October 15, 2006 Corporate America’s Pay Pal By GRETCHEN MORGENSON
YOU may not know Frederic W. Cook, but if you are a shareholder or employee who has watched executive pay rocket in recent years, you are likely to be acquainted with his work.
As the nation’s leading executive compensation consultant, Mr. Cook and his colleagues at Frederic W. Cook & Company are probably responsible for creating more wealth for executives over the last 20 years than any other pay advisers.
He and his associates have advised on the $1.1 billion option grant that Computer Associates gave its top three executives in 1998 and the $83 million pension benefit amassed by Hank McKinnell, Pfizer’s recently ousted chief executive. And in 2000, court documents show, Mr. Cook’s firm provided advice to Tyco International’s compensation committee, which heaped a $95 million pay package on L. Dennis Kozlowski, its chief executive at the time.
Mr. Cook also invented “reload stock options,” the financial equivalent of perpetual-motion machines, which helped bestow millions of lucrative shares on executives over more than a decade until an accounting change forced them into disfavor. This year, officials at the Business Roundtable, a corporate lobbying organization, hired Mr. Cook to counter critics of executive pay; his study tried to justify rapid increases in the packages.
The soft-spoken Mr. Cook, 65, does not see himself as corporate America’s Pied Piper of pay. Instead, he asserts, he is just a “foot soldier” in the army of capitalism. ...
<http://www.nytimes.com/2006/10/15/business/yourmoney/15pay.html?_r=1&oref=slogin>
October 15, 2006 Economic View: After Years of Growth, What About Workers’ Share? By EDUARDO PORTER
JOB growth is starting to slow, and wages are barely keeping up with inflation. Five years into a relatively robust economic expansion, it’s understandable that many American workers feel that they are not getting their fair share of the pie.
In fact, the share of the economy devoted to workers’ wages and benefits has eroded in the United States over the last five years. But if it’s any consolation, the trend for workers in other rich industrial nations isn’t much better. ...
Economists have identified some important forces causing this erosion, but they are mostly perplexed by the long decline [ha!]. “It’s a bit of a mystery why the labor share is falling so much,” said Alan B. Krueger, a professor of economics at Princeton. ...
“The decline in the wage share is bound to level off,” said David Grubb, a labor economist at the O.E.C.D. But the question is, when will it stop falling, and how?
If historical experience in the United States serves as any guide, workers’ compensation could still fall a long way. It was a different world then, but it is worth noting that in 1929, workers had less than half of the economic pie.
<http://www.nytimes.com/2006/10/15/business/yourmoney/15view.html?ref=business>
October 15, 2006 Everybody's Business: You Can Complain, or You Can Make Money By BEN STEIN
THERE is extreme income inequality in this country. It is hard to say whether it’s the fault of President Bush, since there was also extreme income inequality under former President Bill Clinton, and in fact there has always been extreme income inequality.
Just to give you an idea of current inequality, statistically speaking, the top 1 percent of all income earners in this great land earn roughly 20 percent of the total income. The top 1 percent of wealth holders have close to one-third of all wealth. The top 5 percent of wealth holders have very roughly 50 percent of all wealth in this country.
As you can see, that does not leave a lot for everyone else.
There are a number of ways to respond to this situation. You can become indignant and say that it’s a violation of American democratic principles. This is a good way to put yourself into a sanctimonious mood, and it offers some psychic satisfaction.
I’m not sure that there is any historical basis, though, for believing that the founders of the nation wanted everyone to have equal wages. Certainly, many of them were wealthy men, and the Father of Our Country was said to be the wealthiest man in the colonies from his land and slave holdings. But, again, if you want to be exercised about inequality, you’ll have plenty of company.
Another way, possibly more satisfying in the long run, would be to ask yourself how the top 1 percent of wealth holders and income earners got to be that way, and then to try to do it yourself. ...
[For example,] [y]ou make money by making money for people who already have money. This is another reason finance is such a well-paid field. One good day’s work for a man who has a $100 million account you are trading is worth far more than a lifetime’s work at the checkout counter at Wal-Mart. Yet, amazingly, managing wealthy people’s money is far less difficult and stressful than checking out customers at Wal-Mart. It’s not even close. ...
<http://www.nytimes.com/2006/10/15/business/yourmoney/15every.html?ref=business>
Carl
Philosophers have hitherto only interpreted the world in various ways; the point, however, is to change it.
-- Old Whiskers