Last year was a boffo year for chief executive officers. A study of the top 350 American companies reported by The Wall Street Journal found that executives earned just over $6 million apiece in 2005, an increase of 7.1% over 2004. The New York Times found that executive pay at the top 200 companies rose by 27%, while USA Today pegged the pay raise at the top 100 companies at 25%. The nonprofit Corporate Library, perhaps the most respected analyst of executive pay, found that executive pay rose 11% at the top 500 companies.
The results vary depending on which analyst is doing the research and how many companies are surveyed, but they all point to a big increase in executive pay. Yet the Milwaukee Journal Sentinel, in its annual roundup of executive compensation in June, announced that CEO pay had actually declined and mostly offered analysis explaining how salaries are moderating.
Oddly, the rest of the media seem unaware of this heartening new trend. The Wall Street Journal, for instance, found that executive pay not only “swelled” last year but noted “bigger bucks may be ahead. Many CEOs remain perched atop piles of unexercised [stock] options.”
How did the JS come to a completely different conclusion? Its story offered some selective data: a survey by Pearl Meyer & Partners of just 48 state CEOs who held the same position in 2004 and 2005. Their pay dropped by 1%, to an average of $2.6 million.
In the past, however, the Journal Sentinel simply ran a complete list of top executives in the state, including newly appointed CEOs, and compared average pay to that of the previous year. In 2004, the paper found, average compensation was $2.5 million. In 2005, the average was $2.63 million, suggesting that CEO pay could have gone up by at least 5 percent. This comparison, however, wasn’t included in the analysis of 2005 compensation.
Weirdly, the JS did include the figure from the Corporate Library showing that executive pay rose 11% nationally, yet its story had mostly experts talking about how compensation had moderated. Given how hard it is to find experts defending executive pay, you have to give the JS credit for working hard to cherry-pick such testimony.
The reporter for this story was Joel Dresang , the paper’s (part-time) labor reporter, yet he tiptoed around any controversy, telling readers that “labor-friendly researchers contend that the average CEO makes more in a year than the average American could earn in 300 or 400 years.”
Such phrasing suggests that this is just union rhetoric. Dresang might have simply run the figures used by researchers (and often included in Business Week) , which compare Department of Labor statistics for the average, non-managerial worker’s salary to the average CEO’s pay. By this standard, top CEOs earned 262 times more than the average American worker in 2005.
I’m not blaming Dresang, by the way. No reporters at the JS are eager to do the annual CEO roundup because they wonder how much honesty the paper’s top brass will tolerate. Not all that much, it appears.
Turmoil at the Cops’ Union
By the end of this week, Milwaukee Police Union President John Balcerzak could be recalled from office. About two weeks ago, a recall petition with some 300 signatures (well more than the required 200) was submitted to the board, which then approved a recall election. By week’s end, police will vote on whether to remove Balcerzak.
Why should non-cops care? At a time when the city has been racked by scandals involving police, it might be helpful to have a politically savvy union leader who understands the need to relate constructively to the community and to Police Chief Nan Hegerty . Balcerzak lacks any such vision.
As I noted in an earlier column, Balcerzak has angered some African-American and younger cops for what they perceive as favoritism toward the old white guard of officers.
Balcerzak may also be making a strategic mistake by not seeking a compromise regarding the controversial state law that allows fired police officers to continue drawing a salary while they appeal the termination decision. Barrett is pushing for a change in the law, but more importantly, the state’s largest newspaper has turned this into a campaign and is hammering the police and state legislators for not eliminating this egregious benefit. The Journal Sentinel’s coverage of this issue has been powerful and is outraging a lot of readers. Balcerzak and the union might be wiser to embrace a compromise that reduces but doesn’t eliminate the protection for fired officers. Should he be recalled, as seems likely, this may be one of many issues that gets approached differently by the union.
Saving the KK River
Milwaukee is increasingly discovering the power of its rivers to fuel development. The removal of the North Avenue dam and reclamation of the Milwaukee River has helped trigger the explosion of new condos along that waterway. More recently, the Menomonee River Valley is being rediscovered as a new area for development. Meanwhile, the Kinnickinnic River remains completely overlooked. One of the state’s most polluted streams, it barely qualifies as a river over long stretches where it is channeled in concrete. Yet it has more population near it than either of the other rivers.
In the current issue of Milwaukee Magazine, Senior Editor Kurt Chandler has written an in-depth feature story about this overlooked resource. In recent years, we have learned more about what makes a great city, and you can see the results in the many neighborhoods being redeveloped. A move to reclaim the Kinnickinnic would require some investment by government, but the resulting economic spin-off, the recreational improvement and heightened property tax values could be huge. This story shows us what might be the future for both the KK and this city. Send me a copy.
