« All the News that fit to print | Main | Where Oh Where Did My Customers Go? »
June 29, 2004
Penny Pinching
This Sunday issue of the Philadelphia Inquirer had an interesting article (stupid registration required) on executive compensation within the Philadelphia region. One choice quote from the article:
As a group, chief executive officers who had run publicly traded companies in the Philadelphia area for at least a year brought home an average of 33 percent more from cash and stock awards last year than in 2002. That is nine times the median worker's raise, according to the U.S. Department of Labor. [EDIT: emphasis mine]
The printed article had a nice chart breakdown the salary, bonuses, stock options, etc that built up each CEOs total income for the previous year. After examining it, I've come to the conclusion that it certainly would be nice to receive a bonus that is equivalent to 50%, let alone 100% or more, of my yearly salary from any company I work for. It amazes me to see that CEOs being remodeled into the corporate "star player", while becoming a major source of excess monetary spending. The interesting point here is that employees within the company are not making much of a raucous about it (read John Case in "When Salaries Aren't Secret" Harvard Business Review, requires purchase at $6 for more information). Is this a case where an organized labor union would provide better living for a company? Or is this just a case of short-sighted employees whose primary interests lay in the realm of their department only? The article mentions that MBNA at one point cut back on their overly zealous gratuity only after shareholders complained. Is there some central area where employees and stock holders of a company can place a complaint in an attempt reign in this kind of spending? It's not as if the Board of Trustees has shown any interest in slowing this spending, and it's very unlikely that they will.
On the other hand, employees are being downsized in a maneuver to create a lower corporate operating cost. Originally the measure was based solely upon the differences in immediate salary between a local employee and a potential outsourced employee. When the cost of living in the US gets factored into any salary comparison, we as Americans are going to lose despite what the actual net salary one makes is. As an engineer, I fail to see how an obvious solution to this scenario isn't a viable solution to problem; cut the C-level execs salaries. I understand the concept of "it takes money to make money", "money attracts talent", and various other slogans to be championed as logical reasoning. I don't dispute them either. I find the pre-pending of the word "excessive" to these statements to be my major point of discomfort.
Posted by Dan at June 29, 2004 04:35 PM