----- Original Message ----- From: Charles Brown <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Saturday, January 06, 2001 8:31 PM Subject: [CrashList] Runaway CEO pay [To view this article with some excellent charts and other graphics, sources for all the cited statistics and links to related information, see <http://www.aflcio.org/paywatch/ceopay.htm> Runaway CEO Pay—A Global View Again in 1999, U.S. executive pay continued to grow at an out-of-this-world rate. According to Business Week's annual survey, the average CEO of a major corporation made $12.4 million in 1999, up 17 percent from the previous year. That's 475 times more than an average blue-collar worker and six times the average CEO paycheck in 1990. While these numbers may be startling, they don't tell the whole story. The CEOs of Standard & Poor's 500 companies now lead global corporations—and their pay packages dwarf those of the CEOs of foreign companies. These outsized pay packages are particularly troubling when compared with the compensation these same companies pay to their employees around the world. Globalization has resulted in corporate CEOs making tens and hundreds of millions of dollars while thousands of their employees labor for a few dollars a day. U.S. CEOs Make Far More Than Their Global Competitors Globalization has led to fierce competition among companies in nearly every aspect of their business—except executive pay. American companies are paying CEOs better than anywhere else in the world—and not 10 percent or 20 percent more, but 1,000 percent more and then some. According to Towers Perrin's 1999 Worldwide Total Remuneration report, German CEOs make 13 times what the average manufacturing employee makes. In Japan, the CEO-to-worker pay ratio is just 11-to-1. In today's global economy, workers are told they must compete in a global labor pool—but U.S. CEOs do not seem to face similar international wage competition. For example, the U.K. CEO of pharmaceutical giant Glaxo Wellcome makes just $2.8 million a year, compared with executive pay at such smaller U.S. companies as Schering-Plough ($29 million), Warner-Lambert ($15.8 million), Amgen ($39.2 million) and Bristol-Myers Squibb ($56.3 million). Globalization Globalization means U.S. CEOs are really U.S.-based CEOs of global corporations. And while CEO pay dwarfs that of U.S. workers, a U.S.-based CEO's salary often can exceed his company's entire payroll in developing countries. General Electric provides a telling example of this trend. GE employs 30,000 people in Mexico, more than it employs in any country other than the United States. GE told its Supplier Migration Conference, a meeting it called to pressure its suppliers to relocate to Mexico, that the average wage in Mexico is $3,000 a year. If GE paid that wage, all 30,000 GE workers combined in Mexico would make about $90 million a year, which is less than CEO Jack Welch made in 1999. Some press accounts have estimated GE's average wage in Mexico to be as high as $2 an hour. If that is true, and assuming a 60-hour workweek, the average worker there is making approximately $6,200 a year. That makes GE's yearly payroll in Mexico approximately $186 million. In 1999, Welch made $92.6 million in compensation and stock option gains—or about what 15,000 of GE's Mexican workers made. Are Companies Getting Their Money's Worth from Runaway CEO Pay? Defenders of runaway CEO pay like to point out that under the American model of executive compensation, CEOs are supposed to be rewarded for the shareholder value they create. Yet in 1999, the U.S. stock market, as measured by Standard & Poor's 500 Index, underperformed the Morgan Stanley Europe, Australia and Far East ("EAFE") Index of global stock markets. From a global perspective, U.S. shareholders are putting up with what The Wall Street Journal has labeled "pay for no performance." Should workers care whether their CEOs receive stratospheric pay packages that seem to grow geometrically every year? Maybe not, if through their business leadership the economic pie grows for everyone. Yet today, average workers are earning less, after adjusting for inflation, than they did a quarter- century ago. Wealth and income inequality are at record highs and more and more Americans are working longer hours without health care insurance or a secure retirement. Who are the CEOs responsible for helping make the global economy more unfair? Case Studies in Global CEO Pay takes a look at 10 CEOs who received out-of-this- world compensation packages while their business strategies contributed to growing global inequality and destabilized their own corporate cultures. _________________________________________ _______________________________________________ Crashlist website: http://website.lineone.net/~resource_base
