Would lower executive salaries serve the public interest in the U.S.?

Swiss voters have rejected a proposal that would have limited executive pay to 12 times that of the lowest paid.

BBC News reports:

The referendum saw 65.3% vote against the plan with 34.7% in favour.

The country is home to a range of giant businesses, including pharmaceutical companies Novartis and Roche, the insurance groups Zurich and Swiss Re and the banks UBS and Credit Suisse.

The rules would have given Switzerland the world’s toughest pay rules and some of the lowest executive salaries.

Business leaders said that would limit foreign investment and the government was also opposed to the proposal.

Today’s Question: Would lower executive salaries serve the public interest in the U.S.?

  • AndyBriebart
  • AndyBriebart
  • Sue de Nim

    Maybe not, but a higher minimum wage would.

  • JQP

    yes.
    Keep paying the executives what they are getting, but no increase of any kind until the bottom rung employees are earning 1/40th of what the CEO is.

    As a shareholder employee…. I want to know that employees of other companies can afford to purchase my company products AFTER they’ve paid, utilities, mortgage, food, clothes, transport for their family, put money into savings and insurance.

    I do not want to see that 2007-2008 DEBT Circus come back to town.

    • shorelines

      Don’t forget healthcare and education as life essentials.

      • JQP

        spoken like a true believer.

  • PaulJ

    Yes, world markets aren’t totally free; neither should leaders be free to lord over everyone else. If you have disparate classes you’ll end up with Plato’s 5 regime cycle.

  • Rich in Duluth

    I don’t think it matters. A living wage for the lowest paid employees is a better idea.

  • Jim G

    Yes, our western history is replete with examples of a privileged class taking credit and wealth from the labor of corporate workers. This privileged class mistakenly believe they are authors of their own success. Limiting the earnings of the corporate CEOs will not cure the economic disparity in our broken system, but it would be an ethical acknowledgement that the pendulum must start moving toward equity and livable wages for workers.

  • Yanotha Twangai

    I’m sure one reason the Swiss referendum failed was that 12X was an unrealistically low ratio. I wonder if it would have passed if the ratio had been 100X.

  • mason

    No. This is just another meaningless, feel good idea.

    Why doesn’t the infographic say how much each employee would get if they divided up the salary among everyone? Because they know this is all based on feelings and bringing logic into makes the whole thing look silly.

    • Jamie

      I was with you right up till it was too hard to stop at the CVS or Walgreens on every corner and buy a condom – what??

      • mason

        Oral birth control is far more practical and effective.

        • Jamie

          Oral birth control is also quite easily and cheaply procured, but you do need a prescription – and rightfully so. I know personally of the horrific effects of the additional risk of blood clots while taking hormone-based birth control pills.

    • PaulJ

      It is not that we all need a little more (even if we do); it is that a select few are putting themselves above the rest (in my view w/o the compensating merit). It is as if one person lived to be 1000 years old. If he gave one year to each of 1000 people it wouldn’t make much difference to them. On the other hand, not having one person that gets to live to be 1000 would make a big difference, of a different type, to society.

      • mason

        Thanks for acknowledging that this only based on being upset that someone else has more, and that the “solution” does nothing practical.

        • PaulJ

          Maintaining a creditable may not be quantifiable but it is practical.

  • Eioljg

    I would hesitate to put something like this into law. That said, I also believe it is time to value the middle and lower level employees more, which means better salaries and benefits, long before the top people get bonuses and extra perks. It is often forgotten that there are a number of lower level jobs that are essential to an organization. One example would be the cleaning people at a hospital. I’d guess you’d miss them faster than you’d miss the CEO being away for a week. Many economists have stated that increasing pay for the lower and middle class people results in most of that money going back into the economy immediately. For the very high end earners, most would go into savings and investments, and some of the investments would be off-shore, not benefiting the local economies.

  • david

    It would be nice if that money went to the employees and not into some ceo’s grand caymen account. That would actually help the economy and reduce the deficit. United healthcare’s CEO makes something like 1737:1 his employees. That’s obscene. And all the while the company spends tens of millions buying corporate shill politicians to spread lies and disinformation about healthcare reform so a meaningful discussion can’t take place on what is really good for the country.

    Even if the employees are powerless to do anything about, I am rather surprised the shareholders don’t rise up and run these ceos out of town when many of their compensation is rising far faster then the shareholders returns.

    • mason

      I’m just wondering if you saw my post where I did the math on one of the companies in the article, Nestle, and showed that it would only result in each employee getting $34.56.

