Profiling CEOs and Their Sociopathic Paychecks
The Wall Street Journal reported last week that "Executives and other highly compensated employees now receive more than one-third of all pay in the US. Highly paid employees received nearly $2.1 trillion of the $6.4 trillion in total US pay in 2007, the latest figures available."
One of the questions often asked when the subject of CEO pay comes up is, "What could a person such as William McGuire or Lee Raymond (the former CEOs of UnitedHealth and ExxonMobil, respectively) possibly do to justify a $1.7 billion paycheck or a $400 million retirement bonus?"
It's an interesting question. If there is a "free market" of labor for CEOs, then you'd think there would be a lot of competition for the jobs. And a lot of people competing for the positions would drive down the pay. All UnitedHealth's stockholders would have to do to avoid paying more than $1 billion to McGuire is find somebody to do the same CEO job for half a billion. And all they'd have to do to save even more is find somebody to do the job for a mere $100 million. Or maybe even somebody who'd work the necessary sixty-hour weeks for only $1 million.
So why is executive pay so high?
I've examined this with both my psychotherapist hat on and my amateur economist hat on, and only one rational answer presents itself: CEOs in America make as much money as they do because there really is a shortage of people with their skill set. And it's such a serious shortage that some companies have to pay as much as $1 million a day to have somebody successfully do the job.
But what part of being a CEO could be so difficult -- so impossible for mere mortals -- that it would mean that there are only a few hundred individuals in the United States capable of performing it?
In my humble opinion, it's the sociopath part.
CEOs of community-based businesses are typically responsive to their communities and decent people. But the CEOs of most of the world's largest corporations daily make decisions that destroy the lives of many other human beings.
Only about 1 to 3 percent of us are sociopaths -- people who don't have normal human feelings and can easily go to sleep at night after having done horrific things. And of that 1 percent of sociopaths, there's probably only a fraction of a percent with a college education. And of that tiny fraction, there's an even tinier fraction that understands how business works, particularly within any specific industry.
Thus there is such a shortage of people who can run modern monopolistic, destructive corporations that stockholders have to pay millions to get them to work. And being sociopaths, they gladly take the money without any thought to its social consequences.
Today's modern transnational corporate CEOs -- who live in a private-jet-and-limousine world entirely apart from the rest of us -- are remnants from the times of kings, queens, and lords. They reflect the dysfunctional cultural (and Calvinist/Darwinian) belief that wealth is proof of goodness, and that that goodness then justifies taking more of the wealth.
Democracy in the workplace is known as a union. The most democratic workplaces are the least exploitative, because labor has a power to balance capital and management. And looking around the world, we can clearly see that those cultures that most embrace the largest number of their people in an egalitarian and democratic way (in and out of the workplace) are the ones that have the highest quality of life. Those that are the most despotic, from the workplace to the government, are those with the poorest quality of life.
Over time, balance and democratic oversight will always produce the best results. An "unregulated" marketplace is like an "unregulated" football game -- chaos. And chaos is a state perfectly exploited by sociopaths, be they serial killers, warlords, or CEOs.
By changing the rules of the game of business so that sociopathic business behavior is no longer rewarded (and, indeed, is punished -- as Teddy Roosevelt famously did as the "trustbuster" and FDR did when he threatened to send "war profiteers" to jail), we can create a less dysfunctional and more egalitarian society. And that's an important first step back from the thresholds to environmental and economic disaster we're now facing.
This article is largely excerpted from Thom Hartmann's new book "Threshold: The Crisis of Western Culture."
Thom Hartmann can be heard daily on his radio show 12pm-3pm ET. Visit www.thomhartmann.com to stream live or find a station near you.
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You do realize that once you remove the Highly compensated from the numbers, our per capita GDP is the equivalent of Poland...We are way behind the Scandinavians...but who would want to be like the Scandinavians with their 6 weeks of vacation, free health care and education and Female Presidents.....Oh well....darn it all...
Why is the CEO pay in America so out of line with the CEOs of other countries?
According to a Mother Jones article - http://www.motherjones.com/politics/2006/05/look-numbers-how-rich-get-richer - our CEOs make $475 for every dollar earned by an average worker. In Canada, the CEO pay is only $20 for every dollar. In France, it's even less - $15.
What are our CEOs doing to deserve so much more money?
Thank you!
Why is success considered insane?
Just as a high school basketball player's talent is rewarded with extra minutes, a top business person's talent is rewarded with top jobs and large paychecks. Talent rises to the top in the United States. Companies are interested in making money, and thus, they need to hire the best people for each respective job. Is that selfish?
Try re-reading the article. Nothing about insanity was mentioned.
