Disney’s Robert Iger got a 45% bigger bonus in 2010 (Phil McCarten/Reuters)
Executives in the corner office now make 62 times more than the average worker, and that’s just in bonuses alone.
A study done for the Wall Street Journal, found that incentive pay for the chief executive officers of 50 major corporations jumped 30% in 2010. That’s on top of their base pay. And it also doesn’t include a whole bunch of other things, like generous retirement packages, gold-plated healthcare plans and use of the corporate jets. Remember how the financial crisis was supposed to wipe away the bonus culture of pay for short-term performance in corporate America. Yes. Well, not so much.
As a group the 50 CEOs got year-end payouts of $126 million. That was up from $83 million. Some of lucky (they would say deserving) recipients included Walt Disney’s CEO Robert Iger, who received a $13.5 million bonus. That was an increase of 45.5% from a year ago. GE CEO Jeffrey Immelt, the nation’s new jobs czar, got a $4 million bonus, after not receiving a special – check for two years in a row. And if you wonder where all that money you spend on Grande Caffe Mochas go, wonder no longer. Starbucks CEO Howard Schultz took home a $3.5 million bonus last year. It was the biggest bonus the Schultz has ever, repeat ever, received. And I thought we were still in tough economic times.
Of course, the news of higher pay for top executives comes at a time when pay for the rest of us seems to be stagnating. Yesterday, the government’s Bureau of Labor Statistics reported that average hourly compensation for American workers fell 0.5% in February. The average worker now makes $40,672 a year. What we all make is up from a year ago, but by just 2%. Factor in inflation, and the average worker makes just $0.58 more a week, than they did a year ago.
The corporate PR teams are defending these bonuses by saying that the executives deserve the pay because stock prices and earnings are up. A Walt Disney spokesperson says that shareholder return at the company was up nearly 24%, substantially more than the Standard & Poors 500. But haven’t we already learned, through bubble after bubble, that stock prices are a poor indication of anything. They are irrational, give us false positives, and crash.
But here’s what is the real problem. Yes, if higher profits and a higher stock price warrant better pay for CEOs, why doesn’t the same ring true for the average employee. Workers at Disney’s Florida amusement park Walt Disney World fought for months last year and early this year for higher wages. What they finally ended up getting, in a new contract settled earlier this month, was an annual raise of 3% to 4% over the next three years. The workers will get a bonus, too, of $650, a mere 20,769 times less than Iger’s bonus. As long as it remains that only a small segment of our population will be rewarded for better performance, while the rest of us do more and more work for the same pay, the wealth gap in America is certain to get worse.