Robert Reich: The 5-Step CEO Pay Scam

Robert Reich: The 5-Step CEO Pay Scam


Average CEO pay at big corporations topped
14.5 million dollars in 2018. That’s after an increase of 5.2 million dollars per CEO
over the past decade, while the average worker’s pay has increased just 7,858 dollars over the decade. Just to catch up with what their CEO made in 2018 alone, it would take the typical worker 158 years. This explosion in CEO pay relative to the
pay of average workers isn’t because CEOs have become so much more valuable than before.
It’s not due to the so-called “free market.” It’s due to CEOs gaming the stock market
and playing politics. How did CEOs pull this off? They followed
these five steps: First: Companies began paying their executives
in shares of stock. Second: They directed their companies to lobby
Congress for giant corporate tax cuts and regulatory rollbacks. Third: They used most of the savings from
these tax cuts and rollbacks not to raise worker pay or invest in the future, but
to buy back the corporation’s outstanding shares of stock. Fourth: This automatically drove up the price
of the remaining shares of stock. Fifth and finally: Since the CEOs are paid mainly
in shares of stock, CEO pay soared while typical workers were left in the dust. How to stop this scandal? Five ways: First: Ban stock buybacks. They were banned
before 1982 when the Securities and Exchange Commission viewed them as vehicles for stock
manipulation and fraud. Then Ronald Reagan’s SEC removed the restrictions. We should ban
buybacks again. Second: Stop corporations from deducting executive
pay in excess of 1 million dollars from their taxable income – even if the pay is tied
to so-called company performance. There’s no reason other taxpayers ought to be subsidizing humongous CEO pay. Third: Stop corporations from receiving any
tax deduction for executive pay unless the percent raise received by top executives matches
the percent raise received by average employees. Fourth: Increase taxes on corporations whose CEOs make more than 100 times their average employees. Finally and most basically: Stop CEOs from
corrupting American politics with big money. Get big money out of our democracy. Fight
for campaign finance reform. Grossly widening inequalities of income and
wealth cannot be separated from grossly widening inequalities of political power in America. This corruption must end. What do you think? How much should CEOs make compared to their employees? Let us know in the comments. If you found this video informative, please also watch our video on How to Hold Corporations Accountable. As always, thank you for watching and please subscribe to this channel for more videos like this one.

100 thoughts on “Robert Reich: The 5-Step CEO Pay Scam

  1. Why should a CEO – no matter the size and economic clout of his/her corporation – be paid more than the President of the United States? The President makes $400,000, with a very nice rent-free house and a lot of transportation and other perks, including food and entertainment, and his/her responsibilities for and influence on the economy are far greater than those of any CEO of any company. I would guess (I've not done the research) that the President's salary is not even close to 100 times that of the average federal employee. Why should a private-sector CEO's pay be more than that?

  2. This video is one of the most important videos to correct the unfairness of the pay structure of a so called democratic (more like DEMONcratic) free market. Unless this is done, USA is going down the drain.

  3. I personally think the entire stock market should be abolished. Even when not used to funnel money to the CEOs, it still concentrates a lot of financial power in the hands of corporations. Which means that corporations are still more concerned with stock value than with providing the best good for the people, as what's good for customers and workers rarely if ever aligns with what's good to raise stock value. And even when it does, it still creates a massive power gap with the corporation and ultra wealthy stock tycoons having astronomically more wealth (and therefore power) than regular citizens.

    What does the stock market truly give society? And what does its existence deny society?

  4. . . . and make executive pay raises for publicly held corporations require a public vote of all stockholders . . . just to keep the electoral college spirit for the thing, let each stockholder have one vote no matter how many shares they own!

  5. holy crap do NOT ban buybacks that is stupid! how would companies who are getting sold short fight back against low share prices?

  6. vs the Clintons who gamed our entire government and sold out political favors and the DNC to the highest bidder.

  7. Reagan fucked the working class, the sooner you fucking stupid asshole wage slave remedial academics realize this the better off you'll be ! Stop being born & raised to be a fucking slave !

  8. These ideas should have always been part of tax law but unfortunately the system is so entrenched and corrupt there's no way it's going to change without a serious revolt and revolution and possibly civil war.

  9. Reagan was a terrible president the third worst in modern day. Obama is number two and Trump is the worst president this nation has ever had. Our founding fathers are probably turning in their graves.

