corporate social responsibility

The Outrageous Ascent of CEO Pay

The Securities and Exchange Commission approved a rule last week requiring that large publicly held corporations disclose the ratios of the pay of their top CEOs to the pay of their median workers.

About time.

For the last thirty years almost all incentives operating on American corporations have resulted in lower pay for average workers and higher pay for CEOs and other top executives.

Consider that in 1965, CEOs of America’s largest corporations were paid, on average, 20 times the pay of average workers. 

Now, the ratio is over 300 to 1.

Not only has CEO pay exploded, so has the pay of top executives just below them. 

The share of corporate income devoted to compensating the five highest-paid executives of large corporations ballooned from an average of 5 percent in 1993 to more than 15 percent by 2005 (the latest data available).

Corporations might otherwise have devoted this sizable sum to research and development, additional jobs, higher wages for average workers, or dividends to shareholders – who, not incidentally, are supposed to be the owners of the firm.

Corporate apologists say CEOs and other top executives are worth these amounts because their corporations have performed so well over the last three decades that CEOs are like star baseball players or movie stars.

Baloney. Most CEOs haven’t done anything special. The entire stock market surged over this time. 

Even if a company’s CEO simply played online solitaire for thirty years, the company’s stock would have ridden the wave.  

Besides, that stock market surge has had less to do with widespread economic gains than with changes in market rules favoring big companies and major banks over average employees, consumers, and taxpayers.

Consider, for example, the stronger and more extensive intellectual-property rights now enjoyed by major corporations, and the far weaker antitrust enforcement against them. 

Add in the rash of taxpayer-funded bailouts, taxpayer-funded subsidies, and bankruptcies favoring big banks and corporations over employees and small borrowers.

Not to mention trade agreements making it easier to outsource American jobs, and state legislation (cynically termed “right-to-work” laws) dramatically reducing the power of unions to bargain for higher wages.

The result has been higher stock prices but not higher living standards for most Americans.

Which doesn’t justify sky-high CEO pay unless you think some CEOs deserve it for their political prowess in wangling these legal changes through Congress and state legislatures.

It even turns out the higher the CEO pay, the worse the firm does.

Professors Michael J. Cooper of the University of Utah, Huseyin Gulen of Purdue University, and P. Raghavendra Rau of the University of Cambridge, recently found that companies with the highest-paid CEOs returned about 10 percent less to their shareholders than do their industry peers.

So why aren’t shareholders hollering about CEO pay? Because corporate law in the United States gives shareholders at most an advisory role.

They can holler all they want, but CEOs don’t have to listen. 

Larry Ellison, the CEO of Oracle, received a pay package in 2013 valued at $78.4 million, a sum so stunning that Oracle shareholders rejected it. That made no difference because Ellison controlled the board.

In Australia, by contrast, shareholders have the right to force an entire corporate board to stand for re-election if 25 percent or more of a company’s shareholders vote against a CEO pay plan two years in a row.

Which is why Australian CEOs are paid an average of only 70 times the pay of the typical Australian worker.

The new SEC rule requiring disclosure of pay ratios could help strengthen the hand of American shareholders.

The rule might generate other reforms as well – such as pegging corporate tax rates to those ratios.

Under a bill introduced in the California legislature last year, a company whose CEO earns only 25 times the pay of its typical worker would pay a corporate tax rate of only 7 percent, rather than the 8.8 percent rate now applied to all California firms.

On the other hand, a company whose CEO earns 200 times the pay of its typical employee, would face a 9.5 percent rate. If the CEO earned 400 times, the rate would be 13 percent.

The bill hasn’t made it through the legislature because business groups call it a “job killer.” 

The reality is the opposite. CEOs don’t create jobs. Their customers create jobs by buying more of what their companies have to sell.

So pushing companies to put less money into the hands of their CEOs and more into the hands of their average employees will create more jobs.

The SEC’s disclosure rule isn’t perfect. Some corporations could try to game it by contracting out their low-wage jobs. Some industries pay their typical workers higher wages than other industries.

But the rule marks an important start.

As Nabisco Ships 600 Jobs out of Chicago to Mexico, Maybe It's Time to Give up Oreos

Rather than invest $130 million in modernizing the plant in Chicago, where Oreos have been lovingly produced for the past 100 years, she [Irene Rosenfeld] will instead move the jobs to a new factory in Mexico. The result: a loss of 600 well-paying and community-sustaining jobs on Chicago’s Southwest Side.

There’s nothing new or even unusual about Irene Rosenfeld and the story of Nabisco and its Oreo cookies. But perhaps its very pervasiveness in our lives is just the thing to wake up the nation to the downward spiral we find ourselves in – a veritable race to the bottom, with a thin layer of the very rich, a hollowing out of the middle, and a growing underclass – relegated to selling merchandize produced for pennies on the dollar in other countries.

