A “C-level” or “C-suite” position is nice work if you can get it. It’s understandable why so many people want to be in the club. The salaries are astronomically high and the perks are amazing. But isn’t it just ridiculous that CEOs still get paid egregious sums of money even when their performance is abysmal and they fail?
Last week Bank of America disclosed it had $4 billion less in regulatory capital than it thought. Bank of American CEO Brian Moynihan called it a “disappointing mistake that the bank is investigating.” He went on to say, “We continue to deliver on our strategy to make our company simpler, stronger and more customer-driven.” Whether the bank is in good position or not has no impact on Moynihan’s earnings. As Bank of America’s C.E.O., he received total compensation of $13.1 million in 2013. Chances are, he will probably get an increase in earnings this year regardless of the $4 billion blunder.
Next time your checking account is overdrawn by $4, try contacting your bank to say “it is a disappointing mistake that your family is investigating.” And then add, “We continue to deliver on our strategy to make our family simpler, stronger and more value-driven.”
There are other kings reigning in America. Take a hard look at Yahoo’s CEO Marissa Mayer’s expensive firing of her No. 2 executive— ousted COO Henrique de Castro’s received compensation of approximately $109 million after being on the job for only 15 months.
Another recent example is Goldman Sachs’ award to its CEO Lloyd Blankfein of about $23 million in salary and bonus for 2013, which was an increase of about 9.5% from 2012. It’s noteworthy that Mr. Blankfein was awarded a bonus of restricted stock of $14.7 million and a cash bonus of approximately $6 million in addition to his $2 million salary, even though revenue for Goldman Sachs was flat and there was a decline in compensation—for everyone else.
Mr. Blankfein’s increase in salary allowed him to stay in the club with James Dimon of J.P. Morgan Chase & Co and James Gorman, Morgan Stanley, who also received enormous stock awards from their companies, even more than the stock awards they earned from the previous year. Who could forget the media images of Jamie Dimon smiling sheepishly before the camera while trying to explain JPMorgan Chase’s $5.8 billion trading loss?
Why are these CEOs getting rewarded for losing billions of dollars? They are making a mockery of the core values of who we are as Americans.
The HR practices of many corporations devalue most employees and excessively reward C-suite executives even when they’re aggressively stupid about running a company. The rationale behind paying so much money to C-Executives is because they are irreplaceable, indispensable and as infallible as the Pope. We know it’s a scam and the game is rigged. Anyone can be replaced and it takes a team of great people working together to make a company thrive and prosper.
In his book Management Challenges for the 21st Century, Peter F. Drucker said, “We talk incessantly about teams—and every study comes to the conclusion that the top management does need a team. Yet, we now practice—and not only in American Industry—the most extreme cult of CEO Supermen.” The current accepted practice of CEO compensation operates with the same inclusiveness and built-in suite of privileges as a feudal monarchy. Today’s CEOs command as though they’ve been imbued by birth with the Divine Right of Kings.
There is no hard data to indicate that paying egregiously high salaries to CEOs is a drain on the American economy. And yet the fact that people at the top echelons of corporate America get insanely rewarded for doing a bad job is terrible for our morale. Right now middle-class Americans are being heavily taxed without gaining anything in return for the amount of money they are paying into the system to support the basic infrastructure. If middle-class Americans paid the same rate of taxes as people in Scandinavian countries, they would be getting tons of services, including advanced health care and an exceptional standard of living.
How can people take pride in their jobs when there is huge disparity between what they earn and what their leadership earns, especially when that leadership is incompetent? Complaining about the Divine Right of Kings on social media isn’t going change the game. Getting recognition and reward for your hard work commands respect, and that is a game changer. The underlying drive of why we work hard is to experience the rewards of accomplishment. Believe in your inherent talent, exceptional skills and integrity. Everyone should be well paid for working hard and for being accomplished, not just CEOs. If you have to put your faith anywhere then, place your bet on the American people. We fought the American Revolution to get rid of a tyrannical monarchy and we will do it again.