Monday, June 23, 2008


When companies make a bazillion dollars in profits their CEO's give themselves a bazillion dollars too. Only the top guys clean up because only top people can perform the miracles of profitability. Sometimes the miracle is performed by firing lots of the ordinary people who do nothing but make and sell the product. Jack Welch, the greatest CEO of them all, fired ten percent of the managers every year. At GE having the bad luck to work in an underperforming division or being stuck with a product that had a slow year (consumers have whims) lost you your job pronto. Jack said he was doing these people a favor. But up or down, rain or shine, CEOs always win.

Last year CEO pay went up 3.5 percent from the year before. These guys made an average of 8.5 million, which is about as much per hour as average employees make in a year. Companies struggled, stock prices went down, lots of people were fired and laid off, product sold slowly, and companies maneuvered with glacial ineptitude to counter these changes. Despite everything the CEOs made out like bandits. Where are the natural consequences? Why do regular people get thrown out of their jobs and see their pay stagnate while top people win no matter what?

Let me propose a corrective. If companies cannot cut their CEO compensation to match their stock performance, let the government do it. Tax away the amount the CEO made in excess of stock gains, and give that money to the workers who worked their brains out and lost their jobs or had their health care taken away. Sounds fair to me.

I would call it the Schadenfreude Act.


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