Friday, December 16, 2011

CEOs Rule, Workers Drool

Despite all we've learned about income inequality, the disparity continues to exponentially escalate. A new census record shows that 1 in 2 people in America are now poor or low income. The newest Republican jobs proposal for the unemployed is to take a drug test and work for free.

But CEOs were barely affected by the unemployment rate or economic downturn since 2008.

American CEOs saw pay increases of between 27 and 40 percent last year, according to a GovernanceMetrics International survey. In addition, the median value of CEOs profits on stock options jumped to $1.3 million from $950,400 (See my post: Rich Man Dispels Myth about Job Creators).

CEO pay by itself exceeded the amount that his or her corporation paid in income taxes in at least 25 cases last year. And in the year before America's highest-highest-paid corporate chief netted more than $145 million, U.S. median income fell to below $27,000, meaning half of all earners made less than that.

The net worth of one percenters remained 200 times higher than that of the median national income, according to the Economic Policy Institute.

JPMorgan Chase Chief Jamie Dimon got a $19 million raise in 2010 and Goldman Sachs CEO Lloyd Blankfein netted an extra $3.6 million in bonuses last year.

Some CEOs even got huge pay packages for not doing their jobs. Eugene Isenberg took home $100 million for dropping his title as CEO of Nabors Industries in October. While Dougless Foshee, the CEO of natural gas pipeline operator El Paso, became eligible for an exit package worth $95 million after the company was acquired by rival Kinder Morgan.

Companies often determine CEO pay through a practice known peer benchmarking, which bases executive compensation not on the individual CEO's performance, but on what other companies are paying their CEOs. Partly as a result, median CEO compensation rose 27 percent in 2010, with CEOs at 299 corporations accounting for $3.4 billion in compensation combined, according to study from the AFL-CIO, the largest federation of unions.

But a vast majority of shareholders don't seem to care when they voted on say-on-pay.

Average worker pay falls well short of the gains made by executives. In 2010, worker pay increased by only 2.1 percent, a comparison some corporations are disinclined to make public. In fact, a current lobby known as the Center on Executive Compensation is attempting to undo a Dodd-Frank requirement that demands corporations report the median pay rate of its employees, as it would put executive compensation into perspective with the pay rates of average workers, The Washington Post reports.

And these CEOs pay lower tax rates than middle-class workers (see links below).

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