by Deb Cupples | Jane Hamsher at FDL tells us:
In other words, executive-friendly analysts think that paying lower employees a little more money (for making Wal-Mart's business possible) would force the company to raise consumer prices.
Actually, there is a way to raise essential employees' salaries WITHOUT having to raise Wal-Mart customers' prices: cut executives' and managers' pay.
Below are the total 2008 fiscal year pay packages just for the Wal-Mart's top 5 executives:
Top-5 Wal-Mart Execs' 2008 FY Pay Packages
|
H. Lee Scott, CEO |
|
$31.5 million |
|
John Menzer, CAO |
|
$14.8 million |
|
Michael Duke |
|
$13.2 million |
|
Thomas Schoewe, CFO |
|
$8.5 million |
|
Eduardo Castro-Wright |
|
$7.3 million |
|
Total |
|
$75.3 million |
Figures are from Wal-Mart's 2008 proxy statement and are rounded down.
Let's say, for example, that Wal-Mart's powers that be wanted to give a cashiers a $2,500 dollar pay raise in 2008 without spending more money. Let's say that said powers were willing to drastically lower their own pay packages to do it (don't laugh, it's only a hypothetical).
Every $1 million paid to an exec could instead pay for $2,500 raises for 400 people.
How many cashiers could get a $2,500 raise in 2008 if each of Wal-Mart's top five execs' pay had been lowered to $3 million? See the table below.
Money Saved & Number of Cashier Raises Funded
by Cutting Execs' Pay to $3 million
|
Exec |
$ Saved |
# Cashier Raises |
|
Mr. Scott |
$28.5 million |
11,400 |
|
Mr. Menzer |
$11.8 million |
4,720 |
|
Mr. Duke |
$10.2 million |
4,080 |
|
Mr. Shoewe |
$5.5 million |
2,200 |
|
Mr. Castro-Wright |
$4.3 million |
1,720 |
|
Total |
$60.3 million |
24,120 |
That's right! If only the top-5 execs at Wal-Mart had taken hefty pay cuts in 2008, more than 24,000 cashiers (or stock people) could have enjoyed a $2,500 raise -- without the company's having to spend one cent extra.
Imagine how much thousands more lower-paid (though perhaps more productive) employees could get substantial raises if all Wal-Mart execs and managers took pay cuts -- all without Wal-Mart's having to raise prices for us consumers.
Those tens-of-thousands of Wal-Mart employees would likely contribute to their local economies by spending part of their raises on clothes, computers, restaurant food, gas, dvds -- even on Wal-Mart goods.
It sounds like a win-win to me.
I already hear the violins tuning up, preparing to inspire tears for Wal-Mart's egregiously paid execs. Please remember that someone getting a $3 million pay package would still be rich -- waaay richer than the Wal-Mart employees who actually play crucial roles in carrying out the company's mission.
If you made $3 million a year, even if you paid a full 50% in federal taxes, you'd still pocket $1.5 million -- or $125,000 a month to live on, play with, and invest. You'd be miles away from the poor house.
Public company executives have always been somewhat rich, but they haven't always so egregiously redistributed shareholder wealth to themselves.
As an indicator of that increased redistribution of shareholder wealth, consider the massive increases in CEOs' pay compared to average workers' pay over the past few decades:
- In 1970, CEOs averaged 25 times more than average workers.
- In 1990, CEOs averaged 90 times more than average workers.
- In 2002, CEOs averaged 143 times more than average workers.
- In 2006, CEOs averaged 364 times more than average workers.
Executives and managers have made companies less valuable to shareholders by legally helping themselves to bigger and bigger pay packages -- even when the companies weren't doing so well. Merrill Lynch, Goldman Sachs, and Enron are just three of many examples.
Here's how it goes: executives persuade their boards to give execs big pay packages in order to "retain talent." The logic is this: if you don't pay our execs truckloads of money, then they'll go get truckloads from other companies.
Here's a way around that: all public companies should simply stop funneling truckloads of money to their execs. If all companies paid their execs reasonable salaries and bonuses, then execs could no longer argue that they could get outrageous pay packages from other companies.
Public company boards owe it to their shareholders to stop over-paying executives. Period.
Every dollar funneled into an executive's personal pocket is one less dollar for the company to pay off debts or invest in company growth.
The Wall Street Journal indicates that the Employee Free Choice Act may be introduced next week -- and that some Senate Democrats are now wavering in terms of support for the bill.
Apparently those politicians are more interested in protecting executive pay -- even against company shareholders' interests -- than in promoting ordinary, hard-working Americans' interests.
Memeorandum has commentary.
Related Buck Naked Politics Posts:
* Execs Made Millions While Driving Companies into Ditch
* Real Bonuses Based on Fake Profits
* Merrill CEO Redistributed Shareholders' Millions to Self
* AIG Execs Redistributed Shareholder Wealth to Themselves
* Lehman Execs Redistributed Shareholder Wealth to Themselves
* Cleaning up Political & Corporate Culture Could Help Economy
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