(HOST) According to commentator Bill Schubart, who has worked in the
for-profit sector and volunteered in the nonprofit sector for forty
years, overcompensation of many business and non-profit leaders and
executives nationally is hardly a problem in Vermont. In fact, he
suggests that the real problem is arguably quite the opposite.
(SCHUBART)
According to The Washington Post and other sources, executive
compensation at the nation’s largest firms has quadrupled in real terms
since the 1970’s even as pay for 90% of Americans has been flat. In
1975, the top tenth of one percent earned 2.5% of the nation’s income,
including capital gains. By 2008, that share had quadrupled and stood at
more than ten percent.
To bring this home, executives at Dean
Foods earn ten times what they earned in 1970 while their average
workers earn 9% less for the same period. Meanwhile, Vermont farmers who
supply the Dean enterprise have, until recently, been selling their
milk for less than the price of production. Executive compensation in
America is an international embarrassment. We go about the globe selling
our principles of democratic equality while allowing some executives to
loot their own businesses and stockholders here at home.
Recent
news reports indicate that Vermonters, too, feel their business and
nonprofit executives are overcompensated. But are they? We all feel more
secure singing in a chorus than singing solo, but let’s look at
reality.
I’ve lived in Vermont for 65 years and have earned
everything from minimum wage to an average Vermont CEO’s salary. I’ve
spent my adult life volunteering in the nonprofit sector and have seen
nonprofit leadership salaries ranging from $36,000 to $1M a year and
have yet to see an overcompensated executive in that sector. Mostly, I
have seen the opposite.
When I chaired the board at Fletcher
Allen, I helped negotiate the compensation for departing CEO Dr. Melinda
Estes in 2003 and again in 2005. She earns $826,000 plus a potential
performance bonus of $245,000 but only if she achieves certain quality
and financial goals set by the Board. Here’s why I think the amount is
right. … "
Aside from the State itself, Fletcher Allen is the
largest nonprofit, or for that matter, business enterprise in Vermont.
The immense complexity of a 6800-employee enterprise that arguably has a
direct and personal impact at some point on the lives and wellbeing of
most Vermonters and many New Yorkers is a massive challenge. Dr. Estes
came to Vermont from the Cleveland Clinic when Fletcher Allen was mired
in a criminal scandal. The Board set her compensation at the national
median for Academic Medical Centers of similar size in order to attract
the kind of leadership that was needed for its own recovery. There are
CEOs of private businesses in Vermont who earn considerably more than
Dr. Estes running much smaller and less complex businesses.
So
let’s think about compensation for Vermont business and non-profit
leaders. I have worked in both sectors extensively and have yet to see
compensation excesses here even approaching those in the rest of the
country. In fact, I have seen much the opposite. I have seen earnest,
hardworking people making a difference in the quality of our lives,
usually at well below market rates. Vermont’s challenge is neither
unemployment nor overcompensation; it’s under underemployment and
under-compensation.
(TAG) You can find more commentaries by Bill Schubart at VPR-dot-net.