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Bob Brehl: Greed ultimately leads to strife: Proverbs

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  • May 30, 2019

Throughout the Bible, much is said about money. From “the love of money is the root of all evil” to “give Caesar what belongs to Caesar” to “it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.”

A less well-known reference in Romans (13:8) strikes me as stern yet more positive, “Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.” 

But the other day when I was e-mailed The New York Times annual list of 200 highest-paid CEOs, I thought of Proverbs warning us — almost 3,000 years ago — that greed ultimately causes strife.

The big grabby headline was that Tesla CEO Elon Musk was paid $2.3 billion last year (which is misleading and I’ll get to that), but what was most irksome in the report is that the gulf between the top of America and the rest of the country keeps expanding. I’m no economist or a socialist, but that can’t be good long term. 

“CEO pay increased at almost twice the rate of ordinary wages,” The Times reported. “In 2018 — a pretty good year for the labour market — the average American private-sector worker got a 3.2-per-cent raise, or an extra 84 cents per hour.”

But in 2018, the median chief executive received compensation of $18.6 million, a raise of $1.1 million, or 6.3 per cent, from the year prior, according to Equilar, an executive compensation consulting firm that conducts the annual survey for The Times.

The median household income reached a record $61,372 in 2017, according to the U.S. Census Bureau. That means the median CEO compensation is 300 times higher than the median household income.

Besides Musk, there were five other CEOs being paid more than $100 million last year. When you take currency into consideration, Canadian CEOs get paid half what their U.S. counterparts get. The average CEO in Canada is paid a little over $10 million a year, according to the Financial Post.

If you’re feeling sorry for the Canadian leaders, keep in mind Canadian CEOs are still paid 200 times what the average worker earns.

And don’t forget we’re only dealing with CEOs of publicly traded corporations that must report compensation packages. Missing are leaders of private companies, especially CEOs of private equity firms and hedge funds, whose compensation can run into the hundreds of millions.

For a couple of decades, lawmakers have tried to rein in executive compensation packages. But things like requiring companies to disclose the ratio of their chief executive’s pay to that of their median employee or giving shareholders a special but non-binding vote on executive compensation have had little impact.

In Musk’s case, his $2.3 billion compensation package approved by Tesla’s board last year was meant to be an incentive to keep the visionary entrepreneur around to continue to build the company he founded. He gets the full amount only if the value of the company grows from $35 billion to $650 billion. It’s a trend to tie a chief executive’s pay to performance. It may appear Musk was paid $2.3 billion, but he was not. 

The case of Disney CEO Robert Iger is interesting for a couple reasons. First, he received $66 million plus a further $74 million in shares, an award that was dependent on the completion of Disney’s acquisition of 21st Century Fox and is subject to performance goals. So, he will likely end up with a total of $140 million for 2018 — and more than half being for doing something (the merger) which is part of a CEO’s job description.

The second thing that makes Iger interesting is a comment about him from the Disney family.

Abigail Disney, a granddaughter of Roy Disney, who founded Disney in 1923 with his brother, Walt, recently said: “He deserves a lot of money; I’ve never quibbled with that. But the question is how far we’re going to go.”

How far indeed? In the hit movie 32 years ago Wall Street, Michael Douglas declared: “Greed is good.” Playing his protégé in the film, Charlie Sheen asked: “How many yachts can you water-ski behind? How much is enough?”

As taxes for the rich get cut, 13.7 per cent of Americans (about 45 million people) don’t have health care, according to a recent Gallup Poll.

As CEO pay continues to rise at faster rates than workers’ wages, one in six children in the U.S. lives with hunger, according to the charity No Kid Hungry.

As the gulf between rich and poor widens, 32 million American adults can’t read, according to the U.S. Department of Education and the National Institute of Literacy.

Something has got to give if these trends don’t start to change; at least a little bit. The country’s arc is pointing towards the strife mentioned in Proverbs. It’s a shame and don’t believe for a minute there won’t be spillover impact upon Canada.

(Brehl is a writer and author of many books.)

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