Skip to content

How much is a good CEO worth? Shareholders balk at CEO compensation

By Marshall Connolly, Catholic Online (NEWS CONSORTIUM)
5/28/2014 (3 years ago)
Catholic Online (www.catholic.org)

Record CEO pay grows while employees at the bottom are being subsidized by the public.

There are times when too much is not enough. Shareholders are revolting against gains in CEO pay, as new data shows the average median CEO pay is now over $10 million per year. This is happening as taxpayers continue to subsidize corporate profits by paying taxes for welfare programs while corporate giants pay below-living wages.

I need another raise, but not my employees. Let the suckers--er,  taxpayers subsidize them!

I need another raise, but not my employees. Let the suckers--er, taxpayers subsidize them!

Highlights

By Marshall Connolly, Catholic Online (NEWS CONSORTIUM)
Catholic Online (www.catholic.org)
5/28/2014 (3 years ago)

Published in Business & Economics

Keywords: CEo, pay, compensation, minimum wage, costs, welfare


LOS ANGELES, CA (Catholic Online) - From the halls of congress to the executive boardrooms, the nation's top leaders in both government and business are getting raises. Median CEO compensation has now surpassed $10 million for the first time in history, leading some to ask "how much is enough?"

Corporate executives are well paid for their work, and fairly so. The right talent can engineer the correct balance between land, labor and capital to generate profits by providing value to consumers. This is what entrepreneurship is all about. This is the fiduciary responsibility of corporate boards and directors because it is how they build value for shareholders.

A balanced scale is the Lord's delight. Let us teach others.

The ability to do this is uncommon, so those who can successfully lead a business through the highly-competitive economic arena are worth much more than the fellow on the street whose economic sense comes from a single course in high school.

However, how much is enough? At some point, employee wages are just about as low as they can go, costs are reduced to the minimum, and profits top out. After that, compensation for CEOs begins to trade off with dividends and other investments that could build long-term shareholder value. For this reason, shareholders are applying the brakes to CEO pay increases.

Shareholders have recently challenged pay increases for top executives at Chipotle, JP Morgan Chase & Co., Mc Donald's, Target, and Abercrombie & Fitch.

Meanwhile, many of these same companies profit mightily by suppressing wage increases for employees at the bottom. While a minimum wage job is intended to be just that -low paid, it doesn't make sense that a person who works 40 hours per week should still qualify for public assistance in virtually every case. The problem is most acute in urban areas where the cost of living is high.

While there's little compulsion to make minimum wage workers comfortable, since there should be incentive to improve one's own value to employers, thus justifying wage increases, these same workers should not get public assistance to survive -yet they do because their wages are suppressed.

In some egregious cases, workers who have labored for tens of years for the same employer have not received a single raise or a significant raise in pay, despite the fact they have been faithful and reliable and likely perform their work better than a new hire would.

The problem is yours and mine. As taxpayers, we have to close the gap for the worker who puts in 40 hours, but still needs extra from the public to make rent and put food on the table. This is unfair to taxpayers because a corporation that can pay an extra million to a CEO can also afford to pay an extra dollar per hour to its workers.

An extra dollar-an-hour raise would put over $2,000 per year into the pockets of minimum wage workers, which might be enough for a year's worth of groceries for a single person in most places (although maybe not anymore). That would save taxpayers just as much money and then some for every minimum wage worker that subsequently graduated from the welfare rolls.

Of course, the rebuttal is that corporations would cut jobs in the face of compulsory pay increases, but historical data demonstrates this is a popular myth. As long as the pay raise is reasonable, or made in steps, there would be virtually no reduction in the workforces. In fact, the long-term result would be opposite because minimum wage increases are never saved, but spent, which stimulates the economy and causes employers to hire more people to meet rising demand.

The other myth is that prices will rise out of control. Again, historical data shows that marginal price increases are restrained by competition and other economic forces, such as demand elasticity. Ultimately, big business takes the hit, but always seems to find new ways to deliver better value, this improving the market for all over the long term.

And consider this: CEOs are raking in massive pay increases as well as their executive staffs, yet we're not seeing prices spiral upwards because of it.

The people who lose would be those who collect our taxes, skim off enough for themselves, and then dole out the difference in welfare benefits-they'd have less work to do. They'd lose as well as the CEOs who would have to forgo a million dollar pay increase for a year.

