“The company has enough trouble making money.” Just looked up Sprint executive compensation:
http://insiders.morningstar.com/trading/executive-compensation.action?t=S
This past year the top seven Sprint executives received a total of $76million. The President/CEO was paid just under $27M. The lowest pay of the 7 was just under $4M. Now suppose we were to think that back in the 1960s things were pretty good for the middle class and the average multiplier for top CEO’s was 40 times, how does this look today? The popular cry today is for $15/hr minimum wage. That figure times 40 is $1,248,000. So let’s say we cut back the executive compensation for Sprint to $10M total. So all the top 7 could be paid $1M or more, and there would be $66M to divide among 5,000 rehired US employees. That would free up $13,200 additional to support the 5,000. Just think how much more you would get if all the Spring employees earning a million or more had their salaries cut back proportionately.
The Sprint top exec pay scales are comparable for many big companies. It should be clear from this examination that huge overpayment of a very small percentage of employees means they either have to 1) go to cheap labor countries, 2) severely underpay their low level employees, or 3) severely disappoint their stockholders. If you guessed anything other than 1), then you have not been paying attention.
There has been a huge increase in the ratio between top pay and low level pay over the past 30 years. Should we try to change this?
Perhaps the major problem is that the shareholders are weak and that executives more or less have hijacked the companies.
Change it by government intervention? Absolutely not. It does need to change, I agree, but not by more Big Government telling the private sector what to do (fascism).
Should be different for CEOs who risk to start a company than for hired exec talent, often overvalued.