Monday April 12 2021, @03:52PM
Depends on the size of the business. But yes, a good CEO can be much more valuable than several hundred low-level grunts.
(Score: 0) by Anonymous Coward on Tuesday April 13 2021, @04:11AM
It's mostly a byproduct of changes to the tax code. If the top tax tiers were where they were 40 years ago, you likely wouldn't see that much increase in pay as there'd be little point to it as most of the extra past a certain point would have to be paid back as taxes to the government. When Reagan took office, the top personal income tax rate was over 70% which made having a salary past a certain point pointless.
The other issue is that these scammers sit on each other's boards and since nobody wants to admit that their CEO is below average, they all get paid above average which causes an increase over time as half the CEOs have to be paid less for it to be an average of that sort.
(Score: 1) by khallow on Tuesday April 13 2021, @09:57AM
Many studies would be in error then. There are several effects being ignored in this blaming of wealth inequality: first, that the Roman empire was in no way a democracy - there was no representation of plebeian interests; second, that people were progressively tied down and enslaved as the empire wore on - feudal systems started to take root as the empire failed to protect its citizens from invasions and crime (something the wealthy were more able to resist); and three, the whole empire grew more and more corrupt and incompetent at providing necessary services. Notice how overlapping these modes of failure are. Much wealth was tied to land, and as the system grew more corrupt and oriented towards the wealthy (since no representation by normal people), it became harder for small groups to protect themselves. Hence, the feudalism started with people getting protection in exchange for part of their production. The wealthy were one of the groups able to offer such protection - so would barbarian chieftains for another notable example.
Meanwhile how useful are present day measures of wealth and income inequality? My take is that a fair bit of the alleged inequality is in the form of stock options and such, which are just not that valuable compared to money and overpriced particularly in today's economy. The US is doing ok with respect to the providing of services and things that would tie people to one place (as long as we can control stuff that hinders movement, like professional licensing or taxation of the moving of assets).
(Score: 0) by Anonymous Coward on Tuesday April 13 2021, @10:41PM
The system has checks and balances, and an ethical tradition. It worked great for generations, until the numbers got too big. A moral society is now just a chump for the prospective Robber Baron.
Long before G**gl* took down their "Don't Be Evil" motto, we knew it was all over. And before M*cr*s*ft began cutting off their competitors' air supply. Leverage your monopoly power? You'd be a sucker not to.
At one time, Mr Gates was too young to be a pillar of his community.