CEOs Gone Wild
If you’ve been following the news in the past few weeks, you’ve probably seen the name Bob Nardelli. He’s become the Kenneth Lay of late ‘06/early ’07.
He’s the disgraced former CEO of Home Depot. Under his reign, Home Depot stock went down 6 percent in 6 years. For his pisspoor performance, Nardelli was “punished” with a $210 million golden parachute. This was in addition to his annual compensation of $38.1 million.
We’ve all heard these statistics before, but they need repeating: In 1965, the average CEO made 24 times the pay of the average worker. In 2005, the average CEO “earned” 262 times the pay of the average worker. If this isn’t obscene enough for you, there’s plenty more.
What ever happened to that old-fashioned concept of risk? A Yale political scientist says, “At one time, when corporate titans went down they went down hard. Who could be more insulated from risk than today’s CEO? There’s never been a group of people richer or more protected from the vagaries of the economy.”
He also says “one of the hallmarks of today’s economy is that risks once widely shared by government and employers have shifted onto the American family.” Twenty-five years ago 83% of large and medium-size employers offered guaranteed lifetime pensions. Today that percentage is less than a third.
Bob Nardelli got a guaranteed $4.5 million pension for leaving Home Depot. Home Depot employees are offered a 401(k) with no guarantees.
And before you start bleating about “socialism” or “class warfare” — most of the outrage is coming from shareholders; not from politicians or laid-off employees.
As Ellen Goodman says, “In America, workers aren’t being rewarded for productivity and CEOs aren’t being punished for poor performance. What’s wrong with this picture? At some point, the shame of bankruptcy, job loss, illness — hallmarks of the risky society — is trumped by the shame of picking up a pink slip worth $210 million.”