Who are these leaders? Whose scrutiny are they escaping? And what are they getting away with?
- They are corporate titans – leaders of U.S. businesses. Not all, but many if not most.
- They are escaping our scrutiny – the scrutiny of the media, hence of the American people.
- They are getting away with compensation packages so humungous they’re outrageous.
- And… they they are getting away with inordinately generous tax breaks that favor the already favored few.
The mantra of anger over inequality is familiar. Since the 1970s income disparities have soared in the United States – and they continue to do so. Nowhere is this as much in evidence as in the yawning gap between CEO pay and the pay of average workers. Between 1978 and 2018 CEO compensation grew 940%. During this same span typical worker compensation rose by only 12 %.
Even during the pandemic, the inequities were further exacerbated. In 2020 CEO pay jumped 14.1 %, while median workers got raises of only 1.9 %. According to the Economic Policy Institute this enormous disparity in compensation has been the “major [single] contributor to rising inequality.”
Nor does the U.S. tax code help. It too famously favors the rich over the rest, the ultra-wealthy especially taking advantage of laws that allow them dramatically to lower, sometimes to zero, what they owe. Berkshire Hathaway’s legendary CEO, Warren Buffett, has been one of the few at the top publicly to point to the discrepancies, having lamented out loud that on a percentage basis he pays less in taxes than his secretary.
Every year the numbers boggle the mind. Even setting aside leaders whose pay packages are in the stratosphere – Elon Musk and Jeff Bezos among them – are those whose total compensation, including salary, stock grants, bonuses, and other benefits, is enormous. Simply in terms of straight salary the numbers can be huge, for example General Electric’s Larry Culp earns over $72 million a year , and Nike’s John Donahoe II over $53 million. Moreover, these figures are misleading. In 2020 Jamie Dimon, CEO of JPMorgan Chase, had a total pay package of “only” $31.1 million. But given he has been top dog for 15 years – and appears, I might add, to be going nowhere – imagine the immense wealth he has accumulated over time.
Shareholder protests over extravagant executive pay have risen in recent years, more so in Europe than in the United States. But even their cumulative impact has been low, so far only a feeble attempt to stem a still rising tide. Corporate cultures are like other cultures: unless they are disrupted, they become entrenched. It is this more than anything else that explains the habit of those who make the decisions. The habit of boards, their coteries of consultants, institutional investors and others who vote like automatons to “pay for performance.” Never mind that performance – even assuming it is outstanding – is already being amply rewarded. It is assumed without question that greater rewards will lead to still better performance – that is, better performance for shareholders.
All of which raises the question of how this happened. Why is it that the trend of so lavishly rewarding executives, and so poorly, certainly comparatively, compensating average workers has persisted? And why with every passing year is it still further exacerbated? The answers to questions like these are clearly complex – multifaceted and multilayered. They include, for example, the rise of globalism and the decline of the union movement.
But there is another answer I have yet to hear anyone else provide. It is anonymity and its fraternal twin – obscurity. While America’s political leaders are by and large, certainly the most prominent among them, relatively well known, America’s corporate leaders are not. We tend to be somewhat familiar with our mayors, our senators, and representatives, and of course with the American president. This makes them easy to see and to hold to account – at least they are being scrutinized.
To be clear, Americans’ level of political literacy is not high. Many of us do not know even the names of our elected officials, save perhaps the likes of former President Donald Trump and President Joe Biden. But, still, many more Americans know who they are than know the CEO of IBM, or Salesforce, or Ford, or Target, or Proctor & Gamble, or General Dynamics, or Warner Media, or Boeing, or Exxon, or Intel, or for that matter Blackrock or Blackstone. We might’ve heard of Tim Cook (CEO of Apple) or of Mary Barra (CEO of General Motors). Or not. The point is that with very few exceptions even immensely wealthy chief executive officers remain unknown to the American public. Thus they are able to revel in their existing wealth and to keep accruing more wealth sight unseen. This cannot be good. It cannot be good that we cannot even identify who is escaping public scrutiny. Who is hording many millions and some even billions while avoiding paying their fair share of taxes – while at the same time allowing numberless Americans to languish at or just above the poverty line.
Just as the mainstream American media presume they are responsible for covering the people and policies that populate American politics, they should presume the same for the people and policies that populate American business. No reason in the world to hold government leaders responsible for what happens in America while corporate leaders get off scot-free. High time to name names. To call out leaders who are exorbitantly, excessively, even obscenely rich but not, alas, famous.