Class Warfare Blog

September 16, 2016

CEO Pay Scam … by the Government!

You have all heard about how CEO pay (aka remuneration) has risen from comfortable levels, roughly 20 times the average worker’s pay in the mid-1960s, to mind-numbing levels today, roughly 373 times the average worker’s pay in 2014. The sense of outrage is palpable, but not enough to have anything done about it. What would you say if I told you that the 373:1 ratio was vastly understated? That the actual ratio is closer to 950:1?

How is this possible? It is possible because the Securities Exchange Commission (SEC), the government watchdog of said statistics, uses an estimate of the value of stocks held that works okay for ordinary people, but CEOs are not ordinary people. Their stock is worth more than that estimate suggests because they are better able to time when to cash in their stock because, they, unlike “ordinary people” have information, and decision making power, that allows them to maximize the value of their company’s stock.

So, how much are we talking about? In one such instance, a pharmaceutical corporation CEO was listed as making $19 million in such compensation in 2014 in SEC documents, but on his tax return, he listed a different number, $192.8 million. Similarly in 2015, the SEC list him at $18.8 million as his “fair-value compensation” while his actual take home was $232 million. And the SEC figures are what are used to calculate the ratio of CEO to average worker pay.

As if we needed more evidence that the 1% have scammed the system, it is clear beyond any shadow of doubt that America is government by the “e Rule” them that has the gold, make the rules.m, it is clear beyond any shadow of doubt that America is government by the Golden Rule: those that have the gold, make the rules.

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