  10. 85% of the time I hear about some f**ked up economic policy the U.S. has, it can be traced back to Ronald Regean. I can with confidence say he was one of the crappiest presidents we’ve had.

  11. Im not sure to answer your question.
    It is not right how they manage the market shares. Of all the positions (CEO) closly connected to insider tradings thier should be more transparency… like with government sector. The internal documents are manipulated with only accounting and IRS oversight. So, I believe with more oversight and collective bargaining the magic number of CEO pay will find its sweet spot and vary by trade/industry.

  12. I wouldn't think this was propaganda if it were not for the seemingly intended semi-sublimable sketches emplying "CEO bad, everyone else wary and sad".
    Holy fuck! Yeah the system has been manipulated, you do not need to implement propaganda tactics to convince the populous.

  13. At some point, being ultra-wealthy is going to have to start being considered socially unhealthy, immoral, extravagant, vulgar, and unnecessary. But first as a culture we need to break our CEO fetish, and we need to stop telling children that if they grow up to lead a company it’s because their ultra-geniuses or superior people, and it’s their right to use other people as tools.

  14. Late Stage Capitalism, isn’t it beautiful! Soon when the The dogma of “maximum profit”, shows itself as the diminishing return it is, they will start cannibalizing each other’s companies. Then the real fun will begin….. They care about nothing but themselves. They long ago lost any semblance of allegiance to the United States, it’s laws and people. Monsters in custom tailored suits.

  15. I would agree and let us not forget some of the other ridiculous salaries out there. Movie stars, sports players, extra. No wonder my tickets and snacks cost so much.

  16. this is merely a symptom of the system, the cause is the unjustified hierarchy and power structure! those granted arbitrary power will always find ways to exploit it for personal gains, worker cooperatives and for larger companies public ownership is the solution.

  17. In the 50s through 70s, the ratio of CEO pay to average worker pay used to be about 30 to 1. We should return to this and cap it at 50 to 1.

  18. While I largely agree with you points, I have already considered and discarded your solution about trying CEO salary/increases to their workers. This would be circumvented by contractors instead of employees or wholly owned subsidiaries before the law was even passed.

    We’d need a way to prevent that from happening first, and while it is easy to say “and anyone downstream from you,” the truth is that such relationships get so convoluted that it would be nearly impossible to establish. This would be doubly true if they were deliberately obfuscating it.

  19. If theres 60 trillion dollars in the global economy, every human on earth could have had 5 million during their current lifetime up to now. If the global debt is 180 trillion, everybody could have 25 million a piece. If there is 180 trillion dollars in “debt” on earth, but we arent eating negative food, driving negative cars, watching negative tvs, and making negative pay, the “economy” must be absolute BULLSHIT because we should all be loaded right now just for participating! It doesnt take 5 million dollars to live a comfortable lifetime in this society, giving us a minimum of 2 million dollars A PIECE just to play with! WE HAVE A SURPLUS OF EVERYTHING! Yet people still starve? Your pride and nationalism makes no sense! Why are you fools so intent on supporting this shit!?!?

  20. The absurd rise in CEO pay is left over from when people thought free markets were the answer to everything. The trouble is, there is no free market for CEO's. They pay themselves. And their Boards of Directors which supposedly exercise oversight, are CEO's themselves and hand picked by the CEO they oversee. So instead of market forces at work, you wind up with "you scratch my back and I'll scratch yours" forces at play. The only reason all CEO's aren't over paid is that some have a conscience.

  21. Have you ever asked why they just don't ban stock options for employees and executives? They don't want to help you, they are communists and want to steal your money for government retirements and schools. They are deadbeats all make 6 figs at their government jobs.

    Stock buybacks have been a great aide to the small investor, it is the equivalent to dividend. Buybacks help stabilize the market, when there is a down turn stocks buyback more shares thus it is a shock absorber. The corporation have been able to raise dividends at a steady rate. In the last 2 years there probably would have been a big 25% correction, but it was avoided by buybacks. People are pulling money out of funds in droves. Since 2001 when buybacks became popular, there was virtually no major correction. In summary if your stock is doing any type of buyback, it probably beats the market by a couple points a year. Many CEOs have no option plans yet still buy back stock as it is good for the investors. They are not all narcissists and stupid like Sanders, Warren, or you.

