{"id":313910,"date":"2017-06-21T23:38:41","date_gmt":"2017-06-21T22:38:41","guid":{"rendered":"https:\/\/rinf.com\/alt-news\/newswire\/companies-can-either-make-things-or-make-ceos-rich\/"},"modified":"2017-06-21T23:38:41","modified_gmt":"2017-06-21T22:38:41","slug":"companies-can-either-make-things-or-make-ceos-rich","status":"publish","type":"post","link":"https:\/\/rinf.com\/alt-news\/newswire\/companies-can-either-make-things-or-make-ceos-rich\/","title":{"rendered":"Companies Can Either Make Things or Make CEOs Rich"},"content":{"rendered":"
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Jeff Immelt, the CEO of General Electric since 2001, is retiring. The 61-year-old will be making a well-compensated exit.<\/p>\n

Fortune<\/em> magazine estimates<\/a> that Immelt will walk off with nearly $211 million, on top of his regular annual pay. Immelt\u2019s annual pay hasn\u2019t been too shabby either. He pulled down $21.3 million<\/a> last year, after $37.25 million<\/a> in 2014.<\/p>\n

But Immelt\u2019s millions don\u2019t come close to matching the haul that his predecessor Jack Welch collected. Welch\u2019s annual compensation topped $144 million<\/a> in 2000. He stepped down the next year with a retirement package<\/a> valued at $417 million.<\/p>\n

What did Immelt and Welch actually do to merit their super-sized rewards? What did they add to a GE hall of fame that already included<\/a> breakthroughs like the first high-altitude jet engine (1949) and the first laser lights (1962)?<\/p>\n

In simple truth, not much at all.<\/p>\n

\"ceo-pay-gap\"<\/p>\n

(Photo: Funny Solution Studio \/ Shutterstock)<\/p>\n<\/div>\n

“We bring good things to life,” the GE ad slogan used to proudly pronounce. Not lately.<\/p>\n

And not surprisingly either. Mature business enterprises, we’ve learned over recent decades, either make breakthroughs for consumers or grand fortunes for their top execs. They don\u2019t do both.<\/p>\n

Why not? Making breakthroughs, for starters, takes time. Enterprises have to invest in research, training, and\u00a0nurturing high-performance teams.<\/p>\n

Years can go by before any of these investments bear fruit. By that time, the executives who made the original investments might not even be around.<\/p>\n

Grand fortunes, by contrast, can come quick. CEOs can downsize here, cut a merger there, then sit back and watch short-term quarterly earnings \u2014 and the value of their stock options \u2014 soar.<\/p>\n

If those don\u2019t do the trick, CEOs can always just slash worker pensions or R&D and put the resulting “savings” into dividends and “buybacks,” two slick corporate maneuvers that jack up company share prices and inflate executive paychecks.<\/p>\n

On any CEO slickness scale, Jack Welch would have to rank right near the top. In 1981, his first year as the GE chief, Welch quickly realized he was never going to get fabulously rich making toasters and irons.<\/p>\n

So Welch started selling off GE\u2019s manufacturing assets. In his first two years, analyst Jeff Madrick notes<\/a>, Welch “gutted or sold” businesses that employed 20 percent of GE\u2019s workforce.<\/p>\n

By 2000, Welch himself was making about 3,500 times <\/em>the income of a typical American family.<\/p>\n

By contrast, in 1975, Welch\u2019s predecessor took home merely 36 times<\/em> that year\u2019s typical American family.<\/p>\n

As Welch\u2019s successor, Jeffrey Immelt would give an apology<\/a> of sorts in a 2009 address at West Point. Corporate America, he told the corps of cadets, had wrongfully “tilted toward the quicker profits of financial services” at the expense of manufacturing and R&D, leaving America\u2019s poorest 25 percent “poorer than they were 25 years ago.”<\/p>\n

“Rewards became perverted,” Immelt went on. “The richest people made the most mistakes with the least accountability.”<\/p>\n

Unfortunately, and sadly, Immelt never took\u00a0his own analysis to heart. As a rich CEO in his own right, he continued to make mistakes and suffer no particular consequences.<\/p>\n

One example: After the Great Recession, Immelt froze the GE worker pension system and offered workers a riskier, less generous 401(k). Within five years, notes<\/a> the Institute for Policy Studies, the GE pension deficit widened from $18 billion to $23 billion \u2014 even as Immelt\u2019s personal GE retirement assets were nearly doubling to $92 million.<\/p>\n

“If we want to slow \u2014 or better yet, reverse \u2014 accelerating income inequality,” the Harvard business historian Nancy Koehn noted<\/a> a few years ago, “the most powerful lever we have to pull is that of outrageous executive compensation.”<\/p>\n

How many more outrageously compensated executives will retire off into lush sunsets, the Jeff Immelt story virtually begs us to ask, before we start yanking that lever?<\/p>\n<\/div>\n

This piece was reprinted from Other Words<\/a> by RINF Alternative News<\/a> with permission.<\/p>\n","protected":false},"excerpt":{"rendered":"

Jeff Immelt, the CEO of General Electric since 2001, is retiring. The 61-year-old will be making a well-compensated exit. Fortune magazine estimates that Immelt will walk off with nearly $211 million, on top of his regular annual pay. Immelt\u2019s annual pay hasn\u2019t been too shabby either. He pulled down $21.3 million last year, after $37.25 […]<\/p>\n","protected":false},"author":2523,"featured_media":313911,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[519],"tags":[],"class_list":{"0":"post-313910","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-newswire"},"_links":{"self":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/313910","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/2523"}],"replies":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=313910"}],"version-history":[{"count":0,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/313910\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media\/313911"}],"wp:attachment":[{"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=313910"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=313910"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=313910"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}