Source: Huffington Post

System D and the World's Largest Economy: Bridging the Informal and Formal Economies

System D and the World’s Largest Economy: Bridging the Informal and Formal Economies

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Who is bigger? China or the United States? Both claim to have (or maybe more accurately in China’s case have had) the worlds largest economy. Today it may be more accurate to say that the world’s largest economy isn’t an ‘official’ economy at all. Its the informal economy, the black market, or as an IMF study from 2010 noted “the shadow, underground, informal, or parallel economy, which ‘includes…

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The links between consumer pressure for low-cost high fashion and the merger existences of the sweatshop workers who produce those goods are explored” (Netflix)

“This is a story about clothing. It’s about the clothes we wear, the people who make them, and the impact the industry is having on our world. The price of clothing has been decreasing for decades, while the human and environmental costs have grown dramatically. The True Cost is a groundbreaking documentary film that pulls back the curtain on the untold story and asks us to consider, who really pays the price for our clothing?

Filmed in countries all over the world, from the brightest runways to the darkest slums, and featuring interviews with the world’s leading influencers including Stella McCartney, Livia Firth and Vandana Shiva, The True Cost is an unprecedented project that invites us on an eye opening journey around the world and into the lives of the many people and places behind our clothes.”

Available now on Netflix |

Raising minimum wage is actually totally capitalist

Raising minimum wage is actually totally capitalist

The escalating debate over minimum wage in this country is often framed in very simplistic liberal versus conservative terms, with the assumption that liberals support higher wages and conservatives do not. The truth, though, is a bit more complicated, for while many conservatives do resist a higher minimum wage, they shouldn’t, and not just because higher minimum wages are the right thing to do…

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5 ways companies are defending bees

As honey bees and other pollinators continue to die off at unsustainable rates — this year beekeepers experienced one of the highest losses on record — a growing number of garden retailers, wholesale nurseries and landscaping companies are removing bee-toxic pesticides from their operations while avoiding regrettable substitutions and adopting healthy practices for bees and the environment.

Bees are essential to our food system. They’re responsible for one in three bites of food we eat, from apples to avocados to almonds. Without them, our plates would look pretty bleak and the health of our environment would suffer.

1. Source neonicotinoid free plants

2. Make it the rule: Setting strong neonicotinoid use policies

3. Educate customers

4. Get some help from natural predators

5. Prevent pests, and set cultural and physical controls

To view a list of garden retailers, wholesale nurseries and landscaping companies that have taken steps to eliminate neonicotinoids, visit this Friends of the Earth page.

Source: Green Biz
Don't Let This One Thing Sabotage Millennial Interest in Your Company's Philanthropy
If you care about Millennial recruitment - which you should if you care about the future of your company - you need to understand how to make these socially conscious employees feel connected to the greater purpose of your company. It’s not enough to offer a volunteer and giving program; [...]
By Cause Integration

“Beware of philanthropy apathy; it’s contagious and can torpedo your best intentions. The best deterrent to indifference is fostering a culture where giving back is supported throughout your company and everyone inspires one other to get involved.”

Pickings Corporate Sustainability Ratings From the World's Largest CSR Database

Corporate organizations, researchers, and activists claim corporate social unfalseness (CSR) and sustainability ratings to benchmark butcher shop performance and progress. Corporate organizations require the ratings to learn more helter-skelter their competitors. If them require CSR ratings for any reason, it only need to visit a single website to get the imperious minor premise discounting the world’s largest CSR database.
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More Companies Striving to Close the Gender Pay Gap

According to the White House figures, American women on average earn $0.77 for every dollar earned by men. The pay gap is even wider for women of color and ethnic descent. This harsh reality continues to exist despite the 1963 passage of the Equal Pay Act, which requires men and women to receive equal pay for equal work at the same place of employment.

However, some companies, both large ones and SMBs, are making a conscious effort to address gender-based wage disparities. Marc Benioff, CEO of Salesforce said that he was methodically combing through the pay of all 16,000 of the company’s employees to ensure that the women and men at Salesforce were compensated fairly.

While many companies that are keen to close gender pay gaps conduct an annual salary audit, but that alone is not enough to keep wage disparities at bay. 


Four Banks Plead Guilty To Foreign Exchange Collusion, UBS Pleads Guilty To Wire Fraud

Five banks will pay the Department of Justice nearly $3 billion in fines and penalties for their manipulation of U.S. dollar and Euro exchange rates, which the DoJ characterized as occurring “almost every day for five years” through private chat rooms, benefiting their trading positions but harming countless consumers and investors around the world. Separately, the Federal Reserve said on Wednesday, six banks would pay a total of $1.8 billion in fines for “unsafe and unsound practices” in the FX market.

