Thursday, May 29, 2014

The Bizarre Claim That the Average CEO Makes Over $10 Million

Associated Press is out with a bizarre story. The AP "Big Story" headline reads:

Median CEO Pay Crosses $10 Million

It is rare to see such a misleading headline. It is simply far from the truth, but news outlet after news outlet is running with the absurd claim. According to the Census Bureau, at the end of 2103, there were  400,400 CEOs in the U.S. Of those, 92% earned less than $1 million, never mind $10 million. Only 2%, according to the CB data, earned over $3 million. 77% earned less than $500,000.

So what is with the misleading headline?

It turns out that AP is only talking about companies in the S&P 500. That is, it is not about overall pay, but the pay of CEOs at some of the largest companies in America.

From the body of the AP story:
Propelled by a soaring stock market, the median pay package for a CEO rose above eight figures for the first time last year. The head of a Standard & Poor's 500 company earned a record $10.5 million, an increase of 8.8 percent from $9.6 million in 2012, according to an Associated Press/Equilar pay study.
I am very suspicious of the timing and method this CEO pay story has surfaced. It coincides with the "Inclusive Capitalism" conference in London organised by Lynn Forester de Rothschild.

At the conference, the Bank of England’s Governor Mark Carney warned that a more unequal society was “amplifying the rewards of the superstar” as he pledged to help build a “more trustworthy” capitalism.

The UK's Independent tied in his remarks with the AP story:
His comments came as an Associated Press/Equilar survey showed the average pay of top US executives breaking through eight figures for the first time.
When one of the richest women in the world is holding a conference where concern about CEO pay seems to dominate, a woman who gained most of her wealth by marrying a man more than 25 years older than her, something real fishy is sure to be going on.

Indeed, other big time government operators at the conference echoed Carney's "concern". From The Independent:
Mr Carney’s fellow speaker, the International Monetary Fund’s managing director Christine Lagarde, also attacked the unreformed bonus culture of the financial world at the conference. 
She called for the G20 to push ahead with pay reforms “because the behaviour of the financial sector has not changed fundamentally in a number of dimensions since the financial crisis” and accused the industry of resisting reforms...She argued that rising income inequality was casting a “dark shadow” across the global economy. She called on capitalism to become more inclusive by making income tax “more progressive without being excessive”, making greater use of property taxes and expanding access to education and health.
It looks to me like another New World Order power grab, intended to make sure that new wealth doesn't have a chance to catch up  to old wealth, and another attempt at laying the seeds for an eventual global tax, that will result in greater tax on all of us, but framed as though it is a tax to go after those earning over $10 million. In other words, they are playing the envy card to enslave us all.


  1. The irony of CEO compensation is that this is largely the result of government intervention from the Clinton years that limit base tax deductible compensation to $1million for tax purposes, but allows bonus compensation to be fully deducted. So what's a company to do to make sure its exec gets a $3mil package, why create easily achievable bonuses that have no upside limit to avoid being classified as base compensation. Of course don't expect your average envy driven control freak left winger to grasp this fact. They're too obsessed with envy to understand. Good job Democrats!

  2. This Christine Lagarde is a true hack and tool of the globalist State. She called on capitalism to become more inclusive by making income tax “more progressive without being excessive.” What?!?!? How does one make theft (i.e. income taxes, whether more of less progressive) more inclusive so as to benefit the public at large? Answer: You don't!! You enrich the State, and the cronies connect to it, while sticking it to the rest of us.

    Capitalism (i.e. free market, laissez faire capitalism) does not need some sort of central planning apparatus to make it more inclusive. It's inclusive on its own. Remove the State, with its taxes, regulations, social programs, entitlements, bailouts, etc., and let the free market regulate itself through the price mechanism. Inequality would be a non-issue because we'd all be better off in the short and long-run.

  3. "...he pledged to help build a “more trustworthy” capitalism."

    Translation: socialism. I feel like I live in a world of overgrown, spoiled brat children who stamp their little feet every time they see that someone else has more than they do. It's childish and pathetic. Didn't their mommy and daddy teach them that life isn't fair? Sheesh what pathetic little twerps!

  4. Median is the middle, not the mean (average). Median means an equal number above and below.
    So there are an equal number of S&P 500 CEOs above 10 million as below it. Doesn't matter how much less than ten million those 250 make or how much above the other 250 make.

    On another note I never understood why people fall for the income tax on the 'rich'. Income taxes are used to prevent people from becoming rich or wealthy, the rich and wealthy already it and can guide their further earnings such that they aren't taxed.

    1. Yep, that was what was done in Europe for a very long time. Income taxes were supported by the rich to prevent others from becoming wealthy. BTW, in many of these same countries with 99% income tax rates, the capital gains tax rate was between 10% and zero.

  5. Does SEC Give Naked Short Sellers a Pass?

    CHICAGO (CN) - A financial journalist claims the SEC presides over a system that encourages naked short selling in counterfeit stock, endangering the very system the SEC is supposed to protect.
    Mark Mitchell sued the SEC in a federal FOIA complaint.
    He demands information on SEC inquiries, and enforcement actions, regarding SEC Regulation SHO, involving naked short-selling of stock of public companies.
    He claims the information, which the SEC has not released, would show:
    "A. the inherent flaws in regulations created by the SEC to stop naked short selling;
    "B. the lack of transparency in the regulatory system relating to the processing of short sale trades;
    "C. the SEC's lax enforcement of the securities acts and related rules, including Reg SHO, against those who engage in naked short selling, and, most importantly;
    "D. how these factors combine to create a dangerously high and unacceptable level of risk to the integrity of the nation's and the world's capital markets."
    Mitchell claims: "the SEC has sponsored, supervises, and presides over a regulatory system that has allowed and in fact encouraged broker-dealers and other market participants to create billions of shares of counterfeit stock in hundreds of millions of trades which collectively put the integrity of the capital markets at risk. The counterfeit stock has been and continues to be created through a practice commonly referred to as 'naked short selling.' Naked short sales share no properties in common with lawful short sales, except both involve a purported sale of stock.