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Most of the developed world is pretty much in line when it comes to income distribution, but not...

Most of the developed world is pretty much in line when it comes to income distribution, but not the U.S., Brett Arends asserts, where the results are more in line with Zimbabwe, Argentina and El Salvador. The average Fortune 500 CEO pockets $10.5M a year, more than 300 times the average worker's pay.
Comments (44)
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    If left to his own devices Obama will make sure that income redistribution in the USA is more in line with the rest of his Marxist comrades, he just needs to tweak things a little here and there to get the critical pieces to fall into place so the "required changes" can begin!
    20 Jul 2010, 06:23 PM Reply Like
  • dw57
    , contributor
    Comments (507) | Send Message
     
    sure and the GOP has been redistributing the middle class incomes. to the very top most class. been doing that for a decade now
    20 Jul 2010, 08:28 PM Reply Like
  • tunaman4u2
    , contributor
    Comments (2766) | Send Message
     
    Both parties suck, just check out the last 40 yrs, the middle class has go downhill no matter what.
    Keep voting, waste of time dude
    20 Jul 2010, 08:41 PM Reply Like
  • jpiretti
    , contributor
    Comments (710) | Send Message
     
    I won't attribute causation to correlation, but the following chart suggests to me that except for the Bush family contribution to economic policy, the real median family income (purchasing power) was higher at the end of each Presidential term then the beginning. It's amazing to think that even before Nov. 2007, real median family income was still lower under Bush43 over his term...first time in US economic history over 8 years.

     

    uspolitics.about.com/o...
    20 Jul 2010, 09:25 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    Yes, I agree. Better to have wealth in hands of a few, they are much smarter than the rest of us and will spend it more wisely. I am willing to break my back for them.
    20 Jul 2010, 06:27 PM Reply Like
  • Rhianni32
    , contributor
    Comments (1999) | Send Message
     
    Yeah it takes a lot of intelligence to fire thousands of employees, move their jobs overseas, and pocket the difference in the form of a bonus.
    20 Jul 2010, 07:33 PM Reply Like
  • dw57
    , contributor
    Comments (507) | Send Message
     
    and we have seen the results of how well they managed the money with there greatest creation. the ever popular great recession. the greatest event since the great depression. and just barely better that.
    20 Jul 2010, 08:30 PM Reply Like
  • a skeptic
    , contributor
    Comments (36) | Send Message
     
    and will you be the one to create something innovative to better society in such a manner that you are able to be compensated richly for it? If not, why are you complaining about those who do?
    20 Jul 2010, 09:56 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    What happened to those who create for the satisfaction of it, and not for the money? In my business, winemakers are not paid well, but boy, do we love what we create.
    21 Jul 2010, 10:11 AM Reply Like
  • Paul Nelson
    , contributor
    Comments (225) | Send Message
     
    The rich need more-We need less-Maybe someday, if we are lucky, just one person in this country can have it all-yeah!!!
    20 Jul 2010, 06:38 PM Reply Like
  • brons11
    , contributor
    Comments (2) | Send Message
     
    It's ridiculous to pay a CEO 300 times a workers pay. That is why in civilized countries like Sweden or Japan the difference in CEO and worker pay is about 10 times.
    20 Jul 2010, 06:42 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4011) | Send Message
     
    As it was in the U.S. in the 50s. If CEOs were worth their pay, their stocks would have increased in value commensurately over the last ten years.
    20 Jul 2010, 07:28 PM Reply Like
  • jpiretti
    , contributor
    Comments (710) | Send Message
     
    Here is some interesting numbers...while Carly Fiorina was CEO of HPQ the stock was down 50% while the S&P 500 was down 13%. After she was fired HPQ has been up 135% while the S&P 500 has been down 8%...Hey! I have a great idea, let's made her a US Senator!!!
    20 Jul 2010, 09:33 PM Reply Like
  • Matthew Green
    , contributor
    Comments (457) | Send Message
     
