I am a lawyer in that segment of the entertainment industry that focuses on television (all forms, including streaming), motion pictures and all other forms of audio-visual media. While there are the usual requests for higher pay and benefits, unions and guilds engaged in collective bargaining here are dealing with massive paradigm shifts, most notably the priority transition from old world to digital-original content. It’s not just the technology that has changed. It is the value of the aftermarket (is there one?), the reliance on untransparent algorithms, viewing habits, order patterns (from old world networks at 22 episodes to streaming series with 6-13 episodes per season), upside definitions, how content is developed and then produced, the impact of artificial intelligence, and residuals based on reruns. Okay, most of this comes down to money.
But as the studios and networks scream about out of control costs, as they lumber under exploding interest rates on massive debt from major recent acquisitions, their protests fall mostly on very angry ears: striking writers and the bulk of members of other unions and guilds who will not cross picket lines. The business is shut down. Why the protests? Some publicly disclosed CEO pay suggests absurd numbers, several paid well north of $200 million in annual compensation, that might be sufficient to cover guild demands at that entertainment conglomerate. While the entertainment industry is notorious in egregious CEO compensation, this is really a national problem. A hyper-accelerant to income inequality.
It starts with what has been a tradition of bidding wars for those candidates seen as the most qualified. It happens just as much in financial institutions and major tech companies. Everywhere. To ensure that no one ever breaks this “code of overpayment,” so-called “independent” board members are usually recruited from the ranks of over-compensated officers and directors of other companies. They have a very big stake in making sure that egregious pay remains the rule… so that they are equally assured of being overpaid. It would seem to be unsustainable, but…
The heading in the August 10, 2021, Economic Policy Institute report on executive pay reads: “CEO pay has skyrocketed 1,322% since 1978… CEOs were paid 351 times as much as a typical worker in 2020.” The details are upsetting: “Corporate boards running America’s largest public firms are giving top executives outsize compensation packages that have grown much faster than the stock market and the pay of typical workers, college graduates, and even the top 0.1%. In 2020, a CEO at one of the top 350 firms in the U.S. was paid $24.2 million on average (using a ‘realized’ measure of CEO pay that counts stock awards when vested and stock options when cashed in rather than when granted). This 18.9% increase from 2019 occurred because of rapid growth in vested stock awards and exercised stock options. Using a different ‘granted’ measure of CEO pay, average top CEO compensation was $13.9 million in 2020, slightly below its level in 2019. In 2020, the ratio of CEO-to-typical-worker compensation was 351-to-1 under the realized measure of CEO pay; that is up from 307-to-1 in 2019 and a big increase from 21-to-1 in 1965 and 61-to-1 in 1989. CEOs are even making a lot more than other very high earners (wage earners in the top 0.1%)—more than six times as much. From 1978 to 2020, CEO pay based on realized compensation grew by 1,322%, far outstripping S&P stock market growth (817%) and top 0.1% earnings growth (which was 341% between 1978 and 2019, the latest data available). In contrast, compensation of the typical worker grew by just 18.0% from 1978 to 2020.” Even in down markets and with rising losses, CEO compensation rose. There seems to be a very tenuous link between pay and performance. And when a CEO is fired… OMG… the exit deals are still staggering.
The U.S. has transitioned from a robust and growing job market to a trickling recession triggered by a one-note-Johnny Federal Reserve… that just kept raising interest rates without letting the market truly absorb the impact. Workers are no longer getting the pay they need to keep up with rising costs. And still, big company CEOs are paid unconscionable sums. When confronted with the obvious inconsistency between management claims that they cannot afford to pay workers more even given these absurdly high CEO compensation rates, the CEOs do not care. Indeed, an increasing number of wage and salary earners are puzzled at the lack of empathy they are given by the over-jetted, over-mansioned, over-second-homed and over-luxury-traveled cadre of overpaid bosses.
Shalene Gupta, writing for the May 17th FastCompany.com, tells us about a new survey that addresses this new worker malaise: “Now, according to the 2023 State of Workplace Empathy Report from HR benefits technology company Businessolver, employees’ perceptions of workplace empathy has dropped.
“The study surveyed 1,000 employees, HR professionals, and CEOs across six industries about the behaviors and benefits that make them feel like their workplace cares about them, and how they thought their employers were doing in that regard. Here are some key highlights:
“Employee perceptions of empathy in the workplace are at an all-time low. In 2018, 78% of employees thought they worked in an empathic workplace; this has dropped to 66% in 2023.
“There’s a large gap between how CEOs perceive reality versus how employees do. While 67% of CEOs see themselves as more empathetic than they were before the pandemic, only 59% of employees would agree—a 10% drop from last year.
“CEOs are also less likely to take responsibility for creating an empathic workplace. Only 53% of CEOs said they felt like they had a strong influence on workplace empathy—a 16% drop from last year.” When you see Congress considering cuts to Medicare, Social Security, Medicaid and telling Americans we must remain the only developed nation on earth without universal healthcare because we cannot afford the cost, it’s equally obvious that those in Congress unwilling to tax these overpaid CEOs as does the rest of the world… well… they don’t care either!!!!
I’m Peter Dekom, and if you believe a nation can achieve political stability with this level of accelerating income inequality, time to read history books… or just let “workers them eat cake,” when bread is too expensive.
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