For those accomplishments, Donahoe received a salary of $879,808, a half-million dollar bonus, $273,447 worth of personal air travel, and twenty-odd million in stock options. Former CEO Meg Whitman also received nearly $1 million in her role as “special advisor.” One can only wonder what kind of special advice Whitman provided that contributed to those 2008 results.
In contrast, Amazon.com
had an 18% net sales increase in the same fourth quarter that eBay it's 7% loss. While eBay's revenue was falling, Amazon’s net income soared 36%. Jeff Bezos, Amazon’s CEO, by the way, has taken the same salary since he founded the company in 1994. Every year he receives $81,840, with no additional bonuses, and no extra equity options. True, he holds 101 million shares of Amazon stock. It’s hard to object to Bezos’ multi-billionaire status, though, because his personal wealth is directly tied to the health of the company. That seems reasonable.
announced this week that it was giving out $2 billion in bonuses to about one million of its employees, which includes hourly workers. The bonuses will reportedly amount to more than $900 per employee, presumably as a reward for helping the company to achieve strong results in the midst of economic weakness. That is a nice gesture, and one that is well-earned by the Wal-Mart team, I’m sure.
When putting a calculator to that generous $900 rank and file bonus, we realize that it amounts to just .03% of the $4.12 million bonus that Wal-Mart’s CEO got paid for the same time period. The inference is that the work of CEO Lee Scott was 3,333 times more valuable than the work of the average person who wears a Wal-Mart nametag. I wonder if 3,333 employees had walked out on Black Friday
, if Lee Scott could have covered their shifts?
If the average Wal-Mart employee takes home $25,000 a year (a fabricated number since Wal-Mart never releases such data), then that means Scott’s total compensation of $17.5 million in 2008 was about 700 times that of his average employee.
These are the realities that the AIG big bonus backfire has brought to our attention. Somewhere buried in the system that has created such a wide disparity in compensation lies the root causes for the store closings, job cuts, Chapter 11 filings, and same store sales
declines that we're all sick of living through and talking about. For this revelation, and the change in corporate policy that will be born out of it, we can all be grateful to our new best friends at AIG.