'Cap and Save': The Growing Drumbeat for Pay Limits at the Top

[marmar]

from Too Much: A Commentary on Excess and Inequality:



Cap and Save
To rescue the global economy from reckless power suits, we just may need a 'maximum wage.' So say Australia’s top labor leaders and a daring cohort of MPs in the UK.

June 8, 2009

By Sam Pizzigati


You don’t need to be particularly bold, not these days, to blame excessive executive pay for a good chunk of what ails the world economy. Over recent months, a wide array of public figures — from government and business to academia and the press — have been doing just that.

The latest observer to underscore the dangers excessive executive rewards inevitably create: Jeff Lawrence, a top leader in Australia’s national labor federation.

“Outrageous executive salaries and bonuses,” Lawrence noted last week at the Australian Council of Trade Unions triennial congress, have “encouraged a culture of excessive risk-taking and short-term thinking that is widely acknowledged as a major cause of the global financial crisis.”

“Year after year of virtually unlimited increases in CEO pay packets,” Lawrence would go on to add, have left executive remuneration “out of all proportion with the work performed.”

Nothing exceptionally bold in that observation. But you do have to be somewhat daring to propose what Lawrence — on behalf of Australia’s labor movement — proceeded to say next. The union leader called on Australia’s federal government to cap all corporate executive salaries at ten times each enterprise’s average worker wage.

What about executive bonuses? The Australian labor movement wants all executive “performance” bonuses strictly regulated — and limited to situations where companies out-perform their peers over a full five-year period.

How boldly, comparatively speaking, does this Australian pay cap push stack up against executive pay reform efforts in other nations? In the United States, lawmakers are still struggling to get shareholders the right to take mere advisory votes on executive pay. .........(more)

The complete piece is at: http://www.toomuchonline.org/articlenew_2009/june8a.html

[liberalmike27]

1. Just Imagine for Instance

Had GM been paying their executives a meager few hundred thousand a year (God I wish I made a meager...I digress) and putting that monen into Bonds and Treasuries, for a rainy day, like now, then they'd have had plenty of money to do this makeover, and wouldn't need the goverment.

I don't know if we'll ever get a maximum wage, though I'd certainly advocate for multiples like we used to have, 40X instead of hundreds of times the average employee wage. But I'd sure like for them to pay taxes on all of it, and not be excluded from paying 35-40 percent employment taxes on all compensation, including capital gains, and stock options, stock, and all other compensation. I might add, lift the cap on SS insurance, FICA, and all that, so they pay the full amount, and we solve Social Security problem.

[JerseygirlCT]

11. Yes, that's true

Although, from what I've read, GM exec's salaries look modest compared to others - like those on Wall St. I don't think there's any real incentive for the long-term in companies now - putting money away for a rainy day just takes away from earnings reported. Sparkly numbers for today are what execs are compensated for, not the long-term strength of the company. Long-term is someone else's problem.

[Yupster]

12. I agree with your social security fixes, but would add

that workers who are not paying into social security should also be brought into the fold.

The largest group of course is most publis school teachers in about 20 states including the two largest, California and Texas.

What makes income over 200,000 so special it shouldn't have to pay ss tax?

What makes teachers so special that they shouldn't pay ss tax?

Make both changes at once and we'll have a system that at least is close to fair.

[votingupstart]

2. maybe i am not following - but why wouldn't the companies just move offshore

and pay the individuals from another "country", if everyone pays the same where is the attraction to perform, grow, produce a better product, fix bad products.

if i owned a company - i would want to attract the best people so that my company can grow, if i have to pay the same to everyone i hire how am i as a little company going to be able to attract better employees?

[closeupready]

3. No, you are not following. The legislation does not make companies pay everyone the same.

It puts a cap on the highest compensation. So rest assured, there would still be inequality in pay.

[liberalmike27]

5. Well

A few tariffs would take care of that, and help solve our mounting debt and unemployment problems too.