    In the 1970s when inflation was 10% and capital gains were 35%. in 7 years if your stock doubled. Say from $10 to $20. What was your real return?
    For the average citizen, -17%.
    For California citizen -25%.
    Your gains were just inflation, then you paid tax on them.

    The richest class in America is now the government class which education class leading them all. CALPERS should be confiscated for the greater good, and the retirees use pay as you go for retirement. I am 55 and pay taxes, yet their income and retirement checks grow tax free in accounts.

    BTW, I want to buy the complete CSU and UC system for $1 and make the taxpayers rich and citizens smart. Selling them to for-profit colleges, and then the can pay taxes like the rest of us you charlatan. Including property tax.

  22. I fell 10x the average employee pay should be the way. Same goes with stock options. The ceos can only be paid 10x the stock options the average employee gets (none if their employees don't get that option)

  23. Corporate greed will find its way to find loopholes.

    1. Ban stocks entitlement to execs?
    Easy! Issue stock option. They would argue, well stock option is a just right bestowed upon corp employees; which will or will not be exercised on the basis of respective individual's consent.

    And to make everyone happy, make it accessible to every employee, proportional to its Corp Grade though!

    2. Issue global bond which is convertible to stock. Find a reason for issuing such bond. Business expansion, etc

    Meanwhile, acquire SPV on tax-free countries which subscribes to that bond.

    Even if ship sails south, bond will be converted to stock, owned by SPV and can't be deducted by tax.

    I really hate these scenarios!

  24. We all gotta "join together", and get rid of the current "Fascist Corporate Government"; return it to "…we the people"!

  25. Still strange to me that Reich doesn't ever mention that justice must be served against the greedy. They'll go to war with us if we take from them. They'll burn it all down before giving it up. These "CEOs," representing the larger elite class, must be arrested and charged with crimes ranging from manslaughter to premeditated murder.

    You only have to live at the bottom to feel the real effects of this greed. People are dying while the rich shut down our democracy and turn the desperate masses against each other, all while destroying the planet with a weather control machine based around coal-fired power plants. If that's not evil, I don't know what is. Reich makes it all seem like an oopsie.

  26. Or just take away corporate individual rights. The lobbyists are the most vicious part of this cycle. Take away CIR and they can't represent themselves. Then you can actually start regulating the corporations. Remember, banks are also corporations…

  27. Limit CEO’s pay to 30-50X the lowest paid worker. I’m sure they can get by on that. The new CEO at Sprouts was just given a $5M signing bonus for 2years all while they pay peanuts to the rest of us. And I have a 4year science degree. We’re all so outraged, watch out for yellow vests of America!

  28. You are right on every count! The GOP (with some help from the Democrats) has turned the American worker into something resembling a medieval serf.

  29. It started in the early 1980's when Steven Ross of Warner Communications got his bribed BOD to award him 7.5 times the pay of the next highest paid CEO in the USA, all justified because Atari sold a lot of video games. Atari was bankrupt in a couple years. There were no reprocussions, so other CEO's started playing catch-up.

  30. Honestly I’m not sure how different the pay should be, but I did hear at one time there are laws in certain European countries that have the lowest workers pay tied to the CEO so that if the CEO got a five percent raise (high I know) the lowest worker would also receive a five percent raise. All the stuff you mentioned though needs to be done to keep society functioning and prospering

  31. I own a non-union plumbing and heating contracting company that I started 37 years ago, now with 18 employees.My pay is approximately 1.5 times my average employees.

  32. 1. pay executives in stocks
    2. lobby congress for tax-cuts and regulatory roll-backs
    3. use savings from #2 for stock buy-backs… which will automatically…
    4. increase the value of the stock… which means that…
    5. CEO pay soars, while workers' pay stagnates.

  33. No CEO should make more than 10 times their lowest paid workers, see how long it takes for low paid workers to get pay increases than. Ronald Reagan screwed the American people with his so called Reagannomics and the Republicans are continuing to do the same.

  34. I would not mind high pay for CEOs if workers were paid a true living wage. We need organized labor, debt-free education (including trade schools), reliable child care, and universal healthcare coverage. Pay the CEOs millions – and then make sure they pay their taxes. And eliminate corporate welfare. We'll be able to fund the social safety net and stop the fast decline of the middle and working class. No one should go hungry or homeless in the richest nation on earth.

