If you want to understand why Americans are so outraged by obscene executive compensation levels in a time of severe economic malaise, consider not just the 51% bump awarded to WellPoint CEO Angela Braly for her performance at a time when the insurance behemoth prepared to raise rates on policyholders in California by as much as 39%. Consider, as well, the pro forma excuses offered by her company flacks.
According to the Los Angeles Times, Braly's total compensation shot up from $8.7 million to $13.1 million last year. At least three other executives there did just as well, with raises of up to 75 percent. Meanwhile, 800,000 individual policyholders in California are learning of this good news for WellPoint executives a month before their own insurance rates are set to spike by double digits - an unprecedented rate increase initiated on Angela Braly's watch.
WellPoint wants to attract and retain top talent. In order to be the best, to be innovative, to continue delivering the best service, we do have to retain the best quality." He added: "We are in no way trying to inflate the salaries and compensation figures but trying to maintain a high level of talent at the organization.It's all just a big misunderstanding, see. The problem is that all of us amateur, casual observers, with our pious concerns about "fairness" and "right and wrong," just don't understand the entirely rational and ultimately equitable dynamics of the free market system for labor compensation. Companies have to find and keep talented leaders, and if it takes $6.2 million in restricted stock, a $1.1 million salary increase, a $1.5 million performance bonus, $4 million in stock options and $292,036 in "other expenses" (including over $150,000 in "security-related improvements" to protect Angela Braly from us, the angry, overcharged, underinsured hordes) to retain a CEO who had the wisdom to force hundreds of thousands of Californians off the company's rolls or into bankruptcy-threatening situations in order to buoy WellPoint stock prices (which rose by close to 40% last year), then that's just how the free market works, which is nobody's fault, really, when you think about it.
Except the reality is, there is no misunderstanding. Ordinary Americans understand exactly how the free market works. In fact, it's precisely this understanding that infuriates everyone from your longtime local union activist to your freshly-minted Tea Party revolutionary. It's the Jon Millses of the world that don't get it. Their explanations illuminate nothing, except insofar as they confirm exactly what everyone suspects: that there are in fact two economic realities in America today - one that Angela Braly occupies along with Wall Street CEOs, corporate lobbyists and corrupt politicians, and the other that the rest of us experience.
In the former, forcing hundreds of thousands of everyday people to spend thousands more on their premiums to pay for the mess you've made of the health care system, then pointing to the increased revenue as proof of your leadership and profit-making abilities, is called "taking responsibility" and is rewarded with a $4.4 million raise. It's market meritocracy at work.
In the latter, it really doesn't matter how hard you work or how great of a job you do -- if the executives at the helm steer your company over rocky shoals, you stand a good chance of losing your wage increases, your benefits, or your job altogether. If you're not "top talent," you simply don't need to be "attracted and retained." The world doesn't work that way for you.
Or to take another example, if the executives at your insurance carrier decide they didn't make enough money last fiscal quarter, you better cough up thousands of dollars more this year or lose your coverage. Never mind that you had exactly nothing to do with WellPoint's problems with rising medical costs, or its shareholder's demands for 40% increases in their stock values. It really doesn't matter who you are or what you've done or what you haven't done; you don't control your destiny, the "market" does. That's just basic economics. We don't need a WellPoint spokesman to explain that; everyone knows it already. With the economy in turmoil, we're all getting our noses rubbed in it every single day.
What's incredible is that even after witnessing the public's reactions to the taxpayer-financed AIG bonuses, the auto company CEOs flying on private jets to DC to beg Congress for bailouts, and Goldman Sachs' record profits a year after benefiting from $62 billion in publicly-financed AIG pass-throughs, corporate executives like Braly and their PR handlers still can't comprehend the outrage. But then, that points to something else we already know: that from a mansion on a hill, the riot below can sound like a distant and dull roar, or like nothing at all.
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On one hand he decries a market meritocracy, rewarding company executives for doing well, and on the other hand he notes that a poorly led company may have a poor or negative result for the other employees regardless of the other employee's work ethic.
He concludes that the reason premiums are going up is so that the rich can pat each other on the back with a nice chunk of change while putting the screws to the little guys. Never mind that insurance companies' profits account for only 2 to 4. and a half % of the revenue they take in.
This is another effort to make the big bad rich guys into the enemy of the people in an effort to get the government to jump in and save us from them. Which, of course, will make it cost even more.
Insurance companies, just like the hated Wall Street "Fat Cats", have been operating under the rules that the US Congress and state legislatures give them to operate under. Insurance companies have been playing hardball since the service was invented and first sold.
A free market meritocracy is actually a good thing. It allows the hard work and talent to be rewarded for performance. If someone doesn't want to be compensated on how well they work then they can join a union and not worry about it.
If Wellpoint were to "get it" then there'd be another company that doesn't get it.
It's not the role of businesses to be aware of their profit margin, the only role of businesses is to make profit.
It's govt's role to rein in business excess.
Congress has to 'get it' and do something about it. Tax them, regulate them and stop this terrorism on the World's economy.
The reason is deductions. Sure, millionaires had tax rate around 90% of income, but their deductions and accounting maneuvers, all legal, brought that percentage way down.
When President Reagan cut income taxes, he removed many deductions, such as interest paid on credit cards and automobile loans could no longer be deducted from income tax.
Heck, I'm being taxed at the 28% rate, but paid about 12% for 2009.
Deductions, credits and dependents, my friend.
Is it ok to criticize a woman for making money?
In most businesses, when you gouge your customers, you are eventually put out of business. How is it that insurance companies get away with this? How are they exempt from the laws of the free market which dictate that when you abuse your customers, you are eventually put out of business?
This is disgusting.
All good points. They get a away with it because people need insurance to access the health care system and in some places they are the only game in town.
This is a freaking insurance company, not rocket science.
You can train just about anyone to overcharge, refuse, belittle and rescind people. Not like it takes much more than being able to read and draw a red line.
You deal with the real world as it is. You deal with real people, real institutions.
A system is reformed from within.
Unless, of course, you believe in "the worse, the better".
I ll take Obama rather than someone who hollers: I want what I want, and I want it now. if I don't get it, you are in trouble.
HCR keeps the very people your rightly condemn in charge and in clover and it's only we little people who are forced to buy a product that individuals cannot afford now let alone in 2014. HCR allows Wellpoint to game the reform and ignore the needs of people for profit alone.
You should be advocating a revolution. you should be advocating that Obama be impeached for enabling these crooks and with Senator Dodd and a majority Dem Congress making sure TARP was not restricted in use the Dems of 2006,2007,2008,2009 have run Congress and Obama merely has expanded the rights of Oligarchs.
He's just another GWB.
So what if you are outraged or I am? Who cares? Voting is pointless and we are too docile to do anything. It's over for us: understand?
quite a rant