Issue of the week: CEOs prosper amid the gloom

last updated 8 January 2015

Jamie Dimon finally got his raise, said Clare Baldwin in Reuters.com. The JPMorgan Chase CEO, who piloted “the No. 2 U.S. bank through the financial crisis relatively unscathed,” made $20.8 million in salary, bonus, and stock options last year, a more than 1,500 percent improvement over the $1.3 million he earned in 2009. Dimon has plenty of top-tier company, said Daniel Costello in The New York Times. Led by Viacom, which paid CEO Philippe Dauman $84.5 million last year, median CEO compensation at 200 large U.S. companies jumped 12 percent last year, to $9.6 million. And almost three quarters of those CEOs got bonuses greater than what they were due for hitting all their performance targets. Pay increases for all private-sector workers, meanwhile, averaged 2 percent. “Rarely has the view from the corner office been so at odds with the view from the street corner.”

Tough, said Gretchen Morgenson, also in the Times. “Sky-high pay is necessary to attract talented managers.” Or is it? The stock of Statoil, Norway’s state oil company, has climbed 22.3 percent a year on average since the company went public, in 2001. Its CEO, Helge Lund, earned $1.8 million last year. During the same period, ExxonMobil’s stock rose 11.4 percent. Yet in 2009 (the latest year for which data are available), Exxon paid CEO Rex Tillerson $21.7 million. At least now shareholders can register their displeasure over outsize paychecks, thanks to the “say on pay” provisions of the new financial-reform law, said Rob Varnon in the Connecticut Post. Institutional Shareholder Services, which recommends how institutional shareholders should vote on pay issues, is urging its clients to withhold their approval of the raise granted to General Electric CEO Jeffrey Immelt last year. He earned an estimated $28.5 million in 2010, up from $9.8 million in 2009, even though GE returned a negative 17.2 percent to shareholders in the past three years, versus an average of 1.52 percent for similar companies.

If Jeff Immelt can negotiate a big payday for himself, more power to him, said Cal Thomas in the South Florida Sun-Sentinel. But “at a time of high unemployment, too many layoffs, and too few new jobs in the private sector,” it’s “disheartening” to see CEOs “pay themselves salaries and benefits that would have shamed the super-rich in America’s gilded age.” If I were a CEO and my company were laying people off while giving me a raise, “I would feel morally obligated to take less money.” Such a gesture wouldn’t just be virtuous, it might change “the way the public perceives the super-rich.” Who knows, “some of them might even start voting Republican!”