The system can be controlled, once we realize it is a top-heavy system now, and make a few adjustments, we can fix it. Sure, things will cost more, but we can keep a full-employment society, where people get paid enough to make a living, and buy the things, even if they are more expensive.

We've had another Republican depression, much like, and for very similar reasons, to the one in 1929. One of the reasons, like today, was the disparity of incomes, from the richest to the poorest. After the depression we had (enacted) what was called the Great Compression. Wages, salaries, and to some extent, wealth itself, was compressed. It helped fix the problem.

We can always allow it to get this way. Outside of massive overpopulation, and non-attention to this growing problem, Mexico has the same difficulty. And we see it, and ourselves for that matter with all the econo-cides that are going on, melting down into chaos, and myopia.

Like I've always told my right-wing friends at other sites, or asked, "What kind of country do you want to live in.?" It's getting pretty dangerous, and has shown no signs of getting better. And the problems, essentially, are from growing poverty, misery, and economic inequality. Republicans have managed to take our workers toward the third world, and sadly, Democrats have most of the time, been far to willing to help. We took the wrong course, and look where we've found ourselves.

[closeupready]

6. I agree that modern Democrats have helped Republicans take us here.

Democrats need to re-focus on their roots - the working class, the poor, those who are otherwise disenfranchised. But sadly, money seems to talk more with our corrupt political elites. Den of thieves - that's what Congress today is, and it needs to stop.

[votingupstart]

14. i understand the highest compensation - how do you value personal drive?

why am i only allowed to pay bob XX.xx amount of dollars when his idea is going to grow my companies business by 20%? how do you value someones work? If someone makes a better mouse trap or better sliced bread than everyone else why should he not be compensated for it? Who decides the amount of money that a selected job "should" make?

[closeupready]

16. I don't know. You have to work within the parameters you have, not the ones you wish you had.

If the law says there is a ceiling on how unequal compensation at your company can be, then that is the law, and if you don't like it, lobby your elected legislators to repeal that law.

[votingupstart]

17. exactly what i am saying - there is no answer - so why suggest there is?

and any one who says they can value an industry/personal drive/the human work ethic definitively has no idea what they are talking about.

i will say time and time again - government regulated industrial salaries are not sustainable/based on logic and will fail the people it regulates. it didn't work in the USSR, eastern block or china what makes anyone think it will work here?

[Tikki]

4. We have all worked with someone(s) that make more...

money than we do and simply suck at their job and will never
get any better....And yet, management is loving them.

Just because a worker is from Offshoreland doesn't make
him/her a better worker than an American worker.

Tikki

[Cresent City Kid]

7. Global economy requires global regulation

National borders and laws are barely a speed bump to corporations, who long ago have trancended the nation-state. This type of law with all its righteous good intentions would be a single mallet swing in a game of whack-a-mole. Still, I'm glad it has been brought up, the issue of runaway compensation needs to dealt with and its proponents debunked. This proposal, ineffective as it may be at least brings the issue into our global consciousness.

[DBoon]

8. executive wages are "political" anyway

They are set so high "because they can"

Executive salaries do not reflect the value they add to the company - they reflect the clout the executives have over corporate compensation committees and the board of directors.

Companies are driven into bankruptcy and their executives still take home massive salaries and bonuses.

There is no "free market" for executive salaries

[Pavulon]

9. Not a government issue. A punitive tax

is one thing but just saying hey you cant make more than x is really stupid. These are the same idiots who want to censor the internet...unless a company is taking federal money the wages earned by executives in not a government concern.
http://www.news.com.au/heraldsun/story/0,21985,24568137-2862,00.html

[JerseygirlCT]

10. I would think the tax code could be used for that

but I think at the least, some sunshine on the realities would help a lot too - along with social pressure. I think there ought to be a ratio that needs to be reported by every publicly traded company of the top-paid person's salary to the lowest-paid person's.

[KittyWampus]

13. I'd prefer linking CEO pay to percentage of lowest paid worker in same corporation

[votingupstart]

15. interesting idea nt