I saw this video of Keith Ellison advocating for the destruction of the economy.
I had to look up what he said.
Arthur Peck is the CEO of The Gap. According to Salary.com:
As President and CEO, Gap Inc. at GAP INC, Arthur Peck made $15,587,186 in total compensation. Of this total $1,396,058 was received as a salary, $4,045,859 was received as a bonus, $3,275,460 was received in stock options, $6,762,235 was awarded as stock and $107,574 came from other types of compensation. This information is according to proxy statements filed for the 2017 fiscal year.
According to Payscale the average salary at The Gap is $87,000. That includes all the corporate level positions including buyers, planners, managers, and employees you don’t see at the retail level.
Given total compensation, Peck only makes 179 times as much as the average Gap employee, not “a thousand times” as Ellison said.
There are other factors as play here.
According to Market Watch, The Gap is a publicly traded company with 2017 sales revenue of $15.52 BILLION dollars.
The Gap operates 3,594 stores worldwide and has sub brands that include Banana Republic, Old Navy, Intermix, Weddington Way, and Athleta.
So… the responsibility of the CEO is to manage a company with $15 billion in revenue, 135,000 employees, and 3,600 retail locations, all while being publicly traded and held accountable by the shareholders.
I doubt that level of skill comes cheap.
Ellison should study up on the saga of Ben and Jerry’s management catastrophe.
In a nutshell, Ben and Jerry are some progressive dudes. They decided that the CEO (Ben) should only make five times as much as the lowest paid employee, so his salary was $81,000.
Now keep in mind that they also owned the fucking company, so salary and total earnings were just a tad different.
But… Ben decided to retire. They went on the look for a new CEO.
They just couldn’t find a candidate who had the skills and ability to manage a company with tens of millions of dollars in sales, with nation wide retail stores, contracts with secondary retailers (grocery stores, Wal-Mart, convenience stores, etc), thousands of employees, etc. for $81,000.
They were offering middle management salaries and expecting CEO level skill.
It was insulting. It’s like asking a brain surgeon to take over as Chief of Neurology at a major hospital and offering to pay him $45/hr because that’s five times what the orderly emptying bed pans makes.
It’s just insulting.
So they bumped it to 17 times, about $505,000. That didn’t work.
So they sold out to Unilever Brands and cashed out. The Unilever CEO makes 8.3 million Euros or about $10 Million.
The fact is that if you cut Pecks salary to $1 million and gave everybody else raises, that would mean that $14 million divided by 135,000 is a $103 annual raise or $8.60 per moth.
What The Gap would lose is his skill at the helm. If The Gap and its shareholders didn’t think Peck was worth it, they wouldn’t have offered him the money.
Welcome to the free market, where if you have the skills to manage a multi national, multi billion dollar a year business, you can make a lot of money.
That’s not to say I 100% agree with all CEO compensation.
I’d like to see something that better ties a CEO’s compensation to long term company stability. Perhaps making stock bonuses or share values have a maturation time that starts once the CEO leaves. You don’t want a CEO to bump current stock value with decisions that only pay off in the short term, cash out, and then let the company go belly up a year later. That’s how we got into a lot of financial messes a few years ago.
But having the Government cap CEO salaries is not going to do anything but hurt business and by extension, the employees that depend on them.
The guys smart enough to make millions as CEOs will still figure out how to make millions on the global market. The guys who end up in the CEO chair will have the skill to manage a single McDonald’s franchise, not a fast food corporation with 37,000 restaurants and $23 billion in revenue.