Yes, it does reach a level of selfishness. You missed the entire point of the article. How much money does anyone need? That includes celebrities too, not just business men/women. Every state sounds like it's broke, no money for schools, parks, etc. Where has all the money gone?
Do these guys/gals have it? Something is wrong, very wrong in this country.
Yes, IT IS INSANE..to pay the same people to keep doing what they were doing and landed us in the ditch.....LOOK at LTCM, the great book by LOWENSTEIN, there is NOTHING NEW in this meltdown,,these people knew EXACTLY what they were doing and that is why it had to be done before Obama got into office...Now that he has Summers and Geithner, the WASP mafia knows that they are safe to keep up the SCAM....
The profit locomotive has gone loco!!! Sociopathic for sure so when a social institution becomes so big and powerful that is like a vulture feeding on itself it should be downsized to the point where it no longer has that much power.
The 21st century is going to require a sustainable non-growth economy anyway and those CEO types are from the cave man world of rape and pillage not the global village of interdependence!!
Your piece is partially ironic, of course. And that's fine. Not all executives are sociopaths.
In my opinion, the problem is that the behaviour is being tolerated. And that results from a toxic myth-making to the effect that somebody has to be behind every success.
I don't think that I will ever understand why the vast majority of people are in such dire need of such a meta-principle of performance attribution. I know perfectly well that I am in the minority claiming that mostly (at least very often) there is no such thing. For some odd reason, it appears that people who dare to make this observation easily count as underachievers. But this of course is only one more example why it's a bad idea to ask the majority when it comes to gauge properly the achievements of individuals.
The need to attribute success - no matter how magical and how incoherent - seems to override reason most of the time.
This behavior is not being Tolerated, the BOARDS of DIRECTORS with their compensation and audit committees are in the scheme too,,,,,BECAUSE the CEO determines their compensation,,,,In other words you scratch my back and I will scratch yours, or you jerk etc...
This is insanity and GRAEF CHRYSTAL has been writing about it for 30 years which is the time since the RAYGUN tax cuts......
Speaking if your football analogy Thom.... Just this last Saturday my wife and I went to watch a local semi-pro football team in Chicagoland.... Our team beat the snot out of the opposing team, but the refs spent the ENTIRE GAME until after the two minute warning for the game not calling a single holding call against the home team....
My wife and I, in order to avoid the mosquitoes that were gathered in large enough numbers to carry off small children, were standing near the sidelines (at the high school stadium where this game was being played) and overheard one of our players complain to the ref about that.
His answer? "It's not really affecting the outcome of the game, so we're not calling it."!!!!!!!!!!
So if I'm speeding down the interstate at 110 (double the legal limit) but haven't caused any accidents, the police should just let me go???
That is an excellent point and I believe bolsters my opinion about getting the tax rates back to what they were under EISENHOER..... 91%.... because we were paying off the WW2 debt and building the highway system..... We now have the Bush Debts of 8 trillion (you have to include father with the son) and an ongoing war...The richest 400 people in this country with 1 million dollars in income EVERY DAY are paying 17% and this is highway robbery or should I say WALL STREET MAFIA AT ITS GREEDIEST.... READ FREE LUNCH, READ about LTCM, READ KEVIN PHILLIPS, READ BARTLETT and STEELE, READ UWE REINHARDT....
Thom - an interesting theory about regular CEO's. What's your theory about the relatively high pay of CEO's of non-profits? Your article above, for one example was also posted to www.CommonDreams.org , a non-profit which apparently survives only on reader donations. Yet in 2007, per their tax return available over the internet, the CEO paid himself $112,000 for a 60 hour work week. They also raked in $239,000 that year after expenses. (2008 figures not on internet yet that I could find.) (I'm sure other "non-profits" have even higher salaries.) I think such a "non-profit" salary, probably would shock the conscience of the average Common Dreams donor who makes less. Presumably the CEO's of non-profits aren't sociopaths uncaring of other's needs. So, what do you make of non-profit CEO's giving themselves rich salaries as compared with other workers having the same skill sets making less? What also do you make of Common Dreams blocking my user account and deleting the message I posted in response to Bill Maher's recent article "New Rule: Not Everything in America Has to Make a Profit", in which I asked how profitable Common Dreams was and should be, and what information they should share with their readers about their salaries when asking for more donations? What personality trait/disease is that indicative of?
The reason that the non-profit CEOs are making that much is because the for-profit CEOs are making that much.
Actually, the for-profit CEOs are making 100 times that much. The salary AngieFan cites of $112,000 is not very big, particularly in the Northeast or the West Coast. And clearing $239k after expenses? I don't see that as a problem. Not-for-profit doesn't mean "can't have any profit." These are businesses like other businesses, and having some margin or cushion in any given year is nothing wrong.
You're kidding, right? You're talking about people making 1% of the objects of the post as being excessive?
