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A VIEW from LICK SKILLET: CEO pay steals from workers and stockholders

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In the past couple of years we have seen and heard many things from some of our Tea Party-type friends that have amazed us, but probably the most amazing thing yet was Marsha Blackburn’s complaint this past Sunday about the U.S. Senate not being in session on that day!

Miss Marsha is, as you no doubt know, one of the members of Congress from a district in Middle Tennessee, one of the strongholds of the Church of Christ.

We had always thought that that area was a member in good standing of the Bible Belt.

Yet here we have a duly elected Representative from that area castigating and chastising the Senate for obeying the Commandment which says in (the Revised Standard Version) Exodus, Chap. 20, Verse 8:
“Remember the sabbath day, to keep it holy. Six days you shall labor, and do all your work; but the seventh day is a sabbath to the Lord your God; in it you shall not do any work, you, or your son, or your daughter, your manservant, or your maidservant, or your cattle, or the sojourner who is within your gates; for in six days the Lord made heaven and earth, the sea, and all that is in them, and rested the seventh day; therefore the Lord blessed the sabbath day and hallowed it.”

In the days of our youth, and up until recent times it was not only frowned upon to work, especially governmental work, on Sunday, but it was prohibited by law to do so, and most strictly observing Christians still regard this prohibition as the proper life style; yet here we have a representative of one of the most faithfully observant Christian locales criticizing the members of the Senate for doing just exactly what they are commanded to do in Holy Writ.

We find this bizarre, and both Rep. Blackburn and her supporters should explain just exactly why the Senate should follow her example rather than the Commandment.
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We do not always read all the items in The Wall Street Journal Sunday section run in each Sunday’s Business Section of the Knoxville News Sentinel, but we read with great interest an item that ran in the issue of 22 September.

This was a fairly regular column authored by Al Lewis entitled “Al’s Emporium.” This particular column, which bore the heading “CEO’s ‘Cheap Number,’” detailed the resistance to the Securities and Exchange Commission’s efforts to comply with the Dodd-Frank Law’s mandate that the Commission enact a rule that “would require large, publicly traded companies to report the ratio of their CEO’s pay to the median pay of their workers.”

Mr. Lewis detailed in this column some of the efforts of these large companies, their organizations, and their “hired guns”, i.e. lobbyists, to block the SEC from doing its duty in formulating this rule.

He also gives a few examples of some of the outrageous ratios that have been reported.

For instance, one of the more incredible instances cited in a recent report from Bloomberg, involves a former J.C. Penney CEO, whose pay was found to be 1,795 times that of a Penney’s cashier.

This astronomical ratio means that for the pay of this one “big-shot” executive, the Penney company could have employed one thousand, seven hundred and ninety-five ordinary employees. What makes this particular instance of corporate over-pay astounding is the fact that J.C. Penney has had such a deplorable success rate during the last few years, with its losses growing and growing.

Once the SEC rule is put in place, it would be interesting to see what the relationship is between CEO pay and his or her corporations profit or loss.

We suspect that little or no relationship between these two figures will be found. This is because there seems to be little, if any, connexion between the salaries paid to corporate executives and their performance.

It seems that in the corporate suite, the pay scale is put on a ratchet, whereby it can only go up, and never go down, and it is determined by a high style “good old boy” network with no thought to what the pay increases, no matter how great, will accomplish insofar as productivity or profit.

We have even seen major bankruptcy cases where the bankruptcy court is petitioned, successfully in most cases, to allow the corporate officers who have run the corporation into bankruptcy to remain in charge, drawing the same outrageous salaries, and in a several cases given “retention” bonuses over and above their astronomical salaries and regular bonuses, to keep these incompetent failures in charge throughout the bankruptcy proceeding. And strangely enough, often times after milking the bankrupt estate they are indeed employed by another company at comparable or higher compensation.

This is, of course, just another aspect of the outrageous economic scenario we have been playing out for the last few decades, whereby the rich have gotten much richer, and the regular Joes and working stiffs have gotten relatively poorer.

For example, Mr. Lewis wrote in his column the following:
“In 1977, renowned management thinker Peter Drucker wrote a piece for The Wall Street Journal complaining that this number (i. e. the CEO to average worker ratio) had grown as high as 50 at many companies. ‘A ratio of 25-to-1 ... is well within the ratio most people in this country ... consider proper and indeed desirable,’ he wrote.”

The well-organized effort by corporate America to keep this corporate compensation scandal hidden from view despite the clear mandate of the 2010 Dodd-Frank law is just another example of the powerful organization of America’s corporate god-fathers.

We used to think that just the organization entailed in forming a corporation was sufficient to provoke worker organization in self-protection by means of a union. But now the old corporate organization has morphed into “super-organized” leagues of big corporations to magnify their separate corporate power through joinder with their powerful colleagues. This should be evident to those of the simplest minds, but there are still an overwhelming majority of our workers who are intimidated about organizing themselves so as to be able to deal on a more equal level with the big bosses.

Until the so-called middle class recognizes that it is rapidly losing status as “middle” and will soon be “lower” in classification, this disparity between the pay of CEOs and workers will continue to grow, and the general standard of living will continue to decline.

The current situation in Chattanooga, involving Volkswagen and its workers, offers hope that there could be a tum-around in the situation, although the same old crowd who have succeeded in promoting the CEO/worker imbalance is now entering the fray, and were VW not a German company, the organization effort there would already have been crushed.

Keep your fingers crossed.