Tuesday, March 23, 2004

The Passion Potato I came across the above photo on the Coast to Coast AM Web-site (the late night X-Files radio show). Its associated description: I was peeling potatoes for Thanksgiving dinner (11/27/2003). On my second stroke this is what I saw. The image is straight from my digital camera and has not been manipulated in any way except for rotating it so you would get the point of view I had when peeling the potato. I set it aside. At that moment I knew my Thanksgiving feast was blessed. (And it was! The turkey was moist, the mashed potatoes and gravy weren't lumpy and the company was delightful and gracious.) --Mars B. Omaha, Nebraska 11:13:00 PM    comment [] Condi addresses NewsCorp Executives Condi can't bother to testify before the 9/11 commission, but she does have time to give a speech to Rupert Murdoch and assembled executives of his NewsCorp media empire. After all, part of the value of national security is our feeling secure, and who's more important to our feelings of security than Rupert Murdoch? [Links via Cursor] 12:48:11 PM    comment [] CEO Pay Revisited I mentioned a March 14 roundtable discussion on CNBC during which CEO compensation was discussed. The Unofficial Paul Krugman Archive has posted a transcript. Tina Brown was the host. It included Paul Krugman, Sherron Watkins of Enron fame, editor of Chief Executive magazine Bill Holstein, and Sir Howard Stringer, CEO of Sony and former president of CBS. The topic: the imperial CEO. It turns out the chart I provided before was the exact chart they used on the show. Let me put it up again. [The following chart is taken from Business Week. It displays average CEO compensation in each country as a multiple of average employee compensation for FY 2000.] Country CEO Compensation Brazil 57 Venezuela 54 South Africa 51 Argentina 48 Malaysia 47 Mexico 45 Hong Kong 38 Singapore 37 Britain 25 Thailand 23 Australia 22 Netherlands 22 Canada 21 China (Shanghai) 21 Belgium 19 Italy 19 Spain 18 New Zealand 16 France 16 Taiwan 15 Sweden 14 Germany 11 South Korea 11 Switzerland 11 Japan 10 United States 531 What's especially noteworthy in the CNBC discussion is the reaction of Sir Howard Stringer. After Mr. Holstein's complaint that the government and the public have come down too hard on CEOs after the recent scandals, Tina Brown turns to Paul Krugman to get his take: BROWN: What do you think, Paul? Do you think it's gone too far or not far enough? Mr. KRUGMAN: Well, you know, by the numbers, what do we know? We know that two th--there are two--two measures you can look at--that's where--without getting personal. One is just what the CEO compensation looked like. You know, Warren Buffett says that's the acid test, so... BROWN: Well, we've--we've actually got a good graph on that. [CNBC displays the chart above] Mr. KRUGMAN: OK. BROWN: So let's have a look at that CEO compensation. OK. CEOs here in the US earned 531 times what hourly employees did. In Brazil, it was 57 times more. In Great Britain, 45 times more; Canada, 21 times more; and in Japan, CEOs make 10 times more than hourly workers. That's a pretty huge comparison. Sir HOWARD: That's insane. That's insane. BROWN: It's insane. Right. Mr. KRUGMAN: And let's say that the United States up until about 1980, CEO pay looked like the British multiple. Sir HOWARD: Absolutely. Ms. WATKINS: Yes. BROWN: Watch the terms. Mr. KRUGMAN: So we've had this explosion and that's a--that's a pretty clear indicator. And until you see some really serious compression of that, we haven't--we haven't finished it. Sir HOWARD: Well, it's ridiculous--it's ridiculous ... Tina Brown then turns to Sir Howard to have him expand on his view that CEO compensation in the U.S. is "insane" and "ridiculous." Sir HOWARD: Well, I--I think it depends on the board. If a board ha--has a lot of rich people on it, they tend to agree. I mean, obviously in the case of the New York Stock Exchange, all the board members of that were--were used to seriously high profits and--and--and the New York Stock Exchange was very useful to them. So they presumably agreed to those pay packages. I mean, I sit on British boards, and they're very tough. And on the Japanese, I'm on the Sony board in Japan and it is, by American standards, laughable what Japanese senior executives are paid, and at no time since I've been at Sony have I ever heard a senior executive complain about his or her pay or acts--act astonished o--that--that--that the Hollywood executives, for instance, in our company make more money than they do or the music executives make more money than they do. It's be--we've become a creature of--of CEO fashion an--and--and we've perpetuated the assumption that a CEO has to be extremely well-compensated for his because his--he or she is a rare individual. And I'm not so sure that's really very true. Straight from the mouth of the CEO of Sony. Unfortunately, he's British. For biographical information on Sir Howard, click here. Among other things, he is a former journalist. Postscript: Is it class warfare if a CEO says it? No, but if he's British, perhaps it's a form of terrorism. Grover Norquist can label it the greatest British assault on American enterprise since the War of 1812. 10:32:58 AM    comment []

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