(Daily Camera (Boulder, CO) Via Acquire Media NewsEdge) May 16--Most "say on pay" votes by shareholders of publicly traded companies go overwhelmingly in the executives' favor. So it was notable that 77 percent of the Chipotle shareholders voted against their co-executives' pay system. The two men have made about $300 million in salary and stock rewards since 2011.
People who think the "market" with its established boardroom system is well-equipped to set executive pay tend to fingerpaint it in simple terms: Stop being so jealous of executives!
A more nuanced argument is that executives won't take "a risk" if the rewards aren't high. There's probably truth to that. But it's worth wondering if someone who will earn $20 million in salary and bonuses this year instead of $77 million would just throw in the towel and go back to being an accountant.
But it's clearly not jealousy. Many well-compensated people -- including many leading economists and corporate executives -- are troubled by the gaping inequality that's growing in the United States. Individual billionaires can only buy so much. But most working Americans have less to spend, which is a genuine drag on the economy as a whole. And the working poor can actually work full time -- or cobble together several part-time jobs -- and still qualify for taxpayer-provided support. A rising tide won't lift all boats if a tiny number of yachts are in the sea, and all of the dinghies are land-locked at high altitude.
And then there's the quandary of the boardrooms themselves. One of Coca Cola's board members who helps set the executives' pay and bonuses gets paid almost $3 million a year to serve just a few boards. That's not bad for a part-time job, but it's part of the system of corporate cronyism. Board members don't necessarily want to risk their positions by going against the grain, and their outsized compensation might put them out of touch with what regular paychecks -- including those of many of their shareholders -- even look like.
Researchers Emmanuel Saez and Thomas Piketty reviewed income data from the last century, with the current data showing inequality between the super-rich and everyone else in America happened once before. The year right before the Great Depression. The suggestion from progressives who cite their research is that broad policy -- read: the government -- needs to address it, and soon.
It would be a sight to behold if the Chipotle shareholders spark a worthy trend. Shareholders are the right people to send this message, it's just a wonder that it's taken this long for a group of them to do so, so resoundingly. For the good of their own future millions, executives should heed the message. That the economy would benefit in general is a big bonus.
-- Erika Stutzman, for the Camera editorial board. Email email@example.com. Twitter @stutzmane.
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