Shame Is Good. Shame Is Right. Shame Works
CAPITALISM, 29 Dec 2014
Society needs to motivate CEO Scrooges to change their ways.
Does trumpeting scoundrels’ misdeeds set them straight?
Edward Lampert, chairman and CEO of Sears Holdings, received positive reviews from only 20 percent of employees in a list compiled by the financial news website 24/7 Wall St. from reviews posted on the job community site Glassdoor. The scores reflect employee ire about low compensation and limited shifts, endured while Lampert luxuriated in a $38.4 million palace in Florida. Such widespread discontent, coupled with outrage over his failure to address aging infrastructure and internal systems, have made him the lowest-rated chief executive in America. Various mainstream media outlets, including Time magazine, ran stories highlighting the news. Lampert, who has been criticized in Bloomberg Businessweek and elsewhere for pitting company units against one another in a “Lord of the Flies”–style death match, captured the No. 2 spot on Forbes’ list of America’s worst CEOs in 2012 and ranked third in the magazine’s roundup of worst CEO screw-ups for 2013. Yet Sears is still slowly disintegrating under Lampert’s management. Thousands of layoffs and more than 100 store closings were announced just in time for the holidays.
Since the 2008 financial crisis, Americans have increasingly noticed that many business practices don’t seem to jibe with their social and moral values. There’s little doubt that a substantial shift in business norms over the last few decades has transformed actions once considered outrageous into ordinary or even desirable strategies. Take mass layoffs. IBM CEOs once cherished a policy of keeping workers for life, boasting as late as the 1980s that the company had never laid off an employee since 1921. Today CEOs often jettison thousands of highly trained, dedicated workers without batting an eye — in the name of cost cutting and boosting stock prices — though many point to the negative consequences of these maneuvers. IBM now refers to showing the employees the door as “rebalancing its workforce.”
Layoffs, poor stewardship and awarding themselves gigantic paychecks — these are the kinds of actions that drive employees to vent their anger at CEOs on sites such as Glassdoor. What is common today in American corporations certainly would have made our parents gasp: According to a report by the Economic Policy Institute, the average CEO-to-worker compensation ratio grew from just 20 to 1 in 1965 to nearly 300 to 1 in 2013. In 2012, J.C. Penney Co. CEO Ronald Johnson took home more than $53 million, while his average employee earned less than $30,000. That’s a pay ratio of 1,795 to 1. His pay was not based on performance; his tenure was so disastrous that he was ousted in 2013.
It’s no secret that America’s corporate leaders routinely award themselves mind-boggling sums for performance ranging from average to awful — all while shifting the costs of their mistakes onto taxpayers and demanding subsidies as they shirk taxes. A growing sense of public indignation has been percolating over these developments, with news outlets and unions publicizing lists that sometimes include photographs of the highest-paid CEOs.
A judge equipped with the latest CEO pay disclosures could sentence some corporate titan found guilty of stealing wages to live on the salary of his lowest-paid employee for a time.
Regulators are getting in on the shaming act too. Of all the rules aimed at stopping the explosion of executive pay, possibly the most controversial is one mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The provision would require companies with revenues of more than $50 million to disclose the ratio of the total annual compensation of their CEO to the median pay of company employees. Critics have complained about this shame ratio. Some of them question whether embarrassing CEOs in this way might cause them to outsource more of their labor force — though it hardly seems that they require much motivation to do that.
Of course, CEOs can do all sorts of things that many find distasteful without breaking the law. And when they do run afoul of it, too often the punishment is little more than a slap on the wrist or a fine that is considered simply the cost of doing business. For example, some of America’s most celebrated CEOs, at companies such as Apple and Google, have perpetrated wage theft against highly valued employees in a trend that is increasingly hitting white-collar workers. Others have committed fraud, insider trading and any number of crimes that inflict tremendous damage on society. Because the press pays plenty of attention to murderers and common robbers but not nearly as much to criminals in the executive suite, often their reputations hardly suffer.
History shows that in cases when the law or public consensus has rendered an act reprehensible, society has contrived an impressive array of shaming devices — the dunce cap, the pillory, ducking chairs to plunge the guilty into rivers and ponds and tarring and feathering. The idea, of course, is to not only punish the culprits but also to deter other potential wrongdoers from following suit.
What would be appropriate for CEOs who pinch the wages of their employees while earning hundreds of times more than the lowest paid among them? A scarlet G for “greed” sewn to their lapels? Don’t laugh: Some judges have been known to get creative with sentencing when the ordinary route of punishment doesn’t seem to work. A Los Angeles Times op-ed noted that a judge in La Habra, California, ordered a slumlord to live in his own rundown building under house arrest for two months, and a Cleveland judge sentenced a man who had bullied a neighbor and her handicapped children to stand on the side of the highway carrying a sign describing his crimes. Perhaps a judge equipped with the latest CEO pay disclosures could sentence some corporate titan found guilty of stealing wages to live on the salary of his lowest-paid employee for a time. There is something rather satisfying about ideas like that.
Shaming may not bring America’s corporate Scrooges immediately around to a Dickensian redemption, but it can play a key role in creating a societal consensus that certain behaviors are indeed disgraceful — and that’s a start. No shame, no blame, you might say.
Lynn Stuart Parramore is a cultural theorist and a senior editor at AlterNet, where she directs the New Economic Dialogue project. She writes about culture and economics for Reuters, the Huffington Post and other venues.
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