The paychecks and perks of CEOs are once again the subject of government scrutiny and public anger, just as they were during previous economic downturns. Scholars are split on whether the Wall Street meltdown and subsequent government bailout will reverse the rapidly rising rate of corporate executive compensation, a trend that has caused concern for a decade.
Two studies released in December, based on data from the long-ago good times of 2007, suggest things may be shifting. The Corporate Library, an independent corporate governance group, reports the median pay raise for the 1,864 chief executives who received one in 2007 was 7.5 percent. That’s the lowest rate of increase in six years. Total annual compensation, which includes base salary, bonuses and perks, was a median 4 percent higher, bringing median annual CEO compensation to $1.1 million.
A separate survey by The Conference Board, a nonprofit that collects and disseminates information about management and markets, found that both median cash compensation and total compensation of CEOs increased in more than two-thirds of the industries it scrutinized. Food and tobacco executives were the top earners, with median total compensation for CEOs at a fat $6.34 million. The analysis also notes that CEOs are increasingly receiving compensation in the form of company stock rather than cash, which is good news for reformers who advocate linking executive pay to company performance.
At year’s end, BusinessWeek reported that during the second half of 2008, at least 40 companies filed documents with the Securities and Exchange Commission to cut the salaries of senior executives. Among those adjusting their lifestyles is FedEx CEO Fred Smith, who received a 20 percent salary cut. To put that in perspective, his base salary for the last fiscal year was $1.43 million; his total compensation came to $10.9 million. Such figures suggest the compensation of corporate execs may eventually subside to a reasonable range, but that absolutely, positively won’t happen overnight.
Saving for a Rainy Day (While It’s Pouring)
Dust off your passbook and head for the bank: Saving money is once again in vogue. This represents an abrupt turnaround from recent years, when Americans’ savings rate ranked last among industrialized nations. Between 1995 and 2007, the U.S. personal savings rate dropped from about 9 percent to around zero (and fell into negative territory for a time, meaning we were not only not saving money but spending more than we earned). The mistaken belief that assets — especially homes — would inevitably increase in value made setting money aside seem somehow antiquated.
No longer. According to the federal Bureau of Economic Analysis, the savings rate in 2008 jumped from 0.2 percent in the first quarter to 2.4 percent in October and 2.8 percent in November. David Wyss, chief economist at Standard & Poor’s, expects the rate to stabilize at around 4 percent sometime next year, which is still low by international standards: It hovers around 6 percent in the United Kingdom and 10 percent in Spain, Germany and Japan.
“We’re going to start being moderate savers and not live beyond our means,” Wyss told the Christian Science Monitor, adding that following a crash, it generally takes about 10 years of steady economic gains before people start taking risks with their money again. So, for the foreseeable future, the smart money is in piggy banks — or in piggy-bank manufacturers.
As I Lay Me Down to Sleep, I Thank the Lord that I Am Thankful
A series of recent studies have described the nightmarish consequences of not getting sufficient sleep. Researchers at UCLA reported that losing even one night’s sleep can cause the body’s immune system to attack healthy tissues, and Dutch scientists found insomnia compromises cognitive processes linked to verbal fluency. Recent research estimates 99 million Americans suffer from at least occasional sleeplessness, and $5 billion of productivity is lost due to insomnia each year in the Canadian province of Quebec alone — which adds up to an urgent need for better strategies to keep us snoozing.
An eye-opening research report by four British psychologists suggests part of the answer lies in our ability to be appreciative. Surveying 400 of their fellow British citizens, they found a strong correlation between healthy sleep patterns and the frequency and depth of feelings of gratitude.
“When falling asleep, grateful people are less likely to think negative and worrying thoughts and more likely to think positive thoughts,” notes psychologist Alex Wood, the study’s lead author. Apparently as a result, thankful people fall asleep faster, stay asleep longer and are less likely to be up in the middle of the night. So if you find yourself tossing and turning tonight, try this simple two-step process: Open your heart and close your eyes.
The Nature of Health
Stressed? Nature can help, even if you can’t find time to get outdoors. Or so found a study indicating that placing art posters featuring nature scenes on workplace walls reduces the anger and stress levels of men. A couple of new papers provide additional evidence of the mental health benefits of staying in contact with the natural world, even in the form of a photograph.
University of Michigan psychologists found that performance on a task designed to challenge attention and memory improved greatly after participants took a walk in the park. (This positive effect did not occur for those in a control group who strolled through downtown Ann Arbor.) In a separate experiment, two additional groups tried that same task, then looked at either nature photographs or images of urban environments before making a second attempt. The subjects who viewed pictures of lakes and trees improved upon their earlier scores; those who saw snapshots of skyscrapers and sidewalks showed no improvement. To lead author Marc G. Berman, “These experiments demonstrate the restorative value of nature as a vehicle to improve cognitive functioning.”
Meanwhile, researchers from Kansas State University have come up with strong evidence that contact with plants is beneficial to the health of hospital patients. In their study, 90 patients recovering from appendectomies were randomly assigned to hospital rooms with or without plants during their postoperative recovery. Patients in the rooms with plants used less pain medication, had lower blood pressure and reported less anxiety and fatigue than those stuck in a sterile, nature-free environment.
The study suggests that potted plants provide more emotional benefits than cut flowers — which, after all, die rather quickly, providing a less-than-ideal visual metaphor for a hospital patient. In contrast, living, growing greenery seems to evoke nurturing behavior. As their condition improved, many patients were seen caring for their plants — watering them, pruning them or moving them to places where they could catch more sunlight. As any gardener knows, such activity tends to reduce stress, which may account for the patients’ positive emotional state. Laughter may be the best medicine, but leafy foliage, it seems, is not far behind.
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