Think about it and do the math,,, for a 60 hour week, you would get 20 hours of overtime...so that meant 112000 is the pay for 80 hours per week of normal compensation...or $56 grand for a 40 hour week.....The GDP per person in this country is around 40k and that is for every man woman and child...and this site is dependent on donations which are even more fickle than most incomes....According to Suze Orman, they should have 6 months or 9 months of expenses in the bank at all times...
they are simply the short end of the funnel. part of their job is as an end point for funds that can then be disbursed to lobbyists and political campaigns. They don't actually keep these outrageous sums.
I don't really think that's true. Bribes to Congress and payouts to lobbyists are paid separately from CEO salaries and stock options.
Just look at the orders of magnitude. Aggregate top executive pay is several orders of magnitude more than aggregate lobbyism contributions to lawmakers.
Unless of course you count the unknown figures. But since there are severe consequences (basically career destroying) for both sides, those may not be that much higher. Even if they are several times the known figures, they would still be change.
As usual, Hartmann is 150% on the money. Americans would be well served if Ms. Huffington were to tee-up this topic/theory the next time she dances with the corporate media jesters.
I own two Hartmann books and I can say his analysis of the corporate tyranny is amazing: eye opening and thought provoking. I haven't yet bought the 3rd but soon.
What can I say? You are 100% right.
"But what part of being a CEO could be so difficult -- so impossible for mere mortals -- that it would mean that there are only a few hundred individuals in the United States capable of performing it?"
The premise that there are only a few hundred CEOs in the US is nonsense. There are tens of thousands and most of them are being paid quite normally (as in $300k or less). The people you are talking about are only the CEOs of publicly traded companies and they are the exception to the rule.
Having said that... have you ever tried becoming a CEO of a publicly traded company? It's not as easy as it looks. If it were, there would be far more of them... That does not mean our public company CEOs are worth a dime... of course. Many of them aren't and one can't but agree with that looking at the likes of GM...
He didn't say it was easy.
It's interesting that you simply skip the key notion of 'sociopath'. There are many ways of arriving at the conclusion that some of them aren't worth a dime. One goes like this: sociopaths aren't worth a dime. End of argument. The more elaborate version inserts another step in the argument: they aren't worth a dime because they ultimately always end up destroying wealth. And of course, you can make the argument even more elaborate, if you wish, and if you need to.
"It's interesting that you simply skip the key notion of 'sociopath'."
I happen to know a couple CEO's personally. None of them are sociopaths. One can argue whether some of them are doing a good job running their companies and one is for sure doing a good job enriching himself, while he is not, but the sociopath sticker does not stick to any of them.
So basically your mind is made up and you won't have it changed at any cost. That is fine, but it does only reflect on you, not on America's CEOs.
More importantly, it's the system that is broken, not just some of the people. So in essence you are not even doing yourself a favor smearing the people... the problem goes way deeper than that and we have to work on the roots.
What's the difference between a sociopath and a psychopath? I read somewhere that 6% of the population is psychopathic.
These people are neither. They are exceptionally skilled to get what they want, though. Psychopaths are usually not, they are actually mostly frustrated about not getting their emotional needs satisfied and act out of hate against others. Sociopaths are usually not capable to build a decent existence because their world is built on constant lying and threats to others. You don't make it up the ladder in any large organization with that kind of strategy.
The CEOs I know are actually very sociable and not just in superficial ways. They are, however, also extremely goal oriented and will say no to everything that is in the way of those goals.
If anything, the ability to clearly differentiate what serves an ultimate goal and what does not and to execute these decisions with almost hundred percent perfection is what sets these people apart. The problem lies in the fact that the goals very often are not compatible with long term strategic interests of the corporation. This is what differentiates the US CEOs from their Japanese counterparts which set higher goals than just their own self interest. Or, maybe it's just that in Japan serving the collective is perceived as an honor, and therefor gives pleasure to an executive, while in the US it is not.
ok, so here you're discussing the sociopath-thing.
Of course not all of them are. But what exactly would be the mechanisms which ensure that they have a hard time? Except that sooner or later they will collapse because it's an unsustainable form of life?
You failed to answer the question being asked. Here, I'll post it for you again:
"What's the difference between a sociopath and a psychopath? I read somewhere that 6% of the population is psychopathic."
Now then, if you want to take issue with Thom's point about CEOs being sociopaths, then you should go answer THAT question. THIS thread is about the difference between psychopaths and sociopaths.
I agree totally and would like to add presidents and senators to your list of obvious sociopaths. Here's your definition with a couple changes:
>Today's modern president and senators - who live in a private-jet-and-limousine world entirely apart from the rest of us -- are remnants from the times of kings, queens, and lords.
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