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.