ceo pay – RI Future

September 16, 2016

RI says ‘no’ to excessive executive pay

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In 2016, Treasurer Seth Magaziner has voted “no” on executive compensation plans at 75 companies, including Facebook, eBay, and the parent company of Google, “due to a misalignment between CEO pay and company performance or because the compensation plans were deemed excessive or otherwise inappropriate.”

“My job as Treasurer is to deliver strong financial performance for the state’s pension fund. When the companies we invest in award excessive pay packages to executives, it comes at the expense of the pension fund and the public employees we serve,” Magaziner said. “Our say-on-pay effort reflects our position that executive compensation should be transparent and based on performance.”

Earlier this year Magaziner announced that he will use the power of the Treasurer’s office to “vote against appointing white men to corporate boards of directors that are already comprised of mostly white men.” This latest announcement can be seen as a continuation of Magaziner’s belief that corporate reform can come through ethical voting from progressive investors.

Magaziner says that since the 1970s, inflation-adjusted CEO pay in the U.S. increased by almost 1,000 percent, according to a study last year from the Economic Policy Institute. Six of the highest paid U.S. CEOs make more than 300 times the salary of their typical employee, according to the compensation analysis firm PayScale.

Facing increasing shareholder advocacy amid a volatile market and slower growth rates, many of America’s biggest corporations are under an intense spotlight to link chief executive pay to company performance, according to the Korn Ferry Hay Group 2015 CEO Compensation Study.

Magaziner has sent a letter to all companies that received “no” votes to inform them of Rhode Island’s opposition to their executive pay packages, and offer to open a dialogue about how they can make progress on this important issue.

January 20, 2015January 20, 2015

CVS is no corporate saint when it comes to employee pay

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As President Obama lays out his tax plan for addressing income inequality in tonight’s State of the Union speech, in the first lady’s VIP box will sit a poster child for excessive CEO pay – Rhode Island resident and CVS CEO Larry Merlo.

Merlo got the invite thanks to the fantastic corporate example the Rhode Island-based pharmacy chain set when it stopped selling tobacco products.

“Last year, CVS Caremark President and CEO Larry Merlo announced that CVS would be the first major retail pharmacy to eliminate tobacco sales in all of its stores,” according to a White House item about CVS and Merlo. “Soon after, the company changed its corporate name to CVS Health — a symbol of the organization’s broader commitment to public health.”

CVS certainly deserves tons of applause for this. But CVS has far from warranted corporate sainthood based on the way it pays employees.

Merlo makes $22 million a year, according to CNN Money. He’s the 8th highest paid CEO in America. And he’s number 1 when it comes to making more more than his or her underlings.

“CVS has the greatest disparity between CEO pay and the median wage of its employees among the 100 highest-grossing companies in the U.S.,” Fortune Magazine reports. “You would have to combine the wages of more than 400 CVS Caremark employees to match the salary of the company’s CEO, Larry Merlo.”

On the other end of the salary spectrum at CVS, some low wage employees say annual raises were denied this year to absorb the cost of an increase to the minimum wage. “Salary increases are based on market-based rates and the individual performance of employees, said CVS spokesman Mike DeAngelis when asked about the allegation. “The increase to Rhode Island’s minimum wage does not change this.”

The median CVS employee earns $28,000 a year, according to Fortune Magazine (DeAngelis did not immediately respond to an email yesterday seeking more exact numbers). According to the Economic Progress Institute, this is about $4,000 a year more than a single adult needs to survive in Rhode Island and $31,000 less than a single parent of two would need to pay their basic living expenses.

CVS can and should do better than this.

Like selling cigarettes, there is money to be made by paying employees a pittance. But there’s also very real, if sometimes latent, negative social costs in doing so. For example, we know many CVS employees will require social services to augment their low wages. And we also know low wages lead to poor health decisions.

Most fortunately, CVS has balked at profiteering on activity with a negative social impact. “This is the right thing to do,” said CVS when it stopped selling tobacco products. Just two years after severing its ties to ALEC, this is a hugely promising step for the Woonsocket-based corporation.

Paying a living wage to all employees is also the right thing to do. Let’s hope Michelle Obama impresses upon Merlo that economic security is also an important function of community health as well.

May 25, 2012May 25, 2012

RI Progress Report: 38 Studios, Woonsocket Race To Bankruptcy

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38 Studios laid off all of its employees yesterday … I guess Curt Schilling and Linc Chafee will be completing Copernicus by themselves.

Speaking of going bankrupt, Woonsocket’s supplemental tax increase failed to win approval in the House yesterday afternoon after Rep. Lisa Baldelli-Hunt, a Woonsocket Democrat, stymied its passage. “The end came suddenly, with a sharp bang of Speaker Gordon Fox’s gavel cutting off discussion with resounding finality on a parliamentary maneuver by Baldelli-Hunt to send the bill back to committee,” wrote Jim Baron of the Woonsocket Call.

Barrington did indeed back off its idea to offer a limited number of out-of-town students to attend the high-achieving local schools if the could afford to pay tuition, as we reported yesterday.

This is something Rhode Island should work on changing: the state ranks 12th from the worst in the nation in terms of being bicycle friendly.

5 Ways The Facebook IPO Teaches Us About How Wall Street Games The System

Paul Krugman: “…overall business productivity in America grew faster in the postwar generation, an era in which banks were tightly regulated and private equity barely existed, than it has since our political system decided that greed was good.”

A great story by the Associated Press on CEO pay and how to compare those outrageous salaries compare to the rest of us.

Rest in peace, Scott Nixon, a much-heralded professor of Oceanography at URI. According to Provost Donald H. DeHayes, he “was a world leader in the study of how coastal and estuarine ecosystems work, initially using Narragansett Bay as his laboratory and employing mesocosms to measure respiration and production at a community level. While his findings helped define our understanding of marine ecosystems locally, Scott applied his knowledge at broader scales, too, exploring marine ecosystems around the world, comparing and contrasting them to shape a global view that he then used to challenge himself to think in new ways and to challenge the scientific dogma of the times.”