CEO pay — a lot is okay, but $97m?
Four million dollars sounds like a lot of money, and it is. You could stop, with $4 million. Stop working. Stop grafting. Chuck it in a savings account and live off the interest for good. A life of long walks and long lunches. Sangria? On a Tuesday? Why not?
Four million fatties are what ANZ’s David Hisco received last year, giving him top spot in the Herald’s index of New Zealand’s toppaid CEOs. But although $11,000 is a pretty damn good day rate for most of us, it’s worth maintaining some perspective when considering Hisco’s annual whack.
Just like with pancake stacks and professional football squads, the United States does it bigger. According to Forbes, with stock options included, the top-paid CEO in the United States received $97m last year. Sausage rolls on Larry Ellison!
Of course, the increase in executive pay rates in the US dwarfs that of lowlier employees. In 1965, the CEO-to-worker compensation for America’s biggest companies was about 20-1. Last year it was almost 300-1.
But in one of those weird freakonomics-type twists, all the regulation to try to reduce the cream at the top is having the opposite effect. After the 2007 crash, US regulators tried to reduce CEO pay packets and win favour with Joe Burger-Flipper by introducing laws that ensure transparency as to how much moolah the bosses pull in.
There’s now even a law forcing companies to list their CEO’s pay compared with that of an average worker.
The idea is that transparency over ludicrous pay packets will inspire columns like this and embarrass CEOs into not seeking fantastical figures. It doesn’t. The embarrassment works the other way. Companies in the United States are now confronted by an accurate spread of what the top guys earn.
Not wanting to look like prickle-pockets, most companies take an average CEO wage and add a bit on top, thus driving up the average wage.
Top talent takes top cash. But while workers’ pay languishes in the US, the stock market flourishes and CEO pay soars. Four million’s a lot, but it’s reasonable. $97m is not.