What was that single that soul singer Otis Clay brought out in 1980? Oh yeah, ‘The only way is up’! Well, if ever there were a more fitting signature tune these days for CEOs in the USA, then that’s what I’d be betting (my bottom) dollar on!
Someone said to me yesterday in the midst of the crisis over the Federal Reserve, the Chinese fake data, the tripping blips of the stock market and inflationary pressure: “they just push a button and print more, while the rest of us have to go on working”. I have a sneaky feeling that that’s exactly what CEOs have been doing across the country (world?) to get to where they are today. Some of you might retort that they deserve it! Without them, we wouldn’t be in the position that we are in today! Is that such a good think to shout from the roof tops? Granted, they probably do a lot of work. They are mostly high profile people, attracting the very best talent in tow and that is good for shareholders in the long run. Are the shareholders happy too that the six figure sums are being handed out like trick-or-treat candy? Can anyone really be worth $9.7 million a year? That’s a 6.5%-increase in pay for 2012 in comparison with 2011.
Let’s face it, they went through tough times too when the stock market crash hit and they suffered two years of reduced, subdued pay. But, as we entered 2010, they made up for it, with a pay rise on average equaling 24%. 2011 saw a more moderate pay rise of 6% and now it turns out that last year was 6.5%. Creeping up the scale little by little. I wonder what 2013 holds in store for us. Judging by the fact that things (we are told) are going to get better, they can only go up. Remember, Otis!
But, is it reasonable yet to imagine that we have enough money in society already to pay them such six-figure sums, while your average Joe got an increase of just 1.1% in his salary in 2010 and that was way under inflation! Some are projecting a pay increase this year for those same workers of 2.7%. We’ll see if that comes off (inflation for April stood at 1.1%). You can bet that if the workers get 2.7%, the CEOs will be in for much more. But, are these CEOs living in the real world? Can anyone be living in the real world on such a figure? The trouble stems from peer pressure. Companies are paying in comparison to what other companies are paying these days and so everyone ends up paying more or less the same amount. As soon as someone ups the ante, the others do the same. Why? Because there’s the risk that they might just lose the competitive edge over the others and lose out if they aren’t paying enough. What CEO in their right mind would end up staying with a company, when they could get more money for the same job with someone else? Who wouldn’t jump ship? It’s not the CEOs that are the problem; it’s the companies that think they have to pay over the odds in difficult times for excellent skills.
But, hold on to your hats boys, it’s the ladies that are getting more these days. Women CEOs are getting $11.2 million a year on average. Admittedly, there are few women in the business, but maybe that shortage means that those who are there at the top, the ones that haven’t been stopped from passing through the glass ceiling, they are in such short supply that demand has gone through the roof.
But there are shareholders that are biting back. There have been 14 companies that have seen votes against CEO-pay rise already this year coming from shareholders. Let’s face it; it’s the shareholders that are investing the money in companies. It’s the shareholders that have the final say and it’s their right to exercise that in the face of people that are earning salaries that look like its Monopoly money being handed out. Go directly to jail; do not pass go, do not collect $200! Wasn’t that the answer? Game over!
Originally posted http://www.tothetick.com/fat-cats-get-more-cream-meow