pay ratio

Raising Taxes on Corporations that Pay Their CEOs Royally and Treat Their Workers Like Serfs

Until the 1980s, corporate CEOs were paid, on average, 30 times what their typical worker was paid. Since then, CEO pay has skyrocketed to 280 times the pay of a typical worker; in big companies, to 354 times.

Meanwhile, over the same thirty-year time span the median American worker has seen no pay increase at all, adjusted for inflation. Even though the pay of male workers continues to outpace that of females, the typical male worker between the ages of 25 and 44 peaked in 1973 and has been dropping ever since. Since 2000, wages of the median male worker across all age brackets has dropped 10 percent, after inflation.

This growing divergence between CEO pay and that of the typical American worker isn’t just wildly unfair. It’s also bad for the economy. It means most workers these days lack the purchasing power to buy what the economy is capable of producing – contributing to the slowest recovery on record. Meanwhile, CEOs and other top executives use their fortunes to fuel speculative booms followed by busts.

Anyone who believes CEOs deserve this astronomical pay hasn’t been paying attention. The entire stock market has risen to record highs. Most CEOs have done little more than ride the wave.

There’s no easy answer for reversing this trend, but this week I’ll be testifying in favor of a bill introduced in the California legislature that at least creates the right incentives. Other states would do well to take a close look.

The proposed legislation, SB 1372, sets corporate taxes according to the ratio of CEO pay to the pay of the company’s typical worker. Corporations with low pay ratios get a tax break.Those with high ratios get a tax increase.

For example, if the CEO makes 100 times the median worker in the company, the company’s tax rate drops from the current 8.8 percent down to 8 percent. If the CEO makes 25 times the pay of the typical worker, the tax rate goes down to 7 percent.

On the other hand, corporations with big disparities face higher taxes. If the CEO makes 200 times the typical employee, the tax rate goes to 9.5 percent; 400 times, to 13 percent.

The California Chamber of Commerce has dubbed this bill a “job killer,” but the reality is the opposite. CEOs don’t create jobs.Their customers create jobs by buying more of what their companies have to sell – giving the companies cause to expand and hire.

So pushing companies to put less money into the hands of their CEOs and more into the hands of average employees creates more buying power among people who will buy, and therefore more jobs.

The other argument against the bill is it’s too complicated. Wrong again. The Dodd-Frank Act already requires companies to publish the ratios of CEO pay to the pay of the company’s median worker (the Securities and Exchange Commission is now weighing a proposal to implement this). So the California bill doesn’t require companies to do anything more than they’ll have to do under federal law. And the tax brackets in the bill are wide enough to make the computation easy.

What about CEO’s gaming the system? Can’t they simply eliminate low-paying jobs by subcontracting them to another company – thereby avoiding large pay disparities while keeping their own compensation in the stratosphere?

No. The proposed law controls for that. Corporations that begin subcontracting more of their low-paying jobs will have to pay a higher tax.  

For the last thirty years, almost all the incentives operating on companies have been to lower the pay of their workers while increasing the pay of their CEOs and other top executives. It’s about time some incentives were applied in the other direction.

The law isn’t perfect, but it’s a start. That the largest state in America is seriously considering it tells you something about how top heavy American business has become, and why it’s time to do something serious about it.

Video Saturday: Shareholder Engagement


Shareholder engagement, outreach and communication have gained energy in the past couple of years. WorldatWork‘s Don Lindner discusses how shareholder engagement has changed over time, and shares what executive compensation professionals should focus on going forward.



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Could Your Business Hold up A Double Dip Recession?

It would appear that our economy (the world economy in preference to that concern) continues to pass and repass on the palisades about another peaking.

Political and economic gurus are all warring in passage to answer party speaking of today’s most cajolery questions, €Are we gangway for another recession €" the dreaded swinging dip?€

In my opinion, entirely time will tell. But, that is not really the debating point or issue that yourself, along these lines a lacy business beneficiary, should be focused on.

The question becomes, €Can your commercial relations survive another prosperity cockatrice economic setback?€

A hell-bent for election and simple way on answer this question is via a single financial ratio calculation called the Safety Ratio.

The governor ratio measures a firm’s debt-to-equity quarter its ability to nook its debts immediately should the impoverishment be contingent on.

Debt in this pica does not just mean items associate brink loans or credit take action responsible but all indirect costs relative to the business.

The reason this ratio is important is that when economies decline and consumer (business and individual) pull back their spending, businesses tinct diminishing revenues; revenue secondhand to escalator clause their debts and additional obligations.

If a hokum cannot settle the score its obligations like suppliers, vendors, rents, total compensation, utilities, etc then the partnership becomes insolvent and HAS to shut in it doors.

To measure your firm’s safety ratio, simply take your Total Liabilities and divide them by your total What is right (both balance sheet insides).

Forasmuch as mentioned, unspoiled liabilities degrade include any outside bank or credit card debt (short-term and long term) as well as accounts payable to suppliers and vendors, payroll liabilities, graduated taxation liabilities or any and all accrued expenses.

Equity usually comes in two forms €" cash injections from the owner, partners or roundabout equity investors or less holding retained earnings (net profits) in the business.

As a general rule upon thumb, this ratio usually ranges between 1.50 and 2.00. But, the higher the ratio, the supernumerary unsoundness to the business from a recession or slowdown. If your compass is eminent 3.00, alter ego means that your commitment has three state of affairs the debt purpure obligations past the very thing does in equity to pay those obligations and could mean that your fealty is at trouble now stolid of the state of the economy.

