The compensation committee [of the board of directors] talks to an outside consultant who has surveys you could drive a truck through and pay anything you want to pay, to be perfectly honest. The outside consultant talks to the human resources vice president, who talks to the CEO. The CEO says what he'd like to receive. It gets to the human resources person who tells the outside consultant. And it pretty well works out that the CEO gets what he's implied he thinks he deserves, so he will be respected by his peers. (Morgenson, 2005.)
The board of directors buys into what the CEO asks for because the outside consultant is an "expert" on such matters. Furthermore, handing out only modest salary increases might give the wrong impression about how highly the board values the CEO. And if someone on the board should object, there are the three or four CEOs from other companies who will make sure it happens. It is a process with a built-in escalator.
Besides illustrating the significance of home ownership as a source of wealth, the graph also shows that Black and Latino households are faring significantly worse overall, whether we are talking about income or net worth. In 2013, the average white household had more than 15 times as much total wealth as the average African-American or Latino household. If we exclude home equity from the calculations and consider only financial wealth, the ratios are more than 200:1. Extrapolating from these figures, we see that 65% of white families' wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are close to 90%.
Americans from all walks of life were also united in their vision of what the "ideal" wealth distribution would be, which may come as an even bigger surprise than their shared misinformation on the actual wealth distribution. They said that the ideal wealth distribution would be one in which the top 20% owned between 30 and 40 percent of the privately held wealth, which is a far cry from the 85 percent that the top 20% actually own. They also said that the bottom 40% -- that's 120 million Americans -- should have between 25% and 30%, not the mere 8% to 10% they thought this group had, and far above the 0.3% they actually had. In fact, there's no country in the world that has a wealth distribution close to what Americans think is ideal when it comes to fairness. So maybe Americans are much more egalitarian than most of them realize about each other, at least in principle and before the rat race begins.
Actually, ultra-conservatives and their wealthy financial backers may not have to bother to eliminate what remains of inheritance taxes at the federal level. The rich already have a new way to avoid inheritance taxes forever -- for generations and generations -- thanks to bankers. After Congress passed a reform in 1986 making it impossible for a "trust" to skip a generation before paying inheritance taxes, bankers convinced legislatures in many states to eliminate their "rules against perpetuities," which means that trust funds set up in those states can exist in perpetuity, thereby allowing the trust funds to own new businesses, houses, and much else for descendants of rich people, and even to allow the beneficiaries to avoid payments to creditors when in personal debt or sued for causing accidents and injuries. About $100 billion in trust funds has flowed into those states so far. You can read the details on these "dynasty trusts" (which could be the basis for an even more solidified "American aristocracy") in a by Boston College law professor Ray Madoff, who also has a book on this and other new tricks: (Yale University Press, 2010).
The advisory committee will be involved in recruiting, screening and conducting interviews with candidates for the position. The committee’s work will be scheduled so that candidates can be presented to President Yudof for consideration and a recommended nominee submitted to the Board of Regents, tentatively by July 2013.
Jane Close Conoley, dean of UC Santa Barbara’s Gevirtz Graduate School of Education, will serve as acting chancellor of UC Riverside until the appointment of a successor to Chancellor White.
“Chancellor White generated tremendous momentum for UC Riverside,” said President Yudof. “It’s critical that we find the right leader to continue Riverside on its current trajectory and propel it to even greater heights of academic excellence and public service.”
White became Riverside’s eighth chancellor in 2008 and launched an ambitious 10-year strategic plan to take the campus to new levels of nationally recognized excellence. During his tenure, the Riverside campus grew to more than 21,000 students. White also established the foundation of a UC Riverside School of Medicine, obtaining start-up resources and hiring the school’s first dean.
Outgoing Chancellor Timothy P. White, an internationally-renowned biology and physiology researcher, plans to leave the University of California on Dec. 30 to become chancellor of the California State University system.
University of California President Mark G. Yudof today (Dec. 20) announced the appointment of an advisory committee of university faculty, staff, students, alumni and foundation representatives to help in the national search for a new chancellor to lead UC Riverside. Sherry Lansing, chair of the Board of Regents, also appointed five regents to serve.
The claims made in the previous paragraph need much further investigation. But they demonstrate the ideas and research directions that are suggested by looking at the wealth and income distributions as indicators of power.
On the other side of the class divide, the rise in CEO pay may reflect the increasing power of chief executives as compared to major owners and stockholders in general, not just their increasing power over workers. CEOs may now be the center of gravity in the corporate community and the power elite, displacing the leaders in wealthy owning families (e.g., the second and third generations of the Walton family, the owners of Walmart). True enough, the CEOs are sometimes ousted by their generally go-along boards of directors, but they are able to make hay and throw their weight around during the time they are king of the mountain.
There's a much deeper power story that underlies the self-dealing and mutual back-scratching by CEOs now carried out through interlocking directorates and seemingly independent outside consultants. It probably involves several factors. At the least, on the workers' side, it reflects their loss of power following the all-out attack on unions in the 1960s and 1970s, which is explained in detail in an excellent book by James Gross (1995), a labor and industrial relations professor at Cornell. That decline in union power made possible and was increased by both outsourcing at home and the movement of production to developing countries, which were facilitated by the break-up of the New Deal coalition and the rise of the New Right (Domhoff, 1990, Chapter 10). It signals the shift of the United States from a high-wage to a low-wage economy, with professionals protected by the fact that foreign-trained doctors and lawyers aren't allowed to compete with their American counterparts in the direct way that low-wage foreign-born workers are.