While middle class incomes have fallen steadily (and wages overall have declined while output rose—hooray!) the country's highest paid CEOs got a 16% overall raise last year. Larry Ellison, who makes Mike Bloomberg look like the guy in those FreeCreditReport.com commercials, was the highest-compensated CEO of 2012; Oracle paid him $96.2 million in cash, bonuses, including a giant $90 million stock option. CBS CEO Les Moonves took home the most cash out of the group: $32 million of his $60.3 million salary was in U.S. currency—more than enough money to remove every remaining trace of 2 Broke Girls from the planet.
The Times explains that many of the CEO's obscene pay structure is focused on "short-term results."
“We need compensation that is aligned to long-term value drivers, like innovation,” said Mark Van Clieaf, a managing director at MVC Associates International, an organization consulting firm. “Yet at probably 70 to 80 percent of companies, there are no metrics for measuring the impact of new products or services that were launched.”
Not only are their salaries not tied to their companies' long-term success, many CEOs have golden parachutes bigger than their salaries. Moonves gets $251.4 million if he's fired. Ralph Lauren will get $148.6 million if he's canned from his namesake company (and he's trying!)
Bloomberg News interviewed professor Charles Elson, an expert in corporate governance:
“Executives got insecure when they realized that they could just get fired and insisted on a contract, and with that came severance,” Elson said. “The problem is with the contracts. They make these deals when they are trying to woo an executive, not thinking of what the payout will be.”
Try not to think about this stuff when you're standing several feet from their collections of priceless Japanese art.
