ratio of pay

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.

hbswk.hbs.edu
New income inequality research from Harvard Business School
It turns out that customers prefer shopping from retailers with low pay ratios, according to new research...
By Carmen Nobel

Are you a big fan of crazy-high CEO pay? According to recent research, too bad!

Most people think that CEOs in America, on average, make about 30x more than the average worker in their company. In reality, it’s closer to 350x more!

This exciting new research placed companies' CEO-to-worker ratios (e.g., 1000:1, 50:1) on different products and tested whether it affected consumer choices, and how much they would be willing to pay.

The good news is that people think that high CEO-to-worker ratios are unfair, and they prefer products made by companies with lower pay ratios. That is, people want to buy products from businesses that pay their workers more fairly, and have flatter pay structures.To convince consumers to buy from the firms with higher CEO-to-worker ratios, the products needed to be severely discounted.

This is also good news because new SEC rules will soon mandate companies to disclose this information. Ideally, down the line, this information could be placed on products like energy-savings stickers. 

The take home here is that businesses that pay their workers fairly should start to advertise this information. This could mean better sales, and it also might force other firms to pay their workers better (and their CEOs less)…

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.

If you want a single reason for why Democrats lost big Tuesday it’s this: Median family income continues to drop, the first “recovery” when this has occurred. Meanwhile, all the economic gains are going to the richest Americans. If the Republicans think they can reverse this through their supply-side, trickle-down, fiscal austerity policies, they’re profoundly mistaken. The public will soon discover this. But if the Democrats believe they can reverse it simply by raising taxes on the rich and redistributing to everyone else, they are mistaken, too. We need to raise the minimum wage, invest in education and infrastructure, lift the cap on income subject to Social Security payroll taxes, resurrect Glass-Steagall and limit the size of the banks, make it easier for low-wage workers to unionize, raise taxes on corporations with high ratios of CEO pay to average worker pay, and much more. In other words, we need an agenda for shared prosperity. Over the next two years the Democrats have an opportunity to advance one. If they fail to do so, we’ll need a new opposition party that represents the interests of the vast majority.
Regarding Buying Albums, DVDs, & Photobooks

I’ve gotten an ask or two about buying B.A.P merchandise and I’ve seen people mentioning it here and there, so I wanted to put this out there for any newer fans who might be considering buying B.A.P merch, or people who still want to fill in the holes in their collection.

I totally empathize with the urge to have a group’s albums.  I have B.A.P’s albums, and I like having them.  Some people need to be able to hold them in their hands.  However, right now with all of this stuff coming to light, none of us want to continue lining the pockets of the greedy people running TS Entertainment.  They blatantly and happily exploited B.A.P for every cent they could get.  Their profits were more important than the health and well-being of the six boys they were driving into the ground.  They signed them at an atrociously unfair pay ratio, withheld any type of payment for three years, and actively attempted to circumvent conditions which would lead to them having to pay the boys more.

Nobody is going to stop you from buying B.A.P merchandise.  If you want to buy it, that is your decision, and nobody should attack you for it.  However, there are ways for us to get around giving more profit to TS.

If you’re buying merch for the photobooks, you needn’t do so.  Scans for every B.A.P album, photobook, and DVD (with exception of the 2013 calendar) have been uploaded here.  There are zip files available for downloading them at that blog too, if you want the images on your computer.  Seasons Greetings 2015 should be posted there in about two weeks’ time as well.

If you’re buying merch for the DVD footage, we are working on compiling every B.A.P DVD for download here.  It is still incomplete, but the gaps are slowly being filled in.

If you simply must have a physical copy, most albums, dvds, and photobooks are available secondhand in various places on the internet.  eBay has quite a few secondhand sellers, and there are sometimes posts on tumblr from people selling kpop merch they have no use or need for.  I know it isn’t the instant gratification you can get from buying it off a kpop site, but secondhand goods have already been paid for.  TS can no longer profit from them, and therein lies the positive - it might be a bit more difficult to find, but it robs them of the precious money they worked our boys to the bone for.

Please, if you must have merch that was released by TS Entertainment, try to find it secondhand.  I know some things won’t be available secondhand, such as Seasons Greetings 2015, and that is unfortunate.  In the end, it’s up to you to decide how you feel regarding buying it.  I won’t judge you, and nor should anyone else in the fandom.

Pretty soon, millions of American workers will know exactly how much less money they earn than their corporate bosses, as the Securities and Exchanges Commission voted in favor of a new rule today that requires every publicly traded company to regularly disclose the pay ratio between top company executives and their employees.

Although CEO pay is already revealed in a company’s annual proxy statement, this new rule will force corporations to assess and disclose the ratio of a chief executive’s compensation to the median compensation of their employees, starkly illuminating income inequality company-by-company.

Rule requiring companies to disclose CEO-to-worker pay ratio is “an important step,” 2016 hopeful says

Obama admin to force companies to reveal CEO to average employee pay ratio

What kind of banana republic are we turning into?

from Free Beacon:

Companies will be forced to disclose how many times more their Chief Executive Officers earn relative to rank and file employees, the result of a little known regulation in Dodd-Frank to be finalized later this year.

The provision is backed by labor unions like the AFL-CIO, which seeks to “shame companies into lowering CEO pay.” The price tag of the regulation is expected to be “substantial,” costing more than $72.7 million and over 500,000 hours to comply.

The “pay ratio disclosure rule,” originally found in section 953(b) of the Dodd–Frank Wall Street Reform of 2010, requires all publicly traded companies to disclose the ratio of the CEO’s salary compared to the median salary of all employees at the company.

The Securities and Exchange Commission’s (SEC) proposed regulation would require the disclosure in a company’s annual report.

“For example, if the median of the annual total compensation of all employees of a registrant is $45,790.39 and the annual total compensation of a registrant’s [principal executive officer] PEO is $12,260,000, then the pay ratio disclosed would be ‘1 to 268’ (which could also be expressed narratively as ‘the PEO’s annual total compensation is 268 times that of the median of the annual total compensation of all employees’),” the proposed rule explains.

read the rest

The only reason for this is to drive a wedge between working Americans and their employers.  It is the old game of pitting the “haves aginst the have nots.”  

billmoyers.com
Raise Taxes on Companies that Treat Their Workers Like Serfs

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.

youtube

What makes someone attractive?

Attraction is a fascinating thing. What makes people like these celebrates attractive according to society? Considering they all seem to have very diverse appearances it seems like it might be quite difficult to pin point exactly what sets them out from the rest. Is there even a formula or template for the flawless face?

Surprising according to science there is: with there being many different factors behind the science of attraction and what makes someone so called “good looking”.

Learn how things such as symmetry, the golden ratio and much more pay a part in creating the “perfect looking face”.

By: sciBRIGHT.