In the business news for at least a year, one of the running stories has been over-the-top pay for top executives. In September 2012 the then Chief Executive Officer of the world’s biggest mining company, Marius Kloppers of BHP Billiton, renounced his $4.5 million bonus, taking responsibility for some bad investment moves. The previous February the CEO of Rio Tinto, Tom Albanese, had renounced his bonus for the same reason (and in January 2013, he was given the boot).
Mr Kloppers didn’t hurt too badly, however. Even without the bonus, what he got from BHP Billiton in the last financial year was calculated at $9.4 million, including shares given to him as incentives. Mr Albanese’s successor, Sam Walsh, will start his new job with a total package of $7.8 million per year. Mr Kloppers takes home each year about 200 times what the average worker in the Australian economy gets. The CEOs of the other top-50 corporations in Australia take home about 100 times the average wage.
Corporate executives’ pay, even after the global financial crisis, is at historically high levels, all around the capitalist world. The ratio of CEO pay to average wages in the USA has increased about 20 times since the 1960s. There has been a sharp debate about this, especially in the USA where the top CEO pay package in 2012 was $131 million and the next three were over $60 million. The public debate is whether such huge pay packages are justified, and the broad answer seems to be, they are not. But that doesn’t stop them being paid. Why have such huge amounts become entrenched, what are they exactly, and what are their effects?
That is the start of an essay on the nature of managerial incomes, just published on the website "Inside Story". In a stunning confirmation of the argument, on the day after this was posted, came the announcement of Mr Klopper's retirement package - calculated by the financial pages at $75 million. To read the rest, please go here.
The conclusion:
To put it in a nutshell, the corporate managers are not earning wages. Markets have little to do with it. They are building fortunes. Their organizational power enables them to claim a share of the expanding financialized capital in the modern economy, and convert part of that share into extremely high incomes. Within an environment of privilege, this claim becomes a matter of common sense and routine. And though there are many critics of the result – the anti-globalization movement, the Occupy movement, and some of the unions - there is not at present any social force that has been able to reverse it.
Mr Kloppers didn’t hurt too badly, however. Even without the bonus, what he got from BHP Billiton in the last financial year was calculated at $9.4 million, including shares given to him as incentives. Mr Albanese’s successor, Sam Walsh, will start his new job with a total package of $7.8 million per year. Mr Kloppers takes home each year about 200 times what the average worker in the Australian economy gets. The CEOs of the other top-50 corporations in Australia take home about 100 times the average wage.
Corporate executives’ pay, even after the global financial crisis, is at historically high levels, all around the capitalist world. The ratio of CEO pay to average wages in the USA has increased about 20 times since the 1960s. There has been a sharp debate about this, especially in the USA where the top CEO pay package in 2012 was $131 million and the next three were over $60 million. The public debate is whether such huge pay packages are justified, and the broad answer seems to be, they are not. But that doesn’t stop them being paid. Why have such huge amounts become entrenched, what are they exactly, and what are their effects?
That is the start of an essay on the nature of managerial incomes, just published on the website "Inside Story". In a stunning confirmation of the argument, on the day after this was posted, came the announcement of Mr Klopper's retirement package - calculated by the financial pages at $75 million. To read the rest, please go here.
The conclusion:
To put it in a nutshell, the corporate managers are not earning wages. Markets have little to do with it. They are building fortunes. Their organizational power enables them to claim a share of the expanding financialized capital in the modern economy, and convert part of that share into extremely high incomes. Within an environment of privilege, this claim becomes a matter of common sense and routine. And though there are many critics of the result – the anti-globalization movement, the Occupy movement, and some of the unions - there is not at present any social force that has been able to reverse it.