It's good to know that some corporate chieftains do feel the pain of their underlings — those hard-hit workers who keep being forced to do more for less reward. Take the example of Gannett, the media giant that owns 23 television stations and 82 newspapers, including USA Today.
Early this year, Gannett employees were notified that, for the third year in a row, they would get no raises and would have to take a week off without pay. Harsh financial realities necessitate these sacrifices, they were informed.
The bad news was delivered as gently as possible, including a thank you for their “continued commitment and great work.” To soothe the pain a bit, the note added that Gannett's two top executives would take a commensurate cut in their salaries.
OK, team spirit!
But don't grab the pom-poms and break out in cheers. Only two months later, bonuses totaling $3 million were very quietly bestowed on the top two. And to add a bright cherry to this sweet delight, the duo of honchos also were awarded stock options and deferred compensation totaling as much as $17 million.
So, some 32,000 workers were forced into furloughs to save about $17 million for Gannett, but the corporation's No. 1 and No. 2 were then allowed to slurp up all of that savings and then some. Who says there's no “I” in team?
It's not like the executives are doing a terrific job. With them at the helm, Gannett's newspaper readership, revenues and stock price have fallen substantially, and the corporate chieftains are widely viewed as lacking imagination. But they are credited with “aggressive cost management” — a cynical euphemism for throwing employees in the ditch.
Once again, working people are sacrificed because of management's failure, middle-class opportunities are shrunk, and top executives collect multimillion-dollar bonuses. Where's the morality in that?
Morality? This will seem like a fairy tale now, but not so long ago, it was actually possible for a CEO pay to constitute “an embarrassment of riches.”
How quaint. Today, the riches are unimaginably massive, but the embarrassment gene seems to have been completely bred out of corporate chieftains. They have no qualms, much less shame, at producing negative results for the company, offing thousands of underlings, then wheeling in a front-end loader to haul their own pay to the bank.
Yet another ugly example of this piggish executive ethic recently popped into the news. Having cut 2,000 employees, the head man at Estee Lauder reaped a $250,000 increase in his salary, plus new stock payments worth more than $24 million (up from the $14 million he got the previous year).
Are there no adults to supervise the corporate playgrounds and teach such concepts as humility, sharing and common decency? In a word, no.
Technically, the board of directors is supposed to provide corporate governance, including the setting of CEO pay. But look at who's on these boards — they're mostly other members of the corporate brotherhood who have obvious self-interest in keeping pay levels rising for all executives. Boards also include a smattering of “outsiders” who often turn out to have close financial or personal ties to the chief. And, of course, the chiefs themselves sit on their boards, usually chairing them.
The tale of boardroom coziness between directors and the bank bosses they supposedly govern was revealed in the disastrous Wall Street crash of 2008. Far from providing any reasonable restraints, few board members had questioned the casino games the banks were running, and fewer yet objected to giving reckless bankers billions of dollars in unwarranted bonuses.
Now, after the collapse, what has changed? Nothing. One survey of nine of the big banks we taxpayers bailed out shows that two-thirds of their failed board members are still there, and once again, they are shoveling inexplicably huge bonuses at the same old CEOs, who have returned to playing the same old casino games that caused the crash.
A system that enriches executive elites while crushing the middle class is worse than an embarrassment — it's morally untenable.