So, Hilary told us last week that CEOs of US companies are making 300 times what their workers make.  Of course, that sent certain folks screaming that it was inaccurate.

So, let’s get to a few facts.  Hilary wasn’t being totally accurate- or, more likely, specific.  [Maybe this is a good time to say, I am no fan of Hilary.] The issue is what the Fortune 1000 pay their executives and their staff. (Here’s some reasons why that is true.) Because there are some 20 million US companies, and like is true for many of our clients, the CEO’s of the smaller firms hope to make great money- but don’t always achieve it.  And, many of the smaller company executives are actually owners of S Corporation entities.  Which means the profits flow to them as dividends- not subject to payroll taxes (as long as they pay themselves reasonable compensation).  So, they have no desire to pay themselves high salaries, since that only costs them an extra 10% or so in taxes.

But, that doesn’t apply to the Fortune 1000.  These are public companies, and there is no flow-through of profits to anyone that is not subject to taxation.  And, their salaries are, indeed, excessive.

Of course, there are folks who tell you otherwise.  They compute all sorts of salaries for the employees to demonstrate that the average employee of these firms make $ 55K or more.  Yeah, right.

First of all, many of the employees in the big corporation are now working part-time.  So using 2080 hours a year to determine their salaries is malarkey.  Moreover, many American companies don’t provide two weeks of paid vacation, so 2080 of paid hours is not accurate, either.   And, to use the health care and life insurance costs  that are provided to executives and managers of a company  for the other employees  is baloney, too.  Since the benefits afforded workers and the benefits that accrue to the executives are vastly different- and at totally different cost levels.

Secondly, we must remember that corporate executives have all sorts of perks.   Not only do they receive a salary, they get bonuses, stock grants, options to exercise, and deferred compensation.  Oh, and free private air fare, vacation spots at no charge, ad infinitum.  (OK, the benefits don’t really extend to infinity, but you get the idea.)

Most importantly, if what Hilary said has no merit- and what I state is wrong- why is that these same executives spend billions to stall the regulations that demand they post the ratios of their salaries to those of their employees in the annual reports?

Yeah, right.  You get the point.

(Just so you know, these ratios were supposed to be reported several years ago.  But, since our political leaders have been bought and paid for by corporate lobbyists, the stall is on.)

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