The treasure of a man
A BOSTON GLOBE EDITORIAL
12/22/2002
WHEN SENATORS consider the nomination of John W. Snow to
be Treasury secretary, they ought to question him closely on
the dramatic inequality of income between top executives and
average workers and what - if anything - the Bush administration
can do about it. Snow has firsthand knowledge of the gap, both
from his compensation as chief executive of the CSX railroad
company and the lavish pension he will receive when he steps
down to join government service.
Snow got $2.1 million in salary and bonuses as well as $393,277
worth of country club memberships and other perks in 2001. In
addition, he become eligible for stock options worth $8.1 million
and other stock awards worth $7 million more.
And while he'll forgo $15 million in additional compensation when
he retires to become Treasury secretary, he will still be getting a
yearly pension of $2.47 million for life. This largesse comes
despite CSX's inferior performance under his leadership. From
1996 to 2001, CSX stock fell 23 percent while the Dow Jones
transportation average rose 33 percent.
Snow's compensation package should not by itself disqualify him
for the Treasury post. President Bush is entitled to appoint
Cabinet officers with whom he is comfortable, and Snow has spent
years in Washington as a transportation official and lobbyist.
And his pay package from CSX is hardly unusual. In the last
decade, according to BusinessWeek magazine, the pay of CEOs at
top companies increased by 340 percent, compared with 36
percent for an average factory worker. As of 2001, the ratio
between the average chief executive's compensation and the
average worker's stood at 411 to 1, compared with 42 to 1 in 1980.
Economists are debating the reason for this rich-get-richer
phenomenon, but government has the ability to counteract the
growing inequality if it has the will. Bush, however, has secured
the passage of tax cuts that are tilted toward people in Snow's
top-tier income bracket.
It makes sense to use stock options to encourage executives to pay
better attention to the company bottom line, but disproportionate
awards fuel little but individual greed. To right the balance, the
federal government should skew tax cuts and other stimulus
measures to Americans of limited means. This ought to be done
without threatening the ability of the government to protect the
long-term solvency of Social Security, the most successful
program of income support in the history of the country.
The man who would be chief financial officer of the United States
ought to be asked about the importance of equity in the formation
of economic policy. Senators on the Finance Committee, who will
be examining Snow's appointment, ought to speak up for those who
lack the advantages of a $2.47 million-a-year pension.
This story ran on page D10 of the Boston Globe on 12/22/2002.
© Copyright 2002 Globe Newspaper Company.
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