Log on to Boss's Pay: www.outrage
The AFL-CIO a year ago set up a clever Web site tapping an apparently growing annoyance among American employees over the huge salaries of executives.
"People are just outraged," says Lane Windham, a spokeswoman for the trade union federation. That's reflected in the thousand or so comments left by visitors to the site.
The Web site (www.paywatch.org) had some 250,000 visitors last year. They can plug in their own annual wage and compare it with the compensation of the chief executive officer of his or her company, if it is big.
Say you work for Walt Disney Co. You punch in a typical $25,000 in pay. Hit "enter," and the computer replies: "You would have to work 426 years to equal Michael Eisner's 1997 compensation" of $10,653,820.
Another page tells the visitor how other workers compare with "your CEO." If that is John Reed, chairman of Citicorp, the computer says his $40,277,500 pay package could support 40 Nobel Prize-winners, or 120 average university presidents, or 201 US presidents, or 209 AFL-CIO presidents, or 372 chairmen of the Joint Chiefs of Staff, or 3,760 minimum-wage earners.
The site is obviously designed to arouse in the visitor a sense of unfairness, if not envy. The AFL-CIO, we suspect, hopes it will help galvanize workers to join trade unions.
When you enter your wage, you are asked also to list the value of any bonus and stock compensation, free country club membership, luxury company car or chauffeur service, no-interest loan, and other common executive perks. Most people put in nothing.
Public irritation at executive pay is nothing new. It probably rises each spring when corporate proxies reveal the benefits of top executives and the press pays attention.
The Wall Street Journal, for example, last month ran a special section on executive pay. The main headline reads: "Pay for no performance; CEOs were supposed to get top dollar only when they got top results. Now, many are getting top dollar - no matter what the results."
And Business Week, in its annual survey of executive pay April 20, notes that the average boss at 365 of the country's largest companies earned 326 times what a factory worker did. That's up from 209 times in 1996 and 44 times in 1965.
Thanks to stock options-fueled pay packages and booming stock prices, the average CEO collected $7.8 million in 1997 - a 35 percent raise over 1996's $5.8 million.
Executives often have a hard, sometimes unenviable, job. But to many, such huge benefits for essentially just a corporate job seem excessive. Bosses in no other nation receive pay so disproportionate to that of regular workers. The average CEO gets 21 times an average worker's earnings in Germany.
The AFL-CIO and other critics of "runaway" executive pay want to arouse and harness a public sense of unfairness to bring about change.
United for a Fair Economy (UFE), a Boston advocacy group, is championing a bill before Congress, the Income Equity Act, which would limit the corporate tax deductibility of executive compensation to 25 times the lowest paid worker. If passed, it would hike federal revenues about $500 million. Chances of passage are zilch.
Nonetheless, UFE is "trying to change the national culture where it is acceptable to have these drastically high salaries," says spokeswoman Betsy Leondar-Wright.
In this regard, UFE, together with the Institute for Policy Studies, a Washington think tank, charges that CEOs who downsize workers are rewarded with extra compensation. Nine of 16 firms which laid off 3,000 or more workers last year raised CEO salary and bonuses by an average 20 percent last year, their study finds.
CEOs of the 10 firms that have moved the most jobs from the US to Mexico since passage of the North American Free Trade Agreement got a 15 percent pay hike. General Electric's John Welch, for instance, made nearly $40 million in total compensation - more than his 10,000 Mexican workers combined.
The AFL-CIO Web site encourages visitors to employ "user-friendly" forms to write letters to Congress and boards of directors to complain about executive pay. It charges that members of the executive compensation committees of various corporate boards are not truly independent of their CEOs.
Unions are using the power ensconced in their pension stock portfolios to back shareholder resolutions objecting to fancy CEO pay. At least 71 companies face such resolutions this spring. Few will pass.
Most stockholders probably regard executive pay as not too material to their earnings-per-share. But Smithers & Co., a London-based research group, recalculated profits of 100 large US companies to take full account of granting stock options to employees. It found profits 36 percent lower in 1996 than reported.
That might raise eyebrows on Wall Street and on company boards.
* David R. Francis is the Monitor's senior economics correspondent.