An article in the Washington Post showed how uncomfortable executives of big corporations, including health corporations, are about making their outsize compensation transparent.
It's not just useless, they also claimed:
One apparent reason for their discomfort is that the pay of top hired executives has been skyrocketing while the pay of most other employees stagnates:
Behind the repeal effort are some of the largest US companies:
The HR Policy Association's board of directors includes executives from some of the biggest health care corporations, including pharmaceutical and device firms (Amgen, Johnson and Johnson, and Merck), commercial health insurance companies and managed care organizations (Aetna, CIGNA, and Humana), and other firms with major health care interests (General Electric, Procter and Gamble).
Note that Mr Bartl's concession that calculation of the ratio would be simple seemed to contradict Rep Hayworth's claim that the calculation would be burdensome.
Summary
It certainly appears that top hired managers of big corporations are not happy about the common people seeing how huge their pay is compared to that of other workers. They seem particularly unhappy to have their own stockholders, the common people who actually own their companies and to whom they theoretically report see how much they are making. Perhaps they fear the realization that they may be running their companies more for their personal advantage than in the interests of their supposed owners, much less the other, lesser employees, much less their customers, clients and patients, much less the public at large.
The ability of small cabals of top executives at big corporations to set their own pay independent of the wishes and interests of the corporations' owners would seem to be the fundamental threat to the capitalistic and free market ideal. After all, in my humble and perhaps naive opinion, private ownership is central to capitalism, and the apparent managers' coup d'etat seems to be a existential challenge to private ownership. (For much more informed commentary on how executives have wrested control from owners, see the blog Naked Capitalism and Robert A G Monks' website.) One wonders why so few of the many vocal supposed supporters of capitalism and free markets fail to see this as a problem.
Even though it is increasingly informative to see what has happened to health care within the context of the larger political economy, Health Care Renewal, however, is about health care issues first. So to put this in health care terms....
First, we see again how top leaders of health care organizations prefer opacity to transparency, especially when that opacity increases their ability to put self-enrichment ahead of their organizations' missions and ultimately individuals' and the public's health. They embrace opacity when it protects the perverse incentives that likely are the major cause of increasing health care costs, declining access, and worsening quality.
To repeat, and repeat, and repeat.... to reform health care, we must reverse the managers' coup d'etat, and restore leadership of health care organizations that puts the mission, and the health of patients and the population first, and is accountable to corporate owners (when applicable) and to patients and the public. But that will mean now going up against those who have made themselves the richest and most powerful people in the country and the world, who will not lightly give up their oligarchy.
Here’s one financial figure some big U.S. companies would rather keep secret: how much more their chief executive makes than the typical worker.
Now a group backed by 81 major companies — including McDonald’s, Lowe’s, General Dynamics, American Airlines, IBM and General Mills — is lobbying against new rules that would force disclosure of that comparison.
The lobbying effort began more than a year ago. It involved some of the biggest names in corporate America and meetings with members of both parties on the House Financial Services Committee and Senate banking committee.
The companies and their Republican allies in Congress call comparisons between the chief and everyone else in the company 'useless.'
It's not just useless, they also claimed:
Disclosing such comparisons 'can mislead or confuse investors,' said Rep. Nan A.S. Hayworth (R-N.Y.), who filed the bill to repeal the disclosure. 'It creates heat but sheds no light.'
She also said the calculation of the ratio would be a burden for companies, especially those with global operations.
One apparent reason for their discomfort is that the pay of top hired executives has been skyrocketing while the pay of most other employees stagnates:
'The real reason House Republicans want to keep the typical worker’s pay secret is that it may embarrass some companies to reveal that they pay their CEO in the range of 400 times what they pay their typical worker,' said Sen. Robert Menendez (D-N.J.), who added the requirement to the financial regulatory overhaul bill that passed last year.
Executive compensation at the nation’s largest firms has more than quadrupled in real terms since the 1970s, according to research by Carola Frydman of MIT’s Sloan School of Management and Raven E. Molloy of the Federal Reserve, even as pay for 90 percent of American earners has stalled.
In 1970, average executive pay at the nation’s top companies was 28 times the average worker income, according to the Frydman-Molloy data and numbers provided by Emmanuel Saez at the University of California at Berkeley. By 2005, executive pay had jumped to 158 times that of the average worker.
Behind the repeal effort are some of the largest US companies:
The Center on Executive Compensation has led the criticism of the provision. The group is part of the HR Policy Association, which represents the human resources executives at 325 large companies.
The thrust of the group’s criticism is that the information would have little value for investors comparing firms, because companies have workforces that differ in skills and expected pay. Wages also vary across regions and industries.
Current rules already require disclosure of executive compensation; the new requirement calls for the additional disclosure of median worker pay. Critics say that would add little to what is already known.
'You can already tell where a CEO falls relative to his peers,' said Tim Bartl, senior vice president and general counsel for the Center on Executive Compensation. 'You can already tell where he falls relative to the average worker in the industry. What is this number going to tell us?'
Last year, the HR Policy Association paid Bartl’s law firm, McGuiness & Yager, more than $1.5 million for lobbying, according to OpenSecrets.org.
The HR Policy Association's board of directors includes executives from some of the biggest health care corporations, including pharmaceutical and device firms (Amgen, Johnson and Johnson, and Merck), commercial health insurance companies and managed care organizations (Aetna, CIGNA, and Humana), and other firms with major health care interests (General Electric, Procter and Gamble).
Note that Mr Bartl's concession that calculation of the ratio would be simple seemed to contradict Rep Hayworth's claim that the calculation would be burdensome.
Summary
It certainly appears that top hired managers of big corporations are not happy about the common people seeing how huge their pay is compared to that of other workers. They seem particularly unhappy to have their own stockholders, the common people who actually own their companies and to whom they theoretically report see how much they are making. Perhaps they fear the realization that they may be running their companies more for their personal advantage than in the interests of their supposed owners, much less the other, lesser employees, much less their customers, clients and patients, much less the public at large.
The ability of small cabals of top executives at big corporations to set their own pay independent of the wishes and interests of the corporations' owners would seem to be the fundamental threat to the capitalistic and free market ideal. After all, in my humble and perhaps naive opinion, private ownership is central to capitalism, and the apparent managers' coup d'etat seems to be a existential challenge to private ownership. (For much more informed commentary on how executives have wrested control from owners, see the blog Naked Capitalism and Robert A G Monks' website.) One wonders why so few of the many vocal supposed supporters of capitalism and free markets fail to see this as a problem.
Even though it is increasingly informative to see what has happened to health care within the context of the larger political economy, Health Care Renewal, however, is about health care issues first. So to put this in health care terms....
First, we see again how top leaders of health care organizations prefer opacity to transparency, especially when that opacity increases their ability to put self-enrichment ahead of their organizations' missions and ultimately individuals' and the public's health. They embrace opacity when it protects the perverse incentives that likely are the major cause of increasing health care costs, declining access, and worsening quality.
To repeat, and repeat, and repeat.... to reform health care, we must reverse the managers' coup d'etat, and restore leadership of health care organizations that puts the mission, and the health of patients and the population first, and is accountable to corporate owners (when applicable) and to patients and the public. But that will mean now going up against those who have made themselves the richest and most powerful people in the country and the world, who will not lightly give up their oligarchy.