Commentator and author, John Stossel once said that "greed is good." He pointed out, quite correctly, that under capitalism people are incentiveized to create value for others in order to get paid. Stossel was correct when he made this assessment, but there's a difference between the greed he spoke of over a decade ago and the greed we see today.

Stossel's greed is the kind of greed for food to eat, a decent car, a nice home. This is the common desire to improve one's lot in life; the hope of Joe Everyman to enjoy opportunities for a better future for himself and his kids.

However, the greed we witness at the top, in Congress and in corner offices, is about avarice, the deadly sin of wanting more for just the sake of more.

Every person who labors has the right to enjoy fair and just compensation for their labor. No person who works should be left in serious want of life's basic necessities, even if their work is considered unskilled. As long as people at the bottom of the economic ladder toil without just compensation, i.e. enough to get by without needing public assistance for themselves, then it is right for us to tell our corporate elites that they've made enough money for themselves and it's time to remember their noblesse oblige.

---


'Help give every student and teacher Free resources for a world-class moral Catholic education'


Copyright 2017 - Distributed by THE CALIFORNIA NETWORK

Pope Francis Prayer Intentions for OCTOBER 2017
Workers and the Unemployed.
That all workers may receive respect and protection of their rights, and that the unemployed may receive the opportunity to contribute to the common good.


Comments


More Business & Economics

Is now the time to sell? Experts say Wall Street is on a bubble, here's why Watch

Image of Stocks appear to be on a bubble according to many experts.

Is now the time to sell on Wall Street? Stocks are on a bubble, according to multiple analysis and expert opinions. Fundamental market ... continue reading


Forget Winter, Recession is Coming Watch

Image of Major indicators reveal recession is coming.

The economy is about to go into recession according to several Wall Street firms. They are warning investors to prepare for an end to the ... continue reading


Get ready for self checkout everywhere: 3.5 million retail cashiers are about to be replaced by automation Watch

Image of Retail cashiers often loathe self checkout stands. However, both cashiers and self checkout stands are facing replacement as new technologies threaten to eliminate the checkout process.

Automation is coming soon to a store near you as retailers look for ways to cut costs and improve profits. The best way to accomplish this ... continue reading


'Budgets are moral documents'

Image of

The highly relevant quote, "Budgets are moral documents," has been arguably attributed to Rev. Martin Luther King, Jr. But if he didn't ... continue reading


Central bankers warn of looming global recession Watch

Image of A recession could be lurking around the corner and central banks have been asked to take note, especially in Asia.

A group of central bankers has warned that a great recession, possibly larger than the 2007-2008 recession is looming on a global scale. ... continue reading


Never Miss any Updates!

Stay up to date with the latest news, information, and special offers.

Information
Learn about Catholic world

Catholic Online
Inform - Inspire - Ignite

Catholic Online Saints
Your saints explained

Catholic Online Prayers
Prayers for every need

Catholic Online Bible
Complete bible online

Catholic Online News
Your news Catholic eye

Daily Reading
Today's bible reading

Lent / Easter
Death & resurrection of Jesus

Advent / Christmas
Birth of Jesus

Rest of Catholic Online
All Catholic world we offer

Services
Products and services we offer

Catholic Online Shopping
Catholic medals, gifts & books

The California Network
Inspiring streaming service

Advertise on Catholic Online
Your ads on catholic.org

Catholic Online Email
Email with Catholic feel

Catholic Online Singles
Safe, secure Catholic dating

The California Studios
World-class post production service

Education
Learn the Catholic way

Catholic Online School
Free Catholic education for all

Student Classes
K-12 & Adult Education Classes

Catholic Online MasterClass
Learn from experts

School Teachers
Teacher lesson plans & resources

Catholic Media Missionaries
The New Evangelization

Support Free Education
Tax deductible support Free education

Socials
Connect with us online

Catholic Online on Facebook
Catholic social network

Catholic Online on Twitter
Catholic Tweets

Catholic Online on YouTube
Enjoy our videos

Catholic Online on Instagram
Shared Catholic moments

Catholic Online on Pinterest
Catholic ideas style inspiration

Catholic Online Logo

Copyright 2017 Catholic Online. All materials contained on this site, whether written, audible or visual are the exclusive property of Catholic Online and are protected under U.S. and International copyright laws, © Copyright 2017 Catholic Online. Any unauthorized use, without prior written consent of Catholic Online is strictly forbidden and prohibited.