    CEO salaries were still only 20-30x average worker's pay until about 1980. It really began to take off after. As the cost of living extremely well increased much faster than the simple cost of living, boards of directors found they had to offer much higher salaries or execs would constantly bolt. Add that to the new compensation methods during the past twenty years and the bull market, and then came this decade. Once again, despite the stagnant market you had to pay up or the talent wouldn't be there. Everything on top of the base salary should be tied to performance, golden parachutes should be capped based on the number of years a CEO served.
    20 Jul 2010, 10:26 PM Reply Like
  • DuaneAllman
    , contributor
    Comments (180) | Send Message
     
    If an executive creates huge wealth for his company he/she should be paid millions/billions and I have no problem with that. The issue I have is when a CEO makes millions and does nothing to increase value for shareholders or, even worse, destroys value. People that have or develope highly paid skills should get what the market will pay. People that create and innovate the same. For people that start a new business, my best wishes that they create the next Apple/Google/IBM and make tens of billions. I'm never jealous of those that deserve success. Arends is a book seller and he's picked a subject that resonates with many in these times. I even hope he makes a ton of money with the books and decides to redistribute it.
    20 Jul 2010, 06:48 PM Reply Like
  • positivethoughts
    , contributor
    Comments (1820) | Send Message
     
    The problem is that almost all executives are in some shape/form members of outside boards for different companies in addition to their responsibility for the companies they are employed directly with. These board members decide executive pay and then when their respective pay packages are negotiated, industry comparisons are used even though the executives themselves had an absolute hand in creating the numbers which are used for comparison. Therefore, all the members of boards have a vested interest in seeing massive CEO and/or executive pay.

     

    Example, if I sit on the board of Disney and I declare that Michael Eisner should get 20 million per year plus stock options worth another 10 million, and then Michael Eisner sits on my company's board and determines that I should get paid the going rate - essentially in his ballpark, we both benefit from one another pushing the upper limit.

     

    Now, some commentors might post that it is the free market that determines compensation in that if stockholders are unhappy with a CEO's package, they can sell the stock, however, when virtually every executive is taking huge compensation packages, it is hard to find an alternative where such a thing isn't taking place.

     

    I would like to see a law passed whereby executive members of companies have to hold a vote for shareholders to approve salary and benefits.
    20 Jul 2010, 06:54 PM Reply Like
  • bob adamson
    , contributor
    Comments (4557) | Send Message
     
    positivethoughts –

     

    I agree with almost all of your 6:54 PM comment but question whether the sort of legislation you describe would be effective given that senior management generally controls most of the proxy votes of most of the absentee shareholders by default. The real root of the problem is the short term perspective of most corporate cultures. The CEOs too often are brought in from outside as short term turn around artists and the shareholders take too little proprietary interest in the medium (let alone long term) fate of the companies in which they invest.

     

    The challenge is finding a way to correct this overemphasis on short-termism. Regrettably, I see no ready answer to this problem.
    20 Jul 2010, 08:21 PM Reply Like
  • dw57
    , contributor
    Comments (507) | Send Message
     
    maybe the real solution is to allow a tax deduction for the CEO pay of more than x times the average employee pay if a supper majority (say 95%) of stick holders approve and that the value of the company has grown by x % from the previous year, and the wages of their employees have also grown, and the number of employees has also grown. would only apply to public companies. but we could do the same for them. but we wouldn't have stockholders.
    20 Jul 2010, 08:37 PM Reply Like
  • Archman Investor
    , contributor
    Comments (2385) | Send Message
     
    Not a problem.

     

    Next time Apple releases a new product, just take a drive to the local Apple store.
    You can watch all the $10 / hour WalMart workers (the largest employer in the US) camping out overnight because they just have to have the latest product, that made the same product they bought last year now appear obsolete. (Though they cannot afford it in the first place and have zero net worth to begin with)

     

    Just had some more silver delivered to my house today, and just finished collecting my usual $1700/ month dividend payments from my stocks and bonds.

     

    Attention average Americans: can you relate to that?

     

    I thought not. Cat food and Cheerios for dinner never tasted so good i bet.
    20 Jul 2010, 06:55 PM Reply Like
  • positivethoughts
    , contributor
    Comments (1820) | Send Message
     
    You would really respect me. Until last year, I didn't even have a cell phone, I drive a 10 year old Toyota Corolla, I only buy clothes when they are discounted by at least 40% when the season ends and the last time I went to a movie was about 10 years ago.

