Friday, June 3, 2011
Whenever we have a financial crisis in this country - which is becoming increasingly frequent - the Wall Street financial experts appear on news programs and dispense their wisdom concerning what we should do about it. If the crisis is serious, the news will switch to congress and we will see a powerhouse of politicians who chair the various finance and banking committees. They gather behind their microphones and look deeply into the eyes of their voters, while assuring us that only a minor correction is needed. In the meantime, we need to tighten our belts and take our share of responsibility.
Despite the complicated explanations from the talking heads, the problem is easy to understand and the path back to financial responsibility is rather simple. American businesses are flourishing as they never have before, and the outlook for the future would be bright if it were not for the greed of the people who control the markets. Whenever financial reports come out at the end of each quarter, it leaves a lot of people scratching their head. They wonder why things are not better when profits are rising in almost ever sector of commerce. The problem is where the money is going, and the rules governing business.
A few decades ago, business leaders had their focus on the product their company produced. Most executives were engineers and they knew how the product was made and were familiar with each step from concept to the marketplace. Then, as laws were changed to ‘help’ business grow, the financial boys stepped up to the plate with ideas that appealed to the board of director’s vision of the bottom line. The product was no longer the focus, and short-term profits became the norm. Leverage buyouts were encouraged and sell-offs of company assets in pursuit of quick profits became the norm. Hefty bonuses to CEOs and board members became the new way of doing business. So where is the money going, you might ask, and why are we having so many foreclosures and layoffs? You only have to look at the salaries of the executives in American companies to see the answer.
Most CEOs in America draw more in salary and benefits than all of their employees combined!
If you look at the 500 companies listed on the S&P index, you will discover that the chief executives of those companies draw staggering sums in compensation, while the rest of the employees are facing layoffs and wage cuts. Salaries range from 84 million in total benefits awarded to one executive, to smaller companies where the CEOs draw only a few paltry millions. The overall average CEOs pay in the S&P index companies is $11,358,445.00, and growing at a staggering 23% each year. Compare this to the median wage for all occupations which is around $33,000.
If you have a strong stomach and want to view what your boss is making, you can check the figures at www.paywatch.org. The information is listed by corporation, but you can also access the figures by doing a name search. The figures are gleaned from corporate proxy statements of the various companies. Think about what you find at Paywatch the next time you have to tell your wife she is going to have to drive her wreck to work for another year. Something that is even worse is having to break the news to your kids that they will have to have to attend a state school, take out a loan, and work part time. Please don’t mention to them that when they graduate, they probably won’t be able to get a job in their chosen field because some CEO has outsourced their job.
Click on the title of this article and it will carry you to Paywatch
Posted by Joe Prentis at 10:21 AM