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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Opinion

Smart bombs

Gary Crooks The Spokesman-Review

Let’s say you aren’t thrilled with the stunning rise in pay for executives over the past 20 years but don’t think much can or should be done about it. After all, that’s the private sector. None of your business.

The problem with this thinking is that pay for taxpayer-financed executives is directly related to what other leaders make.

For example, pay for college presidents has risen 37 percent to 70 percent in the region in the past five years. Meanwhile, pay for professors and other college workers has barely kept pace with inflation. College officials defend this by saying they search the same constellations as the private sector for superstars. It’s the market that’s talking, they say, and landing the best is expensive.

The problem with this explanation is that it assumes executive superstars never dim; actual performance isn’t a big factor.

Forbes magazine compiles an annual list of the best and worst chief executives, comparing only those who have been in place for at least six years. It measures the executives’ pay against the relative success of their companies. The average annual compensation of all the executives in this year’s report was $13 million. Nobody in the Top 10 made that much.

Finishing first was Jon Bucksbam of General Growth Properties, a real estate investment trust. His average annual pay over the six years was $624,000. Shareholders got a 37 percent annual return. He’s worth it.

Finishing last was Steven Appleton of Micron. His pay was $7.8 million, and shareholders enjoyed an annual return of -21.7 percent. Yes, that’s negative 21.7 percent. He isn’t worth it.

The pay for CEOs like Appleton is factored into the formula when determining compensation for other executives, including those at public universities. Those doing the figuring are often executives who sit on corporate boards and stand to benefit by raising the overall compensation bar.

Imagine one union setting pay levels for another. Dream on.

The American way. CEOs tell us that wages for workers are stagnant despite high corporate profits because American workers are in competition with lower-paying counterparts around the globe. It’s that darn market again, which, by the way, doesn’t apply to them.

When Daimler-Benz and Chrysler merged in 1998, the CEO of the successful German automaker was making less than $1 million a year. His counterpart at failing Chrysler was making $6 million a year.

Not to worry, though. Analysts say executive pay is rising rapidly in other countries and will continue to do so to stay competitive with U.S. companies.

To recap, when it comes to workers, the market is the world, which dampens pay. When it comes to CEOs, the market is America, which boosts pay.

Oversight cursed. So how’s that Citizen Review Commission working for you? Bring a complaint, get called an “ass.”

Yes, Commissioner Marie Yates, who is charged with rendering impartial judgments on police matters, told off the latest citizen who dared to complain. The mayor ought to thank her for her service and get somebody else.

That is, if he can stand the name-calling.