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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: 2) by wisnoskij on Monday April 12 2021, @01:36PM (15 children)
People have a problem thinking intuitively of large numbers.
But we have a problem here I will liken to a video game example. One of my favourite games the original Mount and Blade had a very poorly designed late game. After you had worked your way up to Lord of a country, their was not too many options. You turned your followers into vassal lords who controlled land, castles and men for you, but whenever you gave any of them anything all the others got jealous. And after you a certain point you had so many followers that any charity created a net loss of kingdom morale.
I 100% assure you that everyone up the chain of command would of wanted to give this janitor $10K and a 2 month vacation, but what about the 100k people who had worked their for 5+ years? HCA Healthcare is rich but it likely cannot afford to give every employee an extra $100 and it definitely cannot afford to teach its employees to expect that. Also this is the absolute worse time to be splurging on care packages when they should be ramping up capabilities.
Furthermore, we do not have a CEO salary problem, we have a company size problem. Including all the stock, performance incentives, and everything else that went into the $30 million dollar compensation, the CEO only made less than $.05 cents an hour per employee he was responsible for. This is also a dishonest evaluation. We are evaluation the CEO based on total compensation much of which will just be stock, while we are just measuring this employees salary based on his hourly revenue not his total compensation. Including all the incentives, Bonuses, etc he probably makes twice that amount in total compensation. Yes, I could agree that CEOs are treaty too lightly in the West, I would love to see the occasional CEO executed for gross negligence or illegal acts like in China, but they make peanuts compared to the their responsibilities.
We also have some very misleading wording here. This employee is likely getting a yearly bonus, that is a very common practice that is fairly universal. And the CEO did not get any bonus or raise, he got paid exactly what was stated in his contract, just because his stocks increased in value and any performance based incentives really kicked does not equate to a bonus.
(Score: 3, Informative) by BK on Monday April 12 2021, @04:44PM (13 children)
Not sure which universe you're referring to. The janitor probably doesn't get any kind of bonus. Even less likely if he's contracted. Nor do the cooks get a bonus at your favorite restaurant. Nor do the checkout clerks or stockers at your favorite retailer. Nor does the nurse at your hospital.
It's a common practice in certain professional and white collar jobs where production can allegedly be measured. But not in most jobs. Not even most 'professional' jobs. More like 'in certain industries and roles'.
...but you HAVE heard of me.
(Score: 2) by wisnoskij on Monday April 12 2021, @04:59PM (12 children)
I have literally never heard of anyone not receiving a christmas bonus. Hell I even got one once for having an unpaid mod position on a forum with zero responsibilities. Looking into it it appears about 2/3s of employees get one, I am really surprised it is that low. Still that probably gives him a 50/50 chance of one.
(Score: 2) by BK on Monday April 12 2021, @05:11PM (6 children)
[Citation Needed]
Your experience is probably not typical.
...but you HAVE heard of me.
(Score: 2) by wisnoskij on Monday April 12 2021, @05:30PM (5 children)
https://www.cnbc.com/2019/12/05/heres-where-employers-stand-on-2019-bonuses.html [cnbc.com]
(Score: 4, Informative) by BK on Monday April 12 2021, @08:06PM (4 children)
Let me help you read that article.
Companies were surveyed. They were of various sizes with different numbers of employees. The percentages given are percentages of companies. We would need to make the leap to assume that all companies were the same size for these numbers to mean a damn thing. Kind of like assuming spherical cows. But, let's run with this before we tear it apart more...
36% of companies surveyed gave no bonuses.
11% of companies gave 'non monetary gifts'. Think T-Shirts. Or maybe a donation in their name to The Human Fund.
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47% of companies didn't give bonuses
+
24% of companies gave bonuses to select employees... executives, sales staff, etc. So most employees don't participate here. Managers maybe but not line workers.
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71% of companies surveyed gave no bonuses to most or all of their employees.
+
20% of companies gave everyone a token bonus of $100 or less to everyone
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91% of companies gave no bonuses OR gave minimal or token bonuses to most of their employees.
.
finally...
.
Just 9% of companies had a structured bonus or profit sharing plan that all or nearly all employees participated in.
.
So, if I assume that companies are all the same size, on average, with some hand waving and reasonable assumptions, I might conclude that 12% of employees... maybe 1 in 8... get meaningful bonuses that affect how we should look at their salaries. This is the 9% with the structured company wide plan plus a fraction of the employees in the 24% that give bonuses to select employees.
.
Thank you for the citation.