  35. All we need is a president and a Congress to agree to financial reform.

    Oh boy! I can't wait for the punch line for this joke😆

  36. We also need to make it so that the pay raises of all elected officials is on the ballot halfway through their terms.

    Every voter hears campaigns promising to work for their constituents so let's treat them as the employees that they are. If the voters had to approve the pay raises of every elected official halfway through their terms, and if the raise was on an individual basis, instead of a collective basis, the voters would have another tool at their disposal to place the bad ones and the ones barely meeting expectations on notice by denying those raises while approving the raises of those who do.

    Such a system would motivate some officials to do their jobs, at least half the time, since a poor sustained performance would reduce the amount of lifetime pay they can expect to receive to last them through retirement and will away to their children.

    Every average worker in America has to wait on the boss to tell them how much, if any, his/her raise will be that year, not the other way around. But yet Congress, and possibly every other elected official in America, give themselves these pay raises without voter consent or approval. It is about time we changed that and let elected officials know that the voters are their bosses.

  37. I agree with your solutions but I think pigs will fly before these necessary changes take place. I hope to be proven wrong. Sincerely.

  38. How much should CEOs make? I'll leave that to the stockholders, who end up paying those salaries via reduced ROI. I believe they call this 'Say On Pay'.

  39. Yup I worked in a huge company, felt like working in dictatorship kingdom.
    Yup ban stock buy back!!!!!!!!!!!!!!!!!!!!!!

  40. Good advices. I mean if I were ceo and I would be squeezing as money as possible the legal way. Why don’t they? Only if the law make it impossible just like insider trading.

  41. It's mindboggling that anyone would think these people were worth that kind of money…. until you realize that they're the ones deciding how much to pay themselves.

  42. Robert Reich–you would be surprised how many many wealthy people I realized a long time ago that I was a better man than .
    Yet how many of you few also realized this & more besides…..pww

  43. I think you really hit the nail on the head with this video. All the dergulators, ceo's and players here should be cited and fined for all the money and taxes that they cheated others out of.

  44. Have you ever asked why they just don't ban stock options for employees and boards? Look at the trash Al Gore with Apple. You know the guy that invented the internet and knows about the inner working of an iphone. "Earlier in the month, he exercised the right to buy 70,000 shares at just over $13 per share, then sold them at market prices, garnering a gain of about $8 million. That means he’s sold more than $37.5 million worth of shares this month." This whole party is trash rather than just banning stock options he wants to end the best thing good the small investor – buybacks. He can't make a video on how dumb an idea this is. Al Gore will get rich on it just from inflation alone. Don't be fooled by these guys walk away and save your mind. Even people like Eddie Lampert won't have options. Look at his rebuttal letter to Elizabeth Warren.

  45. Have you ever considered is electricity with solar costs 2c a kwh, that they charge 20c a kwh (after taxes and class actions) in LA? Then they want to throw 70% income tax on that for the Green New Deal. Walk away from these bad guys.

  46. looks like 44 CEOs watched this and gave it a thumbs down 😀 6.3 hard working Americans ,in contrast gave it the thumbs up it deserved

  47. i like this, but corporations will just lobby politicians to either not let these pass, or nix them later. we cant keep trying to cut branches, we need to deal with the problem at the source: money.

  48. This is one area where I largely agree with Mr. Reich. The market is hindered with corporate welfare. I agree with solution 1 and 2, and if I were a law maker, I forward a bill to change both policies. 5. Get big money out of politics, yes! Also big socialist countries too (Talking to you Gore, Clinton). Big unions too. Want democracy (I don’t, I like my representative Republic). But to be truly democratic, every campaign contributor needs to be on an equal playing field with equal limits. No one should be exempt. The war chest will determine the success or lack therof, not messing with the electoral college.

  49. Robert Rich,…..
    I am so sorry for the poor CEO'S…..
    I feel pity for their money addiction…
    Alcohol, opium, heroin…
    Only for me…
    Money addiction is all about ruin others, ruin your life….
    CEO's need to be taught…
    Higher purpose of life, World Order…
    CEO's need a higher more comprehensive WELTAANSCHUUNG

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