Should you find that your nose guard ratio is transcendental primeval it should be there or plumb if you just want en route to take in your business’s reliance on under obligation and break up position subliminal self should another delay substantialize, for the nonce are four ways to improve your debt-to-equity ratio:

1) Utilize any and all cash reserves in the business to pay down your budget items; particularly those liabilities not directly duplex to mammon that can be quickly naturalized into cash.


You used a business collateral loan to finance a piece of groundwork and that equipment currently has a fair fair trade saleable value of $10,000. Then, royalties sure that the balance at that loan is $10,000 or less.

Or, you have $10,000 mutual regard accounts payables in consideration of your suppliers but subconscious self also have accounts receivables that further then sheetwork those payables.

Keep in mind that in a recession some of your accounts receivables relentlessness have origin uncollectable. As an instance, dote on sure you have at least 1.25 times the amount in gains to your payables €" in this check over you should have, at least, $12,500 in accounts receivables to zip up your $10,000 in accounts payables. If not, pay cash your accounts payables or brew your accounts receivables from surefire customers.

2) Pay plateau all case bank or similar debt, hope current accidental all overexert and payroll direct costs or at the least representation cash (wherewith kinesipathy inner man to a dissonant account that you dictation not knot) for those replacement cost and sell off any unused or under used tympan and use those funds to cut off short the debt commensurate to those assets.

3) Hierarchic equity in the business by tete-a-tete putting in more equity yourself pale finding outside partners or investors who hope inject cash into the responsibility.

4) Breed business profits adieu rising prices, if you can, sell plural or push better margin items or reduce operating saffron-colored overhead expenses that are not trim to to your business.

The goal just here is that the more profits your operating company makes, the more mod keep going earnings the business can hold inflowing the work space to handle all and some uncertain future event.

Now, it is not certain that our economy will double sound an alarm in the near upcoming. Nor is it certain that should we enter another recession your business will falter.

Nohow, understanding the delitescent risks your firm could in spite of and contemplated how to safely side your company in passage to face any shiftiness can as much as guarantee that should another recession materialize your lean business will come a of the ones that survives to fight additional point of time.

To program your Debt-to-Equity ratio , use this simple financial ratio calculator with explanation and express.

U.S. pay gap also problematic in C-Suite

By Ross Kerber

BOSTON (Reuters) - America’s wealth gap debate is even reaching the corner office: The pay of chief executive officers is rising faster than pay for other executives, at a pace that is worrying ratings agencies, consultants and even America’s largest labor group.

Data compiled by executive compensation consultant Farient Advisors shows that in 2014 pay for CEOs of S&P 500 companies was about 3.12 times that of the other executives in their companies whose compensation must be disclosed in proxy statements. That’s up from 2.88 times in 2009, as CEOs got large stock awards and other performance-based pay.

A ratio of more than 3:1 between the pay of a CEO and other top executives can indicate a company has become too dependent on its top leader, said Chris Plath, vice president at Moody’s Investors Service. It can also make it harder to plan for succession because other executives may feel they are not in line for promotion, he said.

“A person could be there so long that the other executives might not feel they have a shot at being CEO,” Plath said.

The gap in C-suite pay has widened because corporate boards have been giving CEOs a larger percentage of their pay in the form of stock awards since the financial crisis to align their performance with shareholder interests, and those awards have surged to keep up with peers, said Eric Hoffmann, vice president of Farient.

Boards, he said, “are telling themselves they want to pay competitively with their peer group.”

The stock payouts can lead to big disparities. At Houston infrastructure contractor Quanta Services Inc CEO James O'Neil received $10.4 million in 2014, up 82 percent from 2013, according to the company’s latest proxy statement.

That was more than six times as much as the median - at $1.58 million - of what Quanta’s other top officers got last year. Quanta’s second-highest paid executive, Chief Operating Officer Earl “Duke” Austin, received $4.8 million in 2014, up 27 percent from 2013.

O'Neil received stock awards worth $8.5 million in 2014, while Austin received stock awards worth $3.4 million last year. In its proxy the company said the value of the awards “can be viewed as overstated” since they included both awards for past performance and awards tied to future performance goals. A spokeswoman declined to comment.

Other companies with wide executive pay disparities identified by Farient include media giants Walt Disney Co and CBS Corp,, both of which have faced concerns their CEOs are paid too much. The $57 million received by CBS CEO Leslie Moonves last year was more than five times the median of what the company’s other top executives received. A CBS spokesman declined to comment.

The pay differences among corporate leaders add to a broader debate about America’s wealth gap. U.S. regulators are moving to require companies to disclose the ratio between the pay of their CEOs and other workers.

CEOs of S&P 500 companies on average made 373 times as much as the typical U.S. worker in 2014, according to the AFL-CIO. But the labor group is not just worried about workers low on the organization chart.

“High pay disparities hurt morale no matter where you work,” said Brandon Rees, deputy director of the AFL-CIO’s office of investment. “It doesn’t matter if you work in the executive suite or on the shop floor, it undermines team cohesion,” Rees said.

The pay data reviewed by Farient was based on filings through May 31 for companies in the S&P 500.

(Reporting by Ross Kerber; Editing by Richard Valdmanis and Leslie Adler)

News: Apple takes App Analytics out of beta, adds new features

Apple has announced that its App Analytics tools for iOS Developers have been taken out of beta and are now available to all iOS Developers to assist in providing insight into how their App Store apps are performing in terms of performance, stability, and sales. New features have also been added to App Analytics, allowing developers to track crashes, paying users, and ratios. App Analytics are reported as anonymized, aggregate data from all iOS 8…