Today’s second “wacky Friday’ commentary concerns an Associated Press article that that is headlined, CEO pay exceeds pre-recession levels. The opening line is an eye grabber: “In the boardroom, it’s as if the Great Recession never happened.”
An analysis by the AP notes that the typical pay package for the head of a company in the Standard & Poor’s 500 was $9 million in 2010, 24 percent higher than 2009.
How many front-line production, procurement, product management or operations people were rewarded with over 20 percent wage increases?
Executives were showered with compensation of many types to include salaries, bonuses, stock grants, stock options and perks. Keep in mind that many cases stock and options were granted during depressed times when the price of a company’s stock was at low levels. The article notes that typical cash bonuses given to a CEO were up 39 percent in 2010 to an average of $2 million.
Most interesting is that during this same period, corporate revenues grew about 12 percent, and we all know the story related to exploding profit margins. The CEO strategies were consistent; dramatically cut costs, shed people and suppliers, and tap emerging markets for top line revenue growths. The fact that industry supply chains were called on to do more, deal with dramatically increased complexity and risk was just another threshold of expectation, “That’s what we pay you for.”
Those workers lucky enough to hold on to their jobs were constantly driven to do more with less.
During the depths of the past financial crisis, many across traditional and social media decried the exorbitant pay of Wall Street executives. The audacity of these people! We even had a government commission created to monitor and oversee salary and bonus excesses of the banking and financial services industry.
How short memories have become.
It seems that the problem of abuse and self-gratification has spread to other industries, and in our view, is not at all a good sign for the economy and for our social fabric. The notion that we all sink or swim together, or a rising tide lifts all boats has been lost on many corporate boards.
I suppose it is just another ‘whacky Friday’ and this too will fade to just short-term memory loss.
We want even ask for reader comments. Better to just have a beer and hug your loved ones.