CEO/worker Inequity short-circuits Circuit City
The national retailer has been so brilliantly managed by its top brass that it just declared bankruptcy.
The bankruptcy, of course, means that thousands of sales staffers soon will be on the streets while the golden parachutes unfurl for top management.
So what's that ratio?
Bloomberg.com reported earlier this year that in fiscal 2006 Circuit City’s CEO Philip Schoonover was paid $8.52 million including a salary of $975,000.
To cut costs last year, Schoonover and management fired more than 3,000 “overpaid” floor sales people who were making a whopping $11 per hour. Management replaced them with inexperienced new hires being paid $8 per.
Morale immediately tanked as did sales, but at least management didn’t do the unthinkable — cut Schoonover’s stratospheric compensation.
So what’s the ratio of Schoonover’s take to that of a floor salesperson, who we’ll figure averages $9/hour or $18,720 a year?
The management is rewarding Schoonover with 456 times as much as the average sales stiff.
To experience why workers might be embittered, Mr. Schoonover ought to try living for a year on $18,720, which is what Schoonover makes in roughly five hours.
I have maintained that any executive demanding or accepting pay of more than six or seven times what the average worker earns is in business strictly for the money. Workers, customers and shareholders be damned.
As the government ladles out billions to corporate American, the money should be conditioned on barring greed from corporate executive offices.