October 13, 2017

CEO pay, performance, capitalism and company improvement

Houston Chronicle business columnist Chris Tomlinson has a good piece on how CEO pay is often not linked to company bottom-line improvement. Of course, even before the Reagan-era spike in income inequality, primarily devoted to the top 1/10th of 1 percent, that was already true to a degree.

But, it's more true now.

Well, it's true as far as it goes.

It takes a too-narrowly capitalistic look at "the bottom line."

Let's look at, oh, the Hearst Corporation, owners of the Chronicle. Let's note that the Chronicle recently fired its Pulitzer Prize-winning editorial cartoonist, Nick Anderson.

If the bottom line is "dollars and cents," then, sure, that helped the bottom line.

If, in the case of media companies, the bottom line is still considered what it (allegedly) was 50 years ago, that hurt the bottom line.

Companies that win those "best to work for" awards usually pay well. They also do other things well for their employees.

And, it's not just media companies, which "produce" a somewhat intangible product. Health care, per the old "doctor's bedside manner," has intangible elements. So does the renowned customer service department of Apple.

I'm not sure how you measure all of that. But, the idea needs to be raised.

(I don't know what Hearst's CEO makes as the company is private.)

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Chris then had another column (I can't find it in a recent actual column, may have been a retweet of someone else) wrote elsewhere about how more than half of employees in the US are subject to binding arbitration at their employers. He did have a column about non-employment binding arbitration here.

Being both serious and devil's advocate, when I saw another Chron employee retweet that, tagging Chris, the Chronicle's "house" Twitter account and one other, I asked: "Does this include Hearst employees?"

Silence in response would indicate "yes."

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