A quick update on avarice in America and beyond
Last week saw the close of the official comment period on proposed federal regulations that would require America’s corporations to annually disclose the ratio between what they pay their CEOs and typical workers. The U.S. Securities and Exchange Commission received a remarkable avalanche of letters supporting the regs, over 116,000 in all. Observers expect the SEC to issue a final rule on ratio disclosure early in 2014. But corporate groups will likely challenge the rule in court, and that challenge won’t surprise anyone. Corporate America has been battling to kill pay ratio disclosure ever since the 2010 Dodd-Frank Act first wrote a mandate for it into federal law . . .
A decade ago, Dennis Kozlowski reigned as America’s “poster boy for CEO greed.” His lavish lifestyle as the chief exec at Tyco International, a global conglomerate, scored headlines on a regular basis. Kozlowski owned mega-million getaways in Colorado, Boca Raton, and Nantucket. His Manhattan apartment sported a $15,000 umbrella stand and a $6,000 shower curtain. He spent $2 million on a toga party. Then the roof caved in. In 2005 a New York jury found Kozlowski and an associate guilty of giving themselves illegal bonuses and grabbing loans later forgiven. Kozlowski went to jail. Now he’s going free. His parole board made that announcement last week. As top gun at Tyco, a contrite Kozlowski told the parole board last April, “I was living in a CEO-type bubble.” Added the 67-year-old: “I had a strong sense of entitlement.”
A “sense of entitlement” still, of course, infuses America’s executive suites, and nowhere more so than the financial industry. The latest example: the industry’s reaction to new European Union bonus cap rules. The new rules will limit banker annual bonus pay to twice regular 2014 salary and apply to executives at the European offices of U.S. financial giants like JPMorgan. The banker response: The industry’s mega players are bumping up executive salaries and introducing “housing allowances” and “loyalty payments” to help execs avoid any bonus cap pay cut. Regular U.S. bank employees, meanwhile, are making so little that a third of them, says a new study released last week, qualify for food stamps and other federal assistance programs. That cost to taxpayers: $900 million a year.