Newspaper article Sarasota Herald Tribune

Invest Where Priorities Are Stockholders and Employees

Newspaper article Sarasota Herald Tribune

Invest Where Priorities Are Stockholders and Employees

Article excerpt

A key element in the analysis of any company's investment potential is its deference for its shareholders.

Corporations that rank high on your investment list should respect their obligation to place the well-being of shareholders and employees above that of its executives. Executive compensation often points to a shirking of this responsibility.

For example, for the first time ever, the 10 highest-paid chief executives in the U.S. received more than $100 million -- each -- in compensation last year, and two took home billion-dollar paychecks, according to a survey of executive pay by GMI Ratings.

Moreover, the median pay of a CEO at a company in the Standard & Poor's 500-stock index rose by nearly 20 percent from 2011 to 2012, according to GMI. In contrast, the median weekly earnings of full- time wage and salary workers rose by just 1.4 percent in the same period, according to data from the Bureau of Labor Statistics.

While no one wants to stifle initiative, hard work and the associated monetary rewards, consider the ramifications to corporate morale when rising executive compensation collides head-on with layoffs and pay reductions, all layered on a mantra of necessary cost cutting -- often despite rising profits.

The previously mentioned 20 percent increase comes when stubbornly high unemployment and declining wealth remain uppermost in the minds of those on Main Street. And we are only talking about the CEOs of public companies, not the many billions in compensation doled out to those who run hedge funds and private-equity firms.

This is the first time in the 11-year history of GMI's survey that all of the top 10 CEOs made at least $100 million. The biggest payday went to Facebook CEO Mark Zuckerberg, who topped the list with $2.28 billion.

Yes, Zuckerberg's salary was based primarily on stock options. In fact, the CEO pay explosion is largely due to executives exercising their massive stock options as share prices climb, which has helped executive pay grow 127 times faster than that of workers over the past three decades.

The U.S. leads the developed world in income inequality.

Since 1970, the top 1 percent of Americans practically doubled their share of the nation's total earned income. …

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