Editorial: Mankind should be their business
If there is a special spot reserved in hell for Ralph Scozzafava, the former CEO of Furniture Brands International, surely it’s a crowded room.
He was not the first or only executive whose employees felt he was looking out primarily for his own interests.
He was not the first or only executive to throw employees under a fleet of buses when it appeared it would help boost his bonus.
He was not the first or only executive whose pay amounted to obscene multiples of what his rank-and-file workers are paid. Indeed, his pay was relatively low for the corporate world.
Scozzafava’s total compensation came to not quite $2 million a year, including bonuses and stock. That wouldn’t even land him within shouting distance of Forbes’ list of the 100 highest-paid CEOs. Topping that list is John Hammergren of pharmaceutical company McKesson at $131.19 million, and coming in at 100 is Richard K. Templeton of Texas Instruments at $15.36 million.
All of them are overpaid – the average CEO in the U.S. is paid 354 times what the typical worker in his company is paid, and the top 500 CEOs make in one day what it takes a typical worker a year to earn – and the margin of their overpayment is growing more quickly than their companies are growing.
CEO pay, even adjusted for inflation, rose 875 percent from 1978 to 2012, according to the Economic Policy Institute. That is more than double the rate of growth in the stock market during the same period and compares to 5.4 percent growth in a typical worker's compensation.
Peter Drucker, who is recognized as the father of business management, said the CEO-to-worker salary ratio should not exceed 20:1, which is what existed in the United States in 1965, according to the Economic Policy Institute. Anything more leads to an increase in "resentment and falling morale" in a business, Drucker wrote. The ratio at major U.S. companies now is more than 250:1.
CEOs are not helpless victims of boards of directors who insist on throwing more and more money at them. Any of them could say, “Stop, that’s enough, and it doesn’t help the business.”
Moreover, any of them, if they were decent human beings, would feel shame at that obscene level of pay.
So make no mistake about it, few executives in the upper ranks of Corporate America may be as bad as Ralph Scozzafava, though some surely are worse. Not all of them did so little for so many while doing much for no one but themselves.
But precious few of them are doing much to avoid the fate of Jacob Marley, the late business partner who returns draped in heavy chains to haunt Ebenezer Scrooge on Christmas Eve in “A Christmas Carol”:
“I wear the chain I forged in life. I made it link by link, and yard by yard; I girded it on of my own free will, and of my own free will I wore it.”
They may live clean and sober lives and attend faithfully to their families and businesses. But how many millions do they need? Why instead do they not return the money in wages to the workers who truly are responsible for it?
The deals of their trade, Marley would say, are but a drop of water in the comprehensive ocean of their business, and the chains they are forging will fill their executive suites.