      • david

        Yes. That was a low ball example so I gave I high one. Add to Hensley’s exorbitant pay the $1.1 billion golden parachute hid predecessor received when he was asked to leave (a US record I believe) and the hundreds of millions paid in lawsuits since Helmsley took over and I fail to see how their compensation can be justified no matter how little it adds to the employees pay.

        Look at the Walmart family. Combined the highest paid people in the country. To save just a few dollars in their crappy stores for crap and crappy customer service the average taxpayer something like $1000 in welfare benefits to subsidize Walmart crappy pay. Things are out of hand.

        • mason

          “That was a low ball example”

          No, it wasn’t a “lowball” example, it was one right from the article.

          ” so I gave I high one” No, you did not give any examples.

          • david

            United healths Stephan hemsleys 1736 times his average employs pay was an example, one that adds up to several thousand per employee per year. And as I later stated united healths inept criminal former ceo’s $1.1 BILLION golden parachute for getting FIRED adds up to over $8000 per employee. I could use an $8000 raise.

          • mason

            Nope, read my comment where I did the math for you. Not only are you wrong, but you have zero evidence to back your off-topic claims.

            You can keep talking about ratio, but it is irrelevant without context – something you seem desperate to avoid.

          • david

            I don’t see your footnotes backing your claims either. And I can’t be off topic for refuting your single unbacked example that’s seems cherry picked to back your point.

          • mason

            Are you blind? I have links all my posts showing where I got the numbers from.

            I am using the companies list in this article and the one that YOU brought up!

            I’m actually starting to feel embarrassed for you.

            Here you go again:
            http://blogs.mprnews.org/todays-question/2013/11/would-lower-executive-salaries-serve-the-public-interest-in-the-u-s/#comment-1138354169

            http://en.wikipedia.org/wiki/Nestl%C3%A9

            http://www.aflcio.org/Corporate-Watch/CEO-Pay-and-You

            http://en.wikipedia.org/wiki/UnitedHealth_Group

          • david

            I guess I am sort of blind, I’m on a phone and the link gets compressed down a lot. Also I wasn’t looking for an argument, I was stating my opinion on the matter. There has been dozens of articles in the star tribune, Forbes, CNN money, etc on hemsley and united healthcare in the last few years. Nothing I have said is a great secret to anyone who has taken the time to follow the money in the healthcare debate.

        • mason

          I did the math for you on the “high” scenario you pulled out of butt and gave no data for.

          CEO pay for 2012: $13.887M

          Total # employees: 133,000

          Total per employee: $104.41

          http://www.aflcio.org/Corporate-Watch/CEO-Pay-and-You

          http://en.wikipedia.org/wiki/UnitedHealth_Group

          • david

            That’s his base pay. Just like I am required to add in things like health insurance benefits and contributions to my 401k, when you add in hemsley’s perks like his guaranteed golden parachute, retirement benefits, stock options, bonuses, and his $36 million a year corporate jet that number rises significantly.

          • mason

            The source that gave clearly states that those are added into the total.

            Keep denying reality.

          • JQP

            you should recalculate the amount of money to spread around by aggregating the CEO and all executives pay and bonus packages. the pool rises to about 75 million. the problem isn’t “just the CEO”. The corporate structure “overvalues” all executives because the executives manage the tools to determine their own pay and worth.

            1) insert line employees and shareholders on the compensation committees. Its not rocket science.

            2) don’t allow any two executives to sit on each others boards or compensation committees. too much rub my back and I’ll rub yours.

            3) ONLY compensate executives in CASH-SALARY. they can buy shares like everyone else … on the open market. Tie-ing Execs to the share price results in very, very short term thinking.

          • mason

            Do you have source? No?

      • david

        And I’m sure 339,000 people paying taxes on $36 would generate way more revenue for the IRS then what one person would pay on $10.7m

        • mason

          No, it would actually be much. much less. One person paying taxes on $10.7m will be paying a far higher overall rate than a middle class person paying taxes on an extra $34.56. In fact for some people it won’t be taxed at all if they have enough available deductions.

          You’re reinforcing my arguement about this not being based on reality.

          • Jim G

            $31.56… Spent by thousands… for necessities…not saved in an off-shore account does more to raise economic tides.

  • kevins

    There is a moral question (or two) also. How much money is enough money for a leader? Remembering that those with lots can keep it or grow it easily, and those with little pretty much have to make do. How much is enough? I suspect that there is never enough for either the CEO or for the line employee, but if poor, you have so few choices, and if wealthy, so many. I tire of the trickle down mentality, because there is experiential evidence that Reagan conned us on that, and that con created a smoke screen for the entitled to maintain and enlarge assets as some sort of patriotic strategy, a cynical end result of a social welfare initiative. We have found civilized ways to create slavery…thanks Ron.