Class Warfare Blog

August 20, 2018

CEO Pay Growing Faster than Yours … Still

Filed under: Business,Economics,Politics — Steve Ruis @ 12:14 pm
Tags: , , , ,

A recent report of CEO pay shows that the gulf between CEO pay and the pay of average workers in their companies has grown wider. I am shocked, shocked I tell you!

Articles are asking “How could this have happened?” As I have said over and over, this did not “just happen,” it was managed by the CEO’s. These people sit on each others boards of trustees to make sure that their pay increases will never be threatened. They have lobbied Congress and state houses to get tax cuts and tax provisions that favor them. We call such tax regulations “loopholes,” but loopholes are laws meant for one purpose that are used for another. These laws were passed for the purpose of increasing CEO power and wealth, period.

Take for example, Bill Clinton’s legislation to rein in the growth of “executive pay.” The situation was CEOs, through “golden parachutes” and other nonsense, were getting extravagant compensation for lackluster, even terrible, performances. So, the Clinton administration decided that CEO pay should be tied to CEO performance, an idea not so bad. But instead of tying CEO pay to some standard measure of business performance (income, profit, 5-year profit average, average wages in the company, customer satisfaction, etc.), they tied it to the value of the company’s stock, and therefore to the stock market. CEO’s rapidly took advantage of this and began getting more and more of their compensation in the form of stock options. They also started manipulating their own company’s stock price for their own gain. (I’m shocked, shocked I tell you!)

The most recent iteration of this practice is having the company borrowing money to “buy back” stock in the company. This has the effect of raising the price of the stock that remains and burdening the company with debt. The only people who benefit are stockholders and, oh, CEOs and other execs. This practice (stock buy backs) used to be illegal but as part of the package deal, it was made legal in the same era that started this binge of stock manipulation.

Who in a company is better positioned to manipulate the price of the company’s stock? Gosh, I believe it would be the CEO.

Can you spell insider trading, boys and girls? And it is legal. And it is making CEOs rich beyond their wildest dreams. And that wealth is being applied to our legislative and court processes to make them even wealthier and more powerful.

And, it all “just happened.” If you believe that, I have some lovely prime building land in Florida you may be interested in … but you might have to drain the swamp first.


  1. About that CEO performance pay – the boards don’t just tie the CEO bonuses to the stock price. They set benchmarks and the CEO is rewarded by exceeding benchmarks. So, for example, if the board sets a benchmark of stock price falling by 20%, and in the CEO’s capable hands the price drops by only 15%, then the CEO would be rewarded by exceeding the benchmark.


    Comment by List of X — August 20, 2018 @ 1:21 pm | Reply

    • The boards do exactly what the CEOs desire. Board management is the #1 skill treasured by CEOs.

      CEO pay is generally by stock option. They get an option to buy the company’s stock at some artificially low price. They get to choose when to buy and they choose to buy when the stock price is high and they can sell what they have “bought” at that high price. No real risk to them. Also, they get a cash salary that in times past would have been a generous pay amount.

      On Mon, Aug 20, 2018 at 1:21 PM, Class Warfare Blog wrote:



      Comment by Steve Ruis — August 20, 2018 @ 1:45 pm | Reply

  2. Your post is depressing.


    Comment by Nan — August 20, 2018 @ 2:42 pm | Reply

    • Sorry. I am just trying to keep you up to date on the class war. They made it. They have basically won and if we are to get back in the game, we need to step up. If I were younger I would be more active (I was back in the day). For now I can, at best, share what I glean from various sources.

      On Mon, Aug 20, 2018 at 2:42 PM, Class Warfare Blog wrote:



      Comment by Steve Ruis — August 20, 2018 @ 9:03 pm | Reply

  3. Yes, this is also the case in Australia. Insider trading laws are a joke, the Australian Stock Exchange have no way to stop the corruption, if you get to top management or CEO level you have money making opportunities the rest of us can only dream about.


    Comment by sklyjd — August 21, 2018 @ 6:20 am | Reply

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