Do I need to apologize? I’ve been using USPX guidelines to vote down pay packages at large companies over the $9 million 2010 median reported by Equilar earlier this year. Now, they’ve revised their pay figures. Final data show median pay for top executives at 200 big companies last year was $10.8 million, up 23% from 2009. (We Knew They Got Raises. But This?, New York Times, 7/2/2011)
The average US worker earned $725 a week in late 2010, up 0.5% (less than inflation) from the year before. I’ve been voting down almost all pay packages where a named executive officer (NEO) earned more than what I thought was the median last year of $9 million. Now it looks like I’ve been too harsh and should have only been voting against those over $10.8 million. I suppose I could say I’m sorry for my vote at those companies where an NEO got more than $9 million but less than $10.8 million. On the other hand, only 1.5% of the companies in the Equilar study had they pay proposals rejected… so, no harm, no foul.
Do we really need to pay them that much? I think our attempt to link pay to performance has resulted in refocusing the corporation. Instead of serving some reasonable public purpose and paying profits to shareowners, many corporations now are moving off shore to avoid paying taxes and are focused on maximizing profits for named executive officers.
Meanwhile, a study from Capgemini and Bank of America Merrill Lynch estimates that financial wealth control by the high net worth individuals jumped 9.7% over the last year to $42.7 trillion. It is hard to see the economy really recovering while the middle class is being hollowed out… although I suppose we could pin our hopes on exports to the growing middle classes of China, India and Brazil.