Overdevelopment, Overpopulation, Overshoot
Container City: Shipping containers, indispensable tool of the globalized consumer economy, reflect the skyline in Singapore, one of the world’s busiest ports.
The shareholders of Wall Street giant Citigroup are out to prove that corporate democracy isn’t an oxymoron. They’ve said no to the exorbitant $15 million pay package of Citi’s CEO Vikram Pandit, as well as to the giant pay packages of Citi’s four other top executives.
The vote, at Citigroup’s annual meeting in Dallas Tuesday, isn’t binding on Citigroup. But it’s a warning shot across the bow of every corporate boardroom in America.
Shareholders aren’t happy about executive pay.
And why should they be? CEO pay at large publicly-held corporations is now typically 300 times the pay of the average American worker. It was 40 times average worker pay in the 1960s and has steadily crept upward since then as corporations have morphed into “winner-take-all” contraptions that reward their top executives with boundless beneficence and perks while slicing the jobs, wages, and benefits of almost everyone else.
Meanwhile, too many of these same corporations have failed to deliver for their shareholders. Citigroup, for example, has delivered the worst stock performance mong all large banks for the last decade but ranked among the highest in executive pay.
The real news here is new-found activism among institutional investors – especially the managers of pension funds and mutual funds. They’re the ones who fired the warning shot Tuesday.
Institutional investors are catching on to a truth they should have understood years ago: When executive pay goes through the roof, there’s less money left for everyone else who owns shares of the company.
For too long, most fund managers played the game passively and obediently. Some have been too cozy with top corporate management, forgetting their fiduciary duty to their own investors. How else do you explain the abject failure of fund managers to police Wall Street as it careened toward the abyss in 2008? Or to adequately oversee executives, such as the Enron criminals, who were looting their companies in the years before 2002?
The new Dodd-Frank law, much of which is being eviscerated by Wall Street’s lawyers and lobbyists, at least requires that public companies give shareholders a say on pay. As a practical matter, this gives institutional investors the chance to speak clearly and openly about the scandal of unbridled executive compensation.
Two key questions for the future: Will institutional investors keep the pressure on? And will CEOs and boards of directors get the message?
Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written 13 books, including his latest best-seller, “Aftershock: The Next Economy and America’s Future;” “The Work of Nations,” which has been translated into 22 languages; and his newest, an e-book, “Beyond Outrage.” His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His new movie "Inequality for All" is in Theaters. His widely-read blog can be found at www.robertreich.org.More Robert Reich.
Man Covering His Mouth: A shepherd by the Yellow River cannot stand the smell, Inner Mongolia, China
Angry Crowd: People jostle for food relief distribution following the 2010 earthquake in Haiti
“Black Friday” Shoppers: Aggressive bargain hunters push through the front doors of the Boise Towne Square mall as they are opened at 1 a.m. Friday, Nov. 24, 2007, Boise, Idaho, USA
Suburban Sprawl: aerial view of landscape outside Miami, Florida, shows 13 golf courses amongst track homes on the edge of the Everglades.
Toxic Landscape: Aerial view of the tar sands region, where mining operations and tailings ponds are so vast they can be seen from outer space; Alberta, Canada
Ice Waterfall: In both the Arctic and Antarctic regions, ice is retreating. Melting water on icecap, North East Land, Svalbard, Norway
Satellite Dishes: The rooftops of Aleppo, Syria, one of the world’s oldest cities, are covered with satellite dishes, linking residents to a globalized consumer culture.
Child Brides: Tahani, 8, is seen with her husband Majed, 27, and her former classmate Ghada, 8, and her husband in Hajjah, Yemen, July 26, 2010.
Megalopolis: Shanghai, China, a sprawling megacity of 24 Million
Big Hole: The Mir Mine in Russia is the world’s largest diamond mine.
Clear-cut: Industrial forestry degrading public lands, Willamette National Forest, Oregon
Computer Dump: Massive quantities of waste from obsolete computers and other electronics are typically shipped to the developing world for sorting and/or disposal. Photo from Accra, Ghana.
Oil Spill Fire: Aerial view of an oil fire following the 2010 Deepwater Horizon oil disaster, Gulf of Mexico
Airplane Contrails: Globalized transportation networks, especially commercial aviation, are a major contributor of air pollution and greenhouse gas emissions. Photo of contrails in the west London sky over the River Thames, London, England.
Fire: More frequent and more intense wildfires (such as this one in Colorado, USA) are another consequence of a warming planet.