To the editor:

Shortly after the Minneapolis City Council voted to increase the minimum wage to $15.27 an hour, Uber and Lyft stated they would stop offering services in that city. Lyft noted the “deeply flawed” ordinance made its “operations unsustainable.”

Apparently CEO salaries and compensation packages of these two companies are perfectly sustainable in their business models. In 2022 Uber CEO Dara Khosrowshahi’s compensation package (including stock options) totaled $24.3 million, a 22 percