Reasons for outrageous CEO pay packages well known

This is the time of year when I should thunder about outrageous compensation for the top executives of public companies.

Outrage is easily found. In the new hard times, the chief executives who make up a substantial part of the infamous 1 percent are doing better than ever. Their pay is often rising even if shareholders are doing badly and even if the company is being run into the ground — or into a merger that costs jobs and hurts communities, but adds even more to the wealth of the boss.

According to the AFL-CIO's Executive Pay Watch, CEOs earned 380 times the pay of the average American worker in 2011, the widest gap in the world. In 1980, the gap was 42.

I've been thundering for nearly that long. So much for the power of the press.

The median American household lost 40 percent of its wealth from 2007 to 2010, and this probably understates the financial ruin experienced by many. Wages for most Americans have been virtually flat for 30 years. Yet from 2009 to 2010 alone, the top 1 percent's wealth grew by more than 11.6 percent.

So much for the Occupy movement.

In the Pacific Northwest, our chief executives are relative Joe Lunchbuckets compared with many of their peers. Howard Schultz of Starbucks leads the pack of toffs with a $1.4 million base salary, $3 million cash bonus and $12 million special stock award that would vest in three years if the company remains profitable.

Jamie Dimon of JPMorgan Chase took home more than $23 million last year, even as he was apparently clueless about the trader known as the London Whale, whose bad bets cost at least $2 billion. Stephen Hemsley of United Health Group landed $102 million. Good work if you can get it.

Schultz at least presided over an impressive turnaround at Starbucks and shareholders have been handsomely rewarded, even if Sonics fans will never forgive the man.

It's pointless to thunder because the causes of such high compensation are well known. Among them: Steadily lower tax rates on the wealthy, lapdog boards of directors, perverse incentives, the unintended consequences of supposed reforms such as stock options, the power of institutional investors seeking short-term gains and the myth of the chief executive as super hero.

The country has changed since the mid-20th century, when chief executives made much less, not least in our morals, norms and sense of mutual obligation. Daniel Patrick Moynihan's famous statement about "defining deviancy down" applies to many a boardroom, not just to street corners.

In that America, rising productivity was widely shared. The bosses and the people who made their money from investments did very well, but so did ordinary workers. That is no longer the case.

By the time shareholder advocacy and initiatives such as say on pay and more independent boards gained traction, the well-paid horse was long gone from the barn. Today's compensation and its increases are routine.

It's equally pointless to thunder because the consequences have been repeatedly reviewed. In too many cases, incentives for chief executives don't align with preserving the long-term health of their companies, much less with sharing the fruits of productivity and innovation with workers and stakeholders, including communities.

These moguls are paid more if they send good jobs offshore, cut employment at home, hold down wages and slash benefits, close operations or even sell the company. At their worst, compensation practices sack the corporate treasury even as average workers are being let go.

At their worst, they are part of a financialized economy engaged in looting the productive wealth it has taken Americans a century to create. The CEOs who were among the biggest demolition artists behind the Great Recession were getting rich from speculating in risky derivatives, adding debt and moving money around.

One must also point out that corporate America includes many fine chiefs, and I can think of dozens of examples in the Northwest. Whether they're worth so much relative to the rest of society is another matter. But it is one that, for now at least, had been settled.

So we may as well admit it. We have a permanent plutocracy, something not seen since the late 19th century.

It may do good deeds, as with Bill Gates. But this is not a generation, as with its robber baron forebears such as Andrew Carnegie, that is afraid of going to hell. So we know, it uses its wealth to buy public policies that favor its interests. Those may or may not coincide with the public interest. Usually not.

None of this is inevitable or irreversible. It is not wise or healthy for democracy or capitalism. It shouldn't be sustainable.

If not, then Stein's Law will eventually topple the titans: "If something cannot go on forever, it will stop."

You may reach Jon Talton at jtalton@seattletimes.com. On Twitter @jontalton.