Sam Pizzigati: The insider who blew the whistle on executives' greed
Via OtherWords.org
If you work in a corrupt system, you have two basic options.
First, you could rationalize away your role in the corruption. If you ever left, you tell yourself, they’d just get someone else to do your job. Might as well shut your mouth and collect your paycheck.
But you could also go in an entirely different direction. Graef Crystal certainly did.
Crystal once ranked as one of America’s top enablers of a deeply corrupt — and corrupting — corporate CEO pay system. He could have continued down that path. But he chose to push for change instead. And he kept pushing for years after most people step back.
Crystal just passed away at age 82. We can learn plenty from his remarkable life.
The first lesson: We all have it in us to walk away from corruption.
Crystal had it made back in the 1980s. He had won national renown as an astute and reliable expert on CEO pay. America’s top corporations — such outfits as American Express and General Electric — regularly hired him to consult on their executive pay packages.
Crystal delivered what these major corporations needed: an “expert” rationalization for ever higher levels of executive compensation.
He played this CEO pay game well. Ample rewards came his way. But the game, over time, came to thoroughly disgust him. At the height of his career, Crystal walked away from his corporate gravy train and stopped telling unconscionably overpaid corporate honchos what they wanted to hear.
By the early 1990s, Crystal had a new role: blowing the whistle on executive pay outrages. Crystal brought to the executive pay wars both a firm command of the basic facts — between 1980 and 1990 real CEO pay had doubled — and a wealth of insider anecdotes.
In 1991, Crystal would pen a widely acclaimed book, In Search of Excess: The Overcompensation of American Executives. And over the next quarter-century, he’d take every opportunity to spread the book’s message. He spent years writing nationally syndicated newspaper columns and reached millions through such media outlets as 60 Minutes.
But all of Crystal’s noble efforts in the end fell short. Way short. In the quarter-century after 1990, CEO pay didn’t fall. It soared.
In 1990, as the Economic Policy Institute has detailed, CEO pay at America’s top 350 companies averaged $2.8 million, after adjusting for inflation. In 2014, it was up to $16.3 million.
Meanwhile, over those same years, the pay gap between top CEOs and average workers quadrupled.
And that brings us to a second key lesson from the life and work of Graef Crystal: We simply cannot rely on corporations to clean their own houses.
Crystal worked on the assumption that corporate decision makers, once they understood the games that unworthy CEOs were playing, would bring much better judgment to bear on executive compensation. But that assumption never reflected corporate reality, as we understand quite well on other issues.
We don’t as a society, for instance, trust those who run our corporations to police themselves on corporate behaviors that impact the environment. So why should we trust those who run our corporations to distribute rewards fairly — or keep their own hands out of the till?
We shouldn’t, of course.
That’s why there’s a growing consensus on the need for public action against CEO pay excess. One particularly promising approach: We could start denying government contracts and tax breaks to corporations that pay their executives over 25 or 50 times more than their typical workers are making.
In Graef Crystal’s early adult years, most American corporations could meet that standard. Today most don’t even come close. The current CEO-worker pay gap: 335 times.
Sam Pizzigati, an Institute for Policy Studies associate fellow, co-edits Inequality.org and writes for OtherWords.org. His latest book is The Rich Don’t Always Win.