"Another Marie Antoinette Moment NYT Editorial - talks about the excessive consumption exemplified by the bat mitzvah party for the daughter of David Brooks - CEO of DHB - the company making millions off ineffective body armor. The party at the Rainbow Room with big name entertainers costing an estimated $10,000,000 was detailed in the past.
However an interesting fact or two comes out :
"The party came less than three months after the release of a report on ballooning pay for CEO's that singled out Mr. Brooks for makig $70 million in 2004 compared with $525,000 in pre-war Iraq 2001. The report said he made an additional $186 million in 2004 selling company stock"
and the body armor his company makes failed tests and is being recalled
Also: "The same report ..... found that in 2004 the ratio of CEO pay to worker pay had balooned to 431 to 1. If the minimum wage had advanced at the same rate as cheief executive compensation since 1990, America's bottom of the barrel working poor would be enjoying salad days with legal wages at $23.03 an hour instead of $5.15"
UPDATED link to republished column:
http://www.iht.com/articles/2006/01/02/opinion/edcorp.php
After a stint on Wall Street I became totally disillusioned with the compensation gap between top executives - whose main focus seemed to be on grabbing MORE and holding onto what they had (instead of doing any REAL work) and the low level employees who actually DID REAL work. One EVP spent years overseeing development of a new system that was little more than smoke and mirrors - he's now CEO of a major insurance company. Execs there would screw $20,000 a year clerks out of $2,000 bonuses so their million dollar bonuses wouldn't get cut. You were expected to kiss up to senior execs with holiday presents too.... and then there were the schemes where purchasing seemed to play games with execs getting a cut all the way up the ladder....
I was at the wedding of a CEO's daughter a few years back at the Pierre. The flowers had to have cost a few hundred thousand. He had just gotten a $26 million bonus - and laid off 5,000 workers. Do the math. No bonus - keep the 5,000 workers. AND I bet that the 5,000 workers do more work than the CEO..... I know for a fact because service TANKED after the layoffs and they had to bring most back....
Somehow CEO's that screw up, or are simply overpaid never have to give any $ back....... workers get laid off to cut costs. The clear and RATIONAL solution - get rid of the overpaid screw-up management NEVER comes up. Look at Delphi. Cut worker salaries from $29 an hour to $10 BUT pay the execs millions to keep this "needed" executive talent. Hell the same executives ran the company into the ground. Fire THEIR asses.
The problem is that pay is NOT tied to accomplishment - not REAL accomplishment. Look at chainsaw AL Dunlap - a complete fraud who wrecked companies.... look at Enron, Worldcom, Adelphi the list goes on...... "Shareholders" are so fragmented that THEY have no real power over executives. At least in the robber baron days, executives had their own money on the line or were accountable DIRECTLY to the owner. No more. The "help" at the higher levels is looting the company - while firing workers that take a stapler home.
Inadvertantly, Henry Ford got it right when he paid assembly workers well to cut turnover. He helped CREATE buyers for his own product. A few thousand dollars paid DIRECTLY to millions does far more for the economy that MILLIONS of dollars paid to a few thousand. "Trickle-down" is a crock. Not alot of people bnefit from $600 shoes, million dollar mansions and a handful of Rolls-Royces. THe same amount spread around means thousands of $40 shoes, hundreds of houses, and lots more Chevys and Fords (or more likely Hondas and Toyotas).
It's all rather backwards. I have nothing against those EARNING high salaries or creating real wealth. My wife's employer is a good example. He's made a ton but everyone along the line also made money with him. HIS money was on the line in HIS company - in contrast to obscenely overpaid executives elsewhere who could care less about "stockholders" and grab all they can WITHOUT increasing earnings or creating any real value.