Starting in 2007, traders at banks involved in Wednesday’s settlement formed what they called “The Cartel”  to fix daily foreign exchange crosses in currencies as prominent as the dollar and euro so that they’d be able to tilt currency movements in their favor. Using coded language and group instant message chats on their Bloomberg Terminals, the traders and their colleagues worked to influence daily rate settings in the forex market by either bidding up some currencies or withholding markets in others at the close of business.

“For more than five years, traders in “The Cartel” used a private electronic chatroom to manipulate the spot market’s exchange rate between euros and dollars using coded language to conceal their collusion. They acted as partners – rather than competitors – in an effort to push the exchange rate in directions favorable to their banks but detrimental to many others,” US Attorney general Loretta Lynch said at a Wednesday press conference.

Source: Forbes

5 Steps to Understanding Racial Bias

Bias in policing, economic and health disparities and social policy are topical in the media, corporate dining halls and on college campuses. Yet, a review of the literature and media coverage suggests insufficient understanding of the nuances of racial bias.

Racial bias advances inequality. While there are no absolute remedies, there are some best practices.

1. Avoid presuppositions – unfounded or misinformed assumptions that unfairly categorize people and circumstances.

2. Examine your preferences in light of your actions to ascertain if they are harmful to others. For instance, if your preference for tall people disadvantages short people, then your preference is a bias. Work to overcome it.

3. Always ask, what if my perspectives or actions pertained to someone I love or to me? Would they be okay? How would I fix them?

4. Seek advice from the people who are affected. Be open to sincere feedback.

5. Examine honestly your organization’s policies and practices to unmask presuppositions that may lead to discrimination and other detrimental effects, and have the courage to change them.Whether in business or personal life, racial bias separates people from their possibilities, organizations from the causes of equality and justice, and society from the benefits of true inclusion. It is incumbent upon each of us to eliminate racial bias where we find it – in our lives, our homes, our workplaces, and anywhere we encounter it.The racial discord that has gripped the nation in cities from Ferguson to Cleveland has resurrected an old term. People are once again talking about “bias.”

Source: Huffington Post

Here are 5 (of many) reasons I no longer shop at Urban Outfitters. Hopefully you'll join me.

In a list of “faux progressive companies” — those easily mistaken as “good” and ethical — Alternet’s Lauren Kelley names Urban Outfitters:

“Urban Outfitters is the kind of place that’s filled to the brim with young, cool, vaguely lefty-looking people, but the company itself (which also owns Anthropologie and Free People) has plenty of issues.”

Issues indeed. Here are five important things you need to know about Urban Outfitters:

1. Urban Outfitters has an anti-gay problem.

Former Sen. Rick Santorum (above), who once publicly compared homosexuality to bestiality, has received political donations from Richard Hayne, president and CEO of Urban Outfitters. 

2. Urban Outfitters profits from astonishing disrespect.

Rarely does a year go by without news of an Urban Outfitters product scandal. Their offensive goods have made them enemies in the black, Irish, Jewish, and  gay communities. 

3. Urban Outfitters is like a klepto at a craft fair.

The company has been accused on many occasions of stealing entire designs from independent craftspeople and designers. 

4. Again, Urban Outfitters just can’t stop stealing.

In 2012, the Navajo Nation sued Urban Outfitters for trademark infringement when the company released an entire line of “tacky and insensitive” products using the tribe’s name and symbols to turn a profit.

5. Despite all of this, Urban Outfitters is doing better than ever.

“At Urban Outfitters, backward-minded stereotypes are fashion-forward,” says HuffPost Show. And apparently, so is abusing power and cheating people.

P.S. Urban Outfitters Inc. owns five brands, so watch out for all of ‘em: Urban Outfitters, Anthropologie, Free People, BHLDN, and Terrain.

Source: Upworthy

Advertising for good: does it turn out we all want the same thing?

The Cannes Lions Festival might just be showing us that, contrary to popular belief, public and industry might both want marketing to benefit society.

It would be a ballsy careers counsellor who, when confronted with a student who seeks a career in an industry that is beyond moral reproach and driven by a desire to make the world a better place, recommends marketing.  

Since the publication of Vince Packard’s ‘The Hidden Persuaders’ (in which he famously implied admen were engaged in ‘people-manipulating activities’ that raised ‘profoundly disturbing questions about the kind of society they are seeking to build for us’), public discourse around the profession has been resoundingly wary.  Public trust in advertising tends to float around 1/5, narrowly ahead of the alcohol industry but behind bankers and politicians.

Underpinning that mistrust is a sense of opposing objectives – the public want life to be better, the marketing industry wants to sell more stuff.  Rarely does the latter lead to the former.

But this year’s Cannes Lions festival might just be demonstrating that, far from being another species entirely, we marketers might just share that desire to make things better, and increasingly are finding ways to turn commercial objectives into advertising that does just that.

