Dear Reader(A)

My father and grandfather were in the food business in a small town in Western Massachusetts. When I was growing up, my father’s salary of “over $10,000” was incredibly high for our small town. Now I earn multiples of my father’s salary, but I’ve learned that no matter what I am paid I manage to accumulate real and imagined “needs” that insure that I don’t have money to throw around, no matter how carefully I budget. So I understand the good feeling a raise gives you, no matter how far you come in your life.

However, reason seems to have abandoned some of the corporate boardrooms within which CEO compensation is determined. At the same time that real wages are not increasing for most workers, upper management and financial services titans are taking home mind-boggling sums of money. After a short hiatus, ratios of C.E.O. pay to average worker pay is again on the ascent. A report by the Institute for Policy Studies and United for a Fair Economy, a group seeking to narrow the gap between rich and poor, found that in 2004 the ratio of C.E.O. pay to worker pay at large companies had ballooned to 431 to 1. If the minimum wage had advanced at the same rate as chief executive compensation since 1990, America’s bottom-of-the-barrel working poor would be enjoying salad days, with legal wages at $23.03 an hour instead of $5.15.” [1]

The good news is that the S.E.C. has affirmed its intention to require disclosure of total compensation package including perqs previously invisible to shareholders, like apartments and country club memberships. The S.E.C. Chairman, Christopher Cox, made it clear that he feels the responsibility to moderate pay packages belongs with shareholders, not the S.E.C. It is thus incumbent upon shareholders to use these reports and continue to rally support for reasonable pay in the companies we own. For our part, we post the comparative ratios or my total compensation on our web site.

The bad news is that cynics claim that this transparency will only cause more competition among C.E.O.’s resulting in more and accelerating pay and perks. In fact, one reaction to the release of the UFE study was to say that since rock stars and athletes receive similar compensation it must be O.K. On Friday, January 13, 2006, the New York Times published an article in the “Escape” section titled “The new Megayachts: Too Much of a Good Thing?” It seems that in the race to own the biggest yacht, superrich sailors have outstripped the docking capacity (for boats over 150 – 200 feet) in the Caribbean and in the Mediterranean. There is so little space that they’re forced to drop anchor and row in to town. That, the article said, is “a very awkward position to be in” because the owners like to “step on and off the boat.”

How much, we must ask, is enough?

[1] 2006 The New York Times Company Monday, January 2, 2006