Making Mismanagement Pay
A million bucks in pay used to be considered real money in the golden world of corporate executives, but these days, a million-dollar CEO is the equivalent of corporate trailer trash.
Now, it takes a $10 million annual pay package to put you in the respectable corporate class, and Forbes magazine recently proclaimed the dawn of a new era of elitism: the nine-digit class. For those of us who have difficulty getting our minds around so many digits, that's at least $100-million a year -- or, for those of you who think in terms of hourly wages, it comes to roughly $50,000 an hour. Never mind that about 80 percent of Americans make less than $50,000 in a year, we're assured that making the big bucks is warranted because the top dogs are so smart and capable. Yet, ability doesn't really have anything to do with executive pay.
Take Xerox Corporation. It's CEO is pulling down a respectable $10 million a year -- yet the company is a mess. Mismanagement from the top led to a decline in revenue, chaos in the sales force, tumult in the back office, and seething anger among customers. So, who gets fired? Xerox has announced it's punting some 5,000 manufacturing workers, middle managers, and clerks. In Rochester, where 2,000 of the cuts will come, the mayor said bluntly, "they are targeting blue-collar jobs, people who are primary breadwinners."
By eliminating these jobs, top executives expect to jack-up Xerox's stock price, producing even higher pay for them. It's a clever act of income redistribution -- the executives mess up, so they off 5,000 of their underlings, which saves the corporation millions of dollars in wages those families had been getting, and, through the resulting stock-price increase, moves millions of dollars more into their pockets.
This is Jim Hightower saying ... Who needs ability when they're millions to be made in mismanagement?