For evidence, I turn to one of the first categories to announce its winners, the ‘Promotional and Activation’ Lions.  

It has always been my favourite category, as to me it represents the sharp end of what Paul Feldwick might call ‘humbug’: advertising that generates its own coverage rather than relying mostly on paid-for media, because ‘if it doesn’t get enough people in the tent, it won’t eat’.  It is usually the one that boasts winners that have been genuinely insightful, and that have worked hard to capture the interest of the public on their terms, not the brand’s.

When you look at the class of 2015 in this category, two things emerge…

1. The industry wanted to award Good ideas (with a capital G)

“The Promo & Activation jury will be looking for work that works. But, more importantly, we’ll be looking for work that in some way lifts creativity and, indeed, society to a higher plane. We have to tap into consumer emotions and experiences to solve real problems.”
- Matt Eastwood, CCO of JWT Worldwide & Chair of the P&A Jury

It was obvious before the festival even commenced that the jury for this category weren’t just looking for work that made the biggest splash, but rather work that did so in a way that contributed to a more responsible contract with the world in mind.  Seeking to award work that lifted ‘society to a higher plane’ is not something one might have expected to hear from a judge a decade or two ago.

It’s a powerful signal to send – the Cannes Lions festival sets the bar for creativity around the world, the standards for the advertising industry to uphold and endeavour to beat.  To set those standards not solely on the basis of commercial outcomes or imaginations captured, but also on societal impact, suggests the leaders of the profession have a desire to prove that the public’s suspicion of us is a case of mistaken identity.

2. …and plenty of Good ideas stepped up to the plate.

Having gone through all 83 awarded entries in the category, there’s an encouraging pattern.

Firstly, over half (57%) could be classified as in some way ‘doing good’ for the world.  Most notably Volvo’s Grand Prix-winning ‘Life Paint’, which sought to make our roads safer for drivers and cyclists alike.  But beyond the very top pedestal we saw Burger King standing up for the right to equality for LGBT people with ‘Proud Whopper’, Vodafone tackling domestic abuse with ‘Between Us’ and Volkswagen encouraging parents to slow down with ‘Reduce Speed Dial’.  Indeed, perhaps most encouraging is that these good-doing winners weren’t just from the usual suspects of charities and lobbying groups – over 40% of all profit-making entrants fell into this grouping.

Secondly, the pattern is even more pronounced at the top end of the scale.  15 of the 20 entries awarded either a Gold Lion or the Grand Prix demonstrated their idea had a positive impact on society.  Cause-related entrants like the ALS Ice Bucket Challenge and No Somos Delito’s ‘Holograms for Freedom’ sat alongside commercial entrants like Samsung’s effort to make overtaking safer (‘Safety Truck’) and Nivea’s fun way of educating kids on the dangers of being in the sun without protection (‘Nivea Doll’).  Again, Good ideas were not disproportionately had by non-commercial organisations.

Green shoots that should be encouraged to grow

It would be foolish to suggest that one category in one awards ceremony should give us cause to believe we’ve found the point where the public’s desire for responsible marketing and our actual practice have met en masse.  But perhaps we might be entering the zone of possible agreement, and one which we should all be endeavouring to pile into more often than we have in the past.

What’s most exciting to me about these winners is that they have managed to deliver on their business objectives and community responsibilities at the same time.  They are the trailblazers for whom sustainable business does not mean compensating for physical or cultural pollution with token donations to charity, but rather finding ways to make the discipline most often charged with fuelling commercial growth do so with societal impact as far more than an after thought.

We should celebrate those who are trying – they might just be plotting the path to the new normal.


“Cannes 2015: How Matt Eastwood Is Putting Himself in Consumers’ Shoes as Promo & Activation Jury President”
Little Black Book, June 2015.

“Advertising: What the UK Really Thinks.”
The Advertising Association/Credos, March 2011.

“The Anatomy of Humbug: How to Think Differently About Advertising.”
Paul Feldwick, January 2015.  Published by Matador.

“The Hidden Persuaders.”
Vince Packard.  Originally published 1957.  Reissued by IG Publishing.

“Cannes Lions: 2015 Promo & Activation Shortlist.”
Cannes Lions International Festival of Creativity.  June 2015. 

This piece was originally published on on 26th June 2015.
The obscure legal system that lets corporations sue countries | Claire Provost and Matt Kennard
The long read: Fifty years ago, an international legal system was created to protect the rights of foreign investors. Today, as companies win billions in damages, insiders say it has got dangerously out of control
By Matt Kennard

“There was no pattern between signing treaties and getting investment,” Carim explained. “We’ve had huge investments from the US and Japan and India and a number of other countries where we don’t have investment treaties. Companies don’t come and invest in a country or not because it does or doesn’t have a bilateral investment treaty. They invest if there is a return to be made.”