By Patrick Martin
18 March 2019
The median income for 132 CEOs
of major US corporations jumped to $12.4 million in 2018, more than $1 million
a month, according to an analysis published Sunday by the Wall Street
Journal. The CEOs, representing about one-quarter of the S&P 500 firms for
which figures have thus far been released, saw pay rises of about 6.4 percent
apiece compared to 2017.
The CEO gains were driven by
rising stock prices for the year, despite a sharp drop in December 2018, the
worst December for the financial markets since the Great Depression. Assuming
the pay rises for the remaining CEOs in the S&P 500 match those of the
first group, 2018 would mark the third consecutive year of record CEO pay in
the United States.
Among the biggest payouts were
$66 million for Robert Iger, longtime CEO of Walt Disney Co., $44.7 million for
Richard Handler, CEO of Jefferies Financial Group, and $42 million for Stephen
MacMillan, CEO of medical equipment maker Hologic Inc. Patrick McHale of
Minneapolis-based manufacturer Graco Corp. made $34.9 million in 2018.
Some CEOs outside the S&P
500 received even bigger windfalls, topped by the $125 million for Nikesh
Arora, a former Google executive who became CEO of Palo Alto Networks, a
cybersecurity company, only in June 2018.
Corporate criminals like the
CEO of Boeing and the heads of the major banks suffered no consequences from
the devastation that their actions have caused for their own workers and the
population as a whole.
Boeing CEO Dennis Muilenburg
received $23.4 million after a year that ended with the crash of a 737 Max
jetliner operated by Lion Air of Indonesia, killing 189 people. Two weeks ago,
a second crash of a 737 Max, this time in Ethiopia, killed 157 people and led
to the worldwide grounding of all the 737 Max 8 and Max 9 jets made by the
company. Boeing stock plunged 10 percent, wiping out $25 billion in stock
market value.
Among bankers, Jamie Dimon of
JPMorgan Chase topped the list with $31 million, while Brian Moynihan of Bank
of America received $23 million. Along with Goldman Sachs, these banks played
central roles in precipitating the 2008 Wall Street crash.
Wells Fargo CEO Tim Sloan saw
a pay rise to $16.4 million, including his first-ever bonus, despite the
company’s stock plunging 24 percent due to the scandal involving the creation
of millions of false accounts for customers, leading to fines and regulatory
penalties.
Ford President and CEO Jim
Hackett received a 10 percent raise in 2018, raking in $17.75 million, while
the company continues to slash jobs both in the United States and
internationally. According to press reports, the Ford CEO received 276 times
the median pay for all Ford employees. General Motors has yet to report the
2018 compensation for CEO Mary Barra, who made $21.9 million in 2017.
A study reported last month in
the magazine Institutional Investor found that median CEO pay at
major US corporations has soared over the past four decades—from $1.8 million
in the 1980s to $4.1 million in the 1990s, reaching $9.2 million in the early
2000s.
Following a drop after the
2008 Wall Street crash, when CEO compensation was driven down by falling share
prices, the combined compensation from pay, stock options and bonuses for
corporate bosses has returned to the level that prevailed before the financial
crisis. In contrast, most workers have seen no significant recovery.
CEO pay has risen nearly 72
percent since the low point in 2009 and is now just 3.3 percent below the
record levels set in 2007, on the eve of the financial collapse. According to
the study reported in Institutional Investor, CEO pay grew 17.6 percent
between 2016 and 2017 alone, while average pay for workers rose by only 0.3
percent.
The ratio of CEO pay to the
pay of the average worker has risen from 20-1 in 1965 to 30-1 in 1978, 58-1 in
1989, 112-1 in 1995 and a record 344-1 in 2000. After the dip following the
2008 crash, the CEO-to-worker pay ratio rose back to 312-1 in 2017.
One corporate CEO’s record pay
package deserves particular attention: Daniel Loepp, CEO of Blue Cross Blue
Shield of Michigan, the largest insurer in the state, covering the majority of
autoworkers and other industrial workers, as well as auto retirees. Loepp has
seen his annual compensation rocket from $1 million in 2006, when he became
CEO, to $9 million in 2015, $13.4 million in 2017 and $19.2 million in 2018,
including a staggering bonus of $16.2 million.
Loepp’s bonus was “only” $10.4
million in 2017, and the $5.8 million raise in his bonus was due to meeting
“performance targets” set by the corporate board. These targets included
slashing corporate expenses by $360 million over the past three years, through
cuts in jobs and employee compensation. Loepp also pushed through a cut in the
health care coverage for Blue Cross retirees, who had expected, having worked
for a health care company, that their benefits would be secure.
Loepp is by far the best-paid
chief executive officer of a company that is still nominally not-for-profit—but
posted an “operating margin” last year of $605 million—and which, because of
its longstanding relationship with the auto industry, the UAW and the AFL-CIO,
has eight union executives on its board of directors.
These union officials approved
the bonus and other compensation for Loepp and set the “targets” that Loepp had
to meet, which were achieved by cutting the jobs and benefits of Blue Cross
Blue Shield workers, many of them members of the UAW, as well as benefits for
workers insured by the company, which is the principal health insurer for
unionized workers across the state.
The Detroit Free Press contacted
the eight union officials, including those from the UAW, Michigan Education
Association, Michigan Building Trades Council, and Michigan AFL-CIO, to
question them about the basis for Loepp’s whopping bonus and raise. Seven did not
respond, while the Teamsters Union representative on the board of directors
defended the $19.2 million payout.
William Black, executive
director of Michigan Teamsters Joint Council 43, said in an email to the
newspaper: “We at the board are sensitive to compensation issues, and we have
emphasized that pay be tied to performance... His compensation is heavily
weighted against company performance, as it should be. That performance has
been very strong in recent years.”
This statement underscores the
scurrilous and thoroughly corrupt role of the unions in supporting the profit
system and the gouging of union members to enrich the capitalists and the
corporate bosses. The union executives have far more in common with Loepp than
with the workers they claim to represent. In institutions like the UAW Retiree
Medical Benefits Trust, the union officials preside over multibillion-dollar
corporate entities with salaries and bonuses that are modeled on those of the
Loepps, Hacketts and Jamie Dimons.
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