...but you HAVE heard of me.
(Score: 2) by wisnoskij on Monday April 12 2021, @08:26PM (3 children)
I am not sure exactly how to parse that.
Maybe it is just different in Canada https://www.cbc.ca/news/business/holiday-bonuses-1.5387582 [www.cbc.ca]
But we might also just be talking about different things. A Christmas bonus is just a few hundred dollars thrown out to employees so that even the least financially literate can afford to buy some presents for their kids. A structured profit sharing plan is just a different type of performance based compensation. It is like working for tips but since it is more complicated to calculate performance in most industries it is an end of year addendum. These are not bonuses as they are not discretionary. I absolutely believe you when you say that salaries based on profiting sharing are rare, I am surprised they are that high. But America is different from Canada if christmas bonuses are rare. Actually come to think of it, the forum christmas bonus was actually from an American company.
(Score: 2) by BK on Monday April 12 2021, @08:43PM (1 child)
You asserted in your first comment that we might be missing an aspect of employee compensation (when compared to CEOs) by not considering employee bonuses. I'm pointing out that those bonuses are not meaningful for most employees most of the time. Your citations support my assertion. The big number here is 230X.
Your latest citation speaks to the prevalence of holiday parties among employers. I'm sure that these have a cost. But it is unreasonable to consider these non-monetary items when discussing compensation. Yes, employers that throw parties are nice(er) to work for (if you like parties) than those that don't. But the existence, even the prevalence of parties, doesn't change the underlying math.
...but you HAVE heard of me.
(Score: 2) by wisnoskij on Monday April 12 2021, @08:57PM
Sure, that is reasonable. But also people with lower salaries are unequally affected by being given a couple hundred bucks. This guy could easily get a weeks or maybe even more salary gifted to him around Christmas time. He might have a retirement plan where the company matches his investments up to thousands of dollars, he might have health insurance, vacation days that he can even cash out at the end of the year. He would not be the only janitor to have stock options. A non hourly rate portion of a low level employees salary can be a huge monetary value, bigger than the CEOs in relative terms.
(Score: 0) by Anonymous Coward on Monday April 12 2021, @09:42PM
Someone else responded with a link to the CBC (https://www.cbc.ca/news/business/holiday-bonuses-1.5387582). From that link:
in Canada. Then https://soylentnews.org/comments.pl?noupdate=1&sid=42949&page=1&cid=1136642#commentwrap [soylentnews.org] doesn't know how to parse it? I mean, it's pretty damn clear, and it is NOT saying that most Canadians get a yearly bonus beyond a $25 gift card for sorely needed December groceries.
(Score: 1, Interesting) by Anonymous Coward on Monday April 12 2021, @06:45PM (3 children)
I worked at a place in the 90s that gave Christmas bonuses. At first they were cash added to our paychecks; at my level it was a couple of hundred bucks, not much, but still something. After a couple of years of that, they changed to being gift cards to restaurants or local retailers, either $20 or $50 depending on your title. Then came the year the CEO bravely gave a donation to charity in our names as our bonus. That's about when the phrase "rats from a sinking ship" got used a lot in casual conversation around the office.
That company doesn't exist anymore.
(Score: 0) by Anonymous Coward on Monday April 12 2021, @07:25PM (2 children)
Seriously?!? That sounds like the plot line to an episode of Big Bang Theory! Did the CEO get beat up every day in the parking lot for the next year?
Color me surprised. Why, you could have knocked me over with a feather!
(Score: 2) by BK on Monday April 12 2021, @07:40PM
Does anyone remember The Human Fund [youtube.com]?
...but you HAVE heard of me.
(Score: 0) by Anonymous Coward on Tuesday April 13 2021, @01:31AM
"Seriously?!? That sounds like the plot line to an episode of Big Bang Theory! Did the CEO get beat up every day in the parking lot for the next year?"
Called tax write off
"Color me surprised. Why, you could have knocked me over with a feather!"
Poof smack!
(Score: 0) by Anonymous Coward on Tuesday April 13 2021, @04:30AM
I've never received a Christmas bonus at any of my jobs over the course of the last couple decades. The closest thing I got was $100 and a thousand points at my current job, but it wasn't really a holiday thing, it was an attempt at retaining people during the pandemic. Perhaps if you live in certain areas and are of a certain class that might be true, but for most workers, that's just not the case.
(Score: 1) by khallow on Tuesday April 13 2021, @11:19AM
I wouldn't. The corruption alone more than outweighs those occasional examples.