Inside many an individual runs a stream that ever so often rises to flood and bares the green-eyed monster. And never stronger does this stream run than in critics of CEO salaries. While they get high on bashing CEOs, nary a word about the salary levels of the tired, poor, and huddled masses, yearning to break free of inequality.
These critics forget that a CEO’s salary is the enduring and iconic symbol of capitalism.
Criticism that denigrates, but does not uplift; tears down, rather than builds, is not criticism.
It reminds the writer of a book about a lawyer-turned-judge in the US that ended with the judge’s words: ‘Justice without mercy, is no justice’. Carping on about CEO salaries being 100, 500 or a 1,000 times that of the median worker in the company, has become banal. The tall poppy syndrome is just a highfalutin term for envy. CEOs live with the stress of knowing that poor financial results in unpredictable markets, could be lethal. They serve at the pleasure of directors and institutional investors who would themselves fail if challenged to call the market correctly. Critics are known to fail in their market forecasts, with impunity; but, like weather forecasters, they are cocooned in permanent jobs.
The stress of calling the market correctly every time is captured in the words of the CEO played by Jeremy Irons, in a scene from Margin Call, where he explains to Mr Sullivan, an analyst, ‘So, what you’re telling me, is that the music is about to stop and we’re going to be left holding the biggest bag of odorous excrement, ever assembled in the history of capitalism.’ Then, ‘Let me tell you something, Mr Sullivan. Do you care to know why I’m in this chair with you all, I mean, why I earn the big bucks? I’m here for one reason and one reason alone. I’m here to guess what the music might do a week, a month, a year from now. That’s it. Nothing more.’ This scene should be mandatory viewing for the critics, so his words are etched in their minds.
In criticising CEO salaries, entities such as the ACTU (July 13, 2022) and the CFMEU [sic] (September 21, 2022), criticise only the widening gap between CEO and worker salaries; and, true to form, they propose caps on CEO salaries. This is a huge fail by entities paid handsomely, to enhance workers’ salaries. If they turned over their snow globes, they would visualise the magic of a worker’s salary linked to the CEO’s. This seismic shift in their approach to workers’ salaries, would generate both, a tsunami of support and strident opposition from directors and institutional investors. It would generate debate in boardrooms, pubs, and clubs.
Here’s how the salary of CEO and worker would work: CEO salaries reflect their monetary value to the company. What is the value of workers below CEO level? Every worker, be they general manager, manager, supervisor, customer service, and office cleaner, represents a particular value to the company. To award monetary values to the worker levels below the CEO, we start with the CEO at a value of 100. The levels below CEO are awarded a value as a percentage of the CEO’s 100. General managers could be awarded a value of 75 per cent; managers 50 per cent; customer service 35 per cent, and so on. If the CEO is paid $100, general managers would be paid $75 and those on customer service level, $35. The percentages would be awarded and agreed at the start of each financial year. The principle is that every worker has a value, like a brick in the wall: remove one, and in time, the wall will collapse.
But there’s more. The percentages would apply equally to the additional benefits paid to CEOs, however described: bonuses, stock options, grants. Again, the principle in paying workers such benefits is that profits triggering benefits were earned by the collective efforts of workers, not just the CEO. And the benefits would be paid to workers at the same time they vested in the CEO, whether or not the CEO or the worker was still employed by the company. Such vesting precludes ongoing debate about the actual values of such benefits, pre-vesting.
Instead of unions criticising CEO salaries, they would criticise companies for lower CEO salaries, because a higher CEO salary means a higher worker salary. Union officials could finally concentrate on those who enable their handsome salaries – the workers.
Critics should focus their energies on getting companies to link the salaries of CEOs and workers, which would raise the salaries of all workers. Linked salaries would enable workers to break free of inequality. And should the critics succeed, they would have earned the right to say, like Timothy, ‘I have fought the good fight, I have finished the race, I have kept the faith.’