     

    My only major purchases are for health care and once in a while I tend to spend a little too much money on women (who can blame me though).
    20 Jul 2010, 07:14 PM Reply Like
  • Archman Investor
    , contributor
    Comments (2385) | Send Message
     
    I have no problem with people living a life. I do not believe in just amassing assets only to die in a freak car crash the next day. However Americans are broke. They are. Simple as that. They confuse "looking" important with actually "being" important. They think that flash over substance trumps quality.
    What they fail to realize is that thru their mindless actions they make the few wealthy while they play in their brainwashed playhouse given to them by the very people they made wealthy.

     

    One of my very simple rules of consumer spending is this: When I buy something, I only purchase it with cash or on my business Amex which must be paid off in full the following month. Also, for every purchase (such as my new $1300 computer system last month) I also will invest that same amount spent in more assets I find attractive at the time. (Stocks, Bonds, Silver, my Lendingclub portfolio, etc)

     

    What does the average Americanm do, even when buying another $300 cell phone they do not need? They put it on the 20% APY credit card and go home to tell their kids they look to fat and have to "eat less" for awhile because they need the money to pay for "other things". Then 20 years later, they have finally paid off that $300 purchase which ends up costing them a few thousand in interest payments.

     

    Smart people indeed.

     

    (BTW, you can never spend to much on women)
    20 Jul 2010, 07:24 PM Reply Like
  • Donald Ingram
    , contributor
    Comments (3481) | Send Message
     
    Well! I'm glad you have at least one outside interest!
    20 Jul 2010, 07:43 PM Reply Like
  • dw57
    , contributor
    Comments (507) | Send Message
     
    while so many complain that the current generation is spend thrifts etc. consider your parents said the same about you and I. the only real difference is what we spent on. previous generations bought cars. the later generations can't afford them so they buy what they can. usually technical gadgets (to the rest of us). but the difference is more generational.
    and the later generations also have to contend with a major collapse in their incomes.
    20 Jul 2010, 08:39 PM Reply Like
  • Jason Rines (iThinkBig)
    , contributor
    Comments (2231) | Send Message
     
    Yeah but Positive Thoughts hasn't learned the RoI on taking the ladies to chick flicks.
    21 Jul 2010, 12:58 AM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    Right, my dad bought a new car every three years, but spent next to nothing on anything else (five kids with one bathroom to share).
    21 Jul 2010, 11:56 AM Reply Like
  • dividend_growth
    , contributor
    Comments (2879) | Send Message
     
    We need more Bill Gates & Warren Buffett, and fewer Chuck Prince & Mark Sullivan.
    20 Jul 2010, 06:56 PM Reply Like
  • undscld lctn
    , contributor
    Comments (2) | Send Message
     
    I wonder if anyone ever looked into Richard Semler of SEMCO based out of Brazil!
    20 Jul 2010, 09:55 PM Reply Like
  • Mr. Ed, Jr.
    , contributor
    Comments (745) | Send Message
     
    Nobody in America should ever have a problem with honest earnings. This is a highly competitive nation of over-achievers, and that is why we have accomplished more in our short history than countries and cultures that have been around for thousands of years.

     

    America is NOT like other countries. But there are plenty of other countries you can go to if you are unhappy with your lot in life, and just want to be more financially equal. Enjoy. But remember that the average income in America is in the top 15% of the world. So, the average American is wealthy, compared to most of the world.

     

    Now, if you want to do something about injustice and corruption, and if you want to start on the path to more equal opportunities (The results will still be lopsided-- we are all born equal, but we don't all achieve equally), do something about this sort of crap:

     

    www.bloomberg.com/news...

     

    There is no shortage of public officials who are corrupt. (Whatever your definition of corruption is, the above story qualifies.) Deal with them so that more will truly have the opportunity to engage in the "pursuit of happiness" -- wherever that takes them.
    20 Jul 2010, 07:42 PM Reply Like
  • undscld lctn
    , contributor
    Comments (2) | Send Message
     
    What do you consider wealthy when you say that the average income in America is in the top 15% of the world? There are countries where they have more disposable cash than those in the US!
    20 Jul 2010, 09:59 PM Reply Like
  • tripleblack
    , contributor
    Comments (13445) | Send Message
     
    Just something to consider when painting entire societies with bombers full of paint:

     

    Sony Inc., CEO Sir Howard Stringer - Salary appx $100million per year. Sony Market Cap $27.2b, down from almost $60b back in 2007. EBITDA $5.98b. Net Income -471.20m. EPS -.47/share. Forward PE $11.48.

     

    Apple Inc., CEO Steve Jobs - Salary $1 (OK, but #2 Tim Cook makes about $1.2million per year, in a good year, where his bonus can just about double his $600,000 salary). Apple Market Cap $229.2b, up from about $100b back when Sony was $60b. EBITDA $15.8b. Net Income $10.81b. EPS $11.80. Forward PE $15.16.

     

    I didn't do the cool ratio thing, but unless Sony is paying its line workers close to $1million per year, I suspect Apple kicks their behinds in something other than the marketplace.
    20 Jul 2010, 08:03 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9928) | Send Message
     
    Good comparison. Unfortunately there are very very few Apple's and Steve Jobs that truly earn and deserve large compensation - cash or stock options. As opposed to the vast majority like Howard Stringer, Lloyd Blankfein, Jamie Diamond, etc. who really don't deserve but a small fraction of the compensation they get. It truly is crony capitalism where the tens of thousands of public company executives control the compensation process and award themselves massively excessive compensation in relation to any objective performance measure.
    20 Jul 2010, 08:21 PM Reply Like
  • tripleblack
    , contributor
    Comments (13445) | Send Message
     
    The point of this thread appears to be that the US CEO's (in particular) are making tons while the "rest of the developed world" is far more progressive and making THEIR CEO's subsist on something more like 10 times a common laborer in one of their factories.

     

    Oh, and the concept that income is "distributed", like fertilizer from a crop duster, is a rather glaring "tell".

     

    This is one of the usual troll articles seeking to ignite class warfare.

     

    Rather than picking and choosing the CEO's from the S&P 500 which annoy lots of folks by their unique mixture of incompetence and over-compensation, then expanding the topic to a global truism, I'd be more interested to see a true study that took our 500 CEO's vs, say, a list of companies from Europe and Japan whose sales in 2009 equaled our gross S&P 500. Then create a ratio of compensation / profits.

     

    As an investor, I am far more interested in a statistic related to profits than whether or not a well-paid union mechanic building Toyotas thinks he is underpaid because the corporate CEO makes a lot more than he does or not.
    21 Jul 2010, 12:14 PM Reply Like
  • cincinnatijake
    , contributor
    Comments (146) | Send Message
     
    "The average Fortune 500 CEO pockets $10.5M a year, more than 300 times the average worker's pay."

     

    Probably costs a lot more than that, when you figure in lobbying fees and paying $$$ under the table to keep the SEC quiet.

     

    --By the way, how are things going on the illegal immigration front? I guess Obama is right when he says these are jobs Americans don't won't...I guess we just don't get the new American dream of breaking our backs for slave wages and having our rights usurped by the government.
    20 Jul 2010, 09:28 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    Like picking beans?
    21 Jul 2010, 11:59 AM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2020) | Send Message
     
    That is why so many young Americans starting out in their career would love to become 'managers'. Looking back at my career, the following three cases in point are reminiscent.

     

    1) 40 years ago fresh from college when I reported to my first full-time job as a junior engineer, a senior colleague with a heart told me this story at a luncheon: "...We are only the workers..Up at Gordon's level (Gordon was our boss, the so-called 'D-Level Manager equivalent to the lowest ranking manager of a unit') is all politics..."

     

    2) In yet another occasion another venerable, older and wiser engineer also with a heart gave me this advice: "...in America, the technical guy has no future..."

     

    3) On the website of the 'Industrial Engineering' of a large and 'pestigieous' university, I noticed the department head has only a liberal arts degree plus an 'engineering management master and doctorate'. Is he an engineer? Does engineering equate to 100% sales and marketing, and telling stories?

