Everyone's furious at the brass. In France, workers detained  four Caterpillar executives. At Obama's town hall meetings, citizens rail about CEO pay. This week, unionized airline workers took a creative 21st century approach. They made a "viral" online game about CEO pay. But is reverting to Web animation a good method for driving real reform, or is it simply just roiling vague, untargeted populist rage?
First, the Transportation Workers Union took all the convetional routes: picketing, billboards, and shows of solidarity. But, according to the union, protests haven't prompted American Airlines' executives to reconsider their bonus system, that has paid out over $300 million to a few hundred managers in the last several years--despite AA's parent company, AMR, flirting with bankruptcy and experiencing precipitous drops in its share price.
To see the union's last resort, visit the new TWU -funded site called American Exec Check , where a Flash game tells you that "you'll be shocked to learn how much money some CEOs make." You can attempt to guess which CEO gets paid how much by dragging little animated CEOs to school-room desks that are marked with salaries. Of course, by "some CEOs," the site specifically means AMR CEO Gerard Arpey, who lands at a desk with the figure $4.6 million emblazoned over it. (In early 2007, he was awarded a $6.6 million in "variable compensation," or share price-based bonuses. It's unclear where the $4.6 million figure comes from.) That's millions more than the CEOs of more sucessful companies, the site notes, citing other animated bobbleheads: Steve Jobs ($1 per annum), Eric Schmidt ($480,00) and Southwest Airlines CEO Gary Kelly ($1.3 million). Compared with the rounds of layoffs that American and Eagle airlines have suffered, despite repeated improvements in efficiency by union workers, it doesn't really quite add up.
But the site doesn't limit its outrage to just Arpey; in text below the game, it reminds readers that the pay of CEOs relative to workers has increased ten-fold since the 1980s, and links excessive compensation at AIG and the nation's over-leveraged banks with that of the airlines (though the latter have not accepted Federal assistance). According to the AP , the international president of the TWU said that he seeks to eschew a direct comparison, but in the next breath says: "Nobody could stop the AIG bonuses, but we have an opportunity for American Airlines management to say, 'Is this the right time to take bonuses?'"
So is the TWU right?
Probably not, at least not if 2009 continues on its current track. While Arpey's stock bonus was projected to be $2.2 million this year, the economy's leeward slide has taken AMR stock with it, leaving Arpey with just $320,000  if he were awarded his bonus today. AMR's stock in 2007 was in the $40 range, and now hovers around $3--thanks to a $2.07 billion loss last year. Then again, it's arguable that Arpey's past compensation has already done its damage, both fiscally and vis-a-vis morale.
According to an early-March piece in The Christian Science Monitor , two Senators are introducing legislation to limit tax-deductable executive pay to a given ratio--say, 25:1, CEO to worker. The bill wouldn't put a definitive cap on compensation, but would merely make outsized salaries vulnerable to outsized rates of taxation. The Monitor cites two Harvard Business School professors who argue that the committees set up by corporations to internally regulate compensation are broken, croneyistic and short-sighted. (Then again, it's hard to take as fact anything coming out of Harvard Business School these days.)
BusinessWeek  published an outraged piece on Monday, deriding American corporatocravy as a once-meritocratic system that has taken to folding company-wide productivity gains into the pockets of a handful of top earners, and rewarding even the leaders that end up bankrupting investors. Cynically, the piece says that the solution isn't salary caps--which it dismisses as untenable or ineffectual--but modeling corporate leadership after entrepreneurship by exposing them to real risk of a downside. That, of course, would rely on companies putting their top earners' compensation almost entirely into stock options, which would have to be made impossible to back-date. Not to mention that stock-based pay has driven much of the short-sightedness that put us into this economic hangover in the first place.
There's little chance the board of any company is going to disallow options back-dating; again, we're back at needing legislation. And since the folks that draft the laws aren't usually the ones that are working overtime to circumvent them, you can bet that whatever bill is hustled through Congress on this wave of public outrage will be quickly circumvented by corporate chicanery--much the way that hedge-fund earners figured out how to get their income taxed as capital gains. Maybe the French workers at Caterpillar have it right after all.