CEOs’ (salaries) gone wild
Last month, Abigail Disney, granddaughter of Disney Company co-founder Roy Disney, appeared on Capitol Hill before the House Financial Services Committee, for a hearing on workers’ rights. Disney’s Congressional testimony followed her very public criticism of Disney CEO Bob Iger’s $65 million per year salary, which is a whopping 1,424 times what he pays his average employee. Moreover, while Iger may be the new poster boy for CEO excess, he has plenty of company in the pay gap arena.
Thanks to a 2017 addition to Dodd-Frank, corporations must now disclose not just the salary of a CEO, but the ratio of his pay compared to that of a median employee salary, and the figures are staggering. On average, CEOs now make 361 times the salary of their employees. Of course, many top executives (including some here in the Triad) far exceed that national average pay gap between boss and worker. The Winston-Salem Journal’s Richard Craver recently reported on local CEO earnings and found that, for example, Hanesbrands CEO Gerald Evans makes 1,392 times the salary of his median employee, a ratio that rivals that of Disney’s Iger.
In its defense, the Disney Company told CNN’s Katie Lobosco that so long as employees can support themselves, then the level of executive pay should be irrelevant. But it is very relevant, and not just at Disney. That’s because families across America are still struggling to make ends meet.
“We have chased large swaths of Americans into a box canyon, and then blamed them for being trapped,” Abigail Disney told Congress, adding that Iger’s pay has a “corrosive effect on society.”
Of course, the pay disparity problem is nothing new, but it’s also never been this pronounced or perverted. In 2017, Fortune.com reported that CEO compensation had grown by 930% since 1978. However, during that same period, Executive Paywatch, Inc. stated that average worker wages have been stagnant.
“This immense inequality is a crisis for our economy and our democracy, and we need legislative action at the local, state, and federal level to address it,” said Minnesota Congressman Keith Ellison, as cited in Craver’s article.
Abigail Disney believes she has a solution to the pay gap problem. In a recent Op-Ed piece for the Washington Post, she said that top executives like Iger should redirect 50% of their annual bonus money to their employees.
“When he (Iger) got his bonus last year, I did the math, and I figured out that he could have given personally out of pocket, a 15% raise to everyone who worked at Disneyland, and still walked away with $10 million.”
Of course, any suggestion that includes redistribution of wealth will be met with fierce opposition in both chambers of Congress, by members who believe that just about any course correction is tantamount to socialism.
“Yes, managers have a fiduciary obligation to their shareholders,” Disney told Congress. “But they also have a legal and moral responsibility to deliver returns to shareholders without trampling on the dignity and rights of their employees.”
In other words, capitalism and salary reforms can coexist, and for proof, we need only look to Switzerland. In 2013, 68% of voters there passed the “Popular Initiative Against Abusive Executive Compensation Act,” which bans golden parachutes either at the point of recruitment or severance. The result? According to the Credit Suisse Global Wealth Report, Switzerland has the highest average wealth per adult in the world. So why haven’t Americans done something to reduce the pay disparity ratio between our CEOs and us? Author Matt Taibbi offers a possible explanation: “In a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.”
OK, then, so we just need to get organized and vote our economic interests instead of our political preferences. The Swiss did it, and we can too.
Sometimes social justice is just a voting booth away, and sometimes we can be inspired by our neighbors who live thousands of miles away. It’s a small world, after all.
Jim Longworth is the host of “Triad Today,” airing on Saturdays at 7:30 a.m. on ABC45 (cable channel 7) and Sundays at 11 a.m. on WMYV (cable channel 15).