     

    How true! And how befitting with this posting! No wonder our manufacturing sector had been in decline for so long!
    20 Jul 2010, 09:36 PM Reply Like
  • Rose_Colored_Glasses
    , contributor
    Comments (928) | Send Message
     
    I worked for a CEO for a fortune 500 company. In a good year he made between $10 - $12 million. The company employed over 75,000 people and the company was recongnized as one of the top ethical companies in the country. Are you telling me he isnt worth half of what Tom Cruise gets for a rag movie? Tom acts like a goofball and probably has a staff of like 20-30 people.
    20 Jul 2010, 09:46 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    Those CEO's are worth EVERY penny!

     

    Why, just look at the value they contrib....

     

    ok, well how about the innovative business models they incorpor....

     

    hmmm, oh, oh! When you consider the amount of hours and stress they endure creating shareholder value and client satisfa....

     

    ahhh crap...nevermind...
    20 Jul 2010, 09:55 PM Reply Like
  • bricki
    , contributor
    Comments (1099) | Send Message
     
    Back in the day I worked for a large conglomerate whose CEO was a total idiot. The company stock flatlined for two decades.

     

    On the day the CEO announced his retirement the stock began a week long run that ended up with a 60% gain. While I made out in some sense because my 401K match was in company stock it didn't come close to what other companies had done over that period of time.

     

    Later I found out from HR that the CEO had made about $500 million on his options because of the runup after his retirement announcement.

     

    CEOs can do a lot for a company and should be rewarded when the do. But it is SICKENING to see these guys rake it in when they do nothing for a decade and more except play golf and bang their secretaries.

     

    Guys like Carl Icahn are right when they say these guys mostly do nothing.

     

    Worse yet is when you realize that the leadership of corps outside of the US is eating our children's lunch. I think this is just as bad as the mismanagement in Washington that is sapping America's competitiveness.
    20 Jul 2010, 10:16 PM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    Yes yes but is the answer more government intervention to say how any private corporation should be run or how much the CEO should be paid, or have the authority to break any corp arbitrarily deemed by who knows who in the Gov that the corp is a threat to the economy and needs to be broken up into smaller pieces.

     

    BTW- does it bother you that almost all politicians from the WH to Congress and the Senate end up on the boards of these big bad corp, and or end up lobbying for these big bad corp, raking in millions and millions of dollars using their influence to their benefit and against us.

     

    Be careful what you wish for you just may get it and live to regret it!
    21 Jul 2010, 07:28 AM Reply Like
  • bricki
    , contributor
    Comments (1099) | Send Message
     
    Not so much government intervention but I firmly believe that current laws make it very difficult if not impossible for stockholders to exercise their rights to throw out the non-performers or have a say in how compensation is structured.

     

    The laws associated with this process must be made more favourable to the idea of corporate accountability to the stockholders. All shares should be votable by the owners regardless of how they are held - mutual funds, 401K, pension plans etc. Disclosure laws must be toughened. I could go on and on but I think you get the picture.
    21 Jul 2010, 09:33 AM Reply Like
  • Rose_Colored_Glasses
    , contributor
    Comments (928) | Send Message
     
    Thank you for the sanity of the comment enigma. The people who want the same idiots that crafted Fannie Mae to design CEO pay structure are even bigger idiots.
    21 Jul 2010, 10:47 AM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    No one wants the govenment stating wages, but the true owners of the company, the shareholders, should have some say.
    21 Jul 2010, 12:00 PM Reply Like
  • OptionManiac
    , contributor
    Comments (3304) | Send Message
     
    I totally agree. If you want me to buy a share (stake) of your company, then give me a voice, however small. This is a bit of a socialist/capitilist melding. The little guy has an actual stake in industry, but only if he wants to.
    21 Jul 2010, 02:10 PM Reply Like
  • Rose_Colored_Glasses
    , contributor
    Comments (928) | Send Message
     
    I feel I have more power as a shareholder than a voter. As a voter I can elect representatives that form a bunch of different governing bodies that compete with other governmental bodies on a host of issues. As a shareholder I elect one body that has an express purpose of increasing my shareholder value. But the best part - if I do not like the way they are headed - I can opt out and sell my stock. No one lets me stop paying my taxes when I am upset with my representative.
    21 Jul 2010, 04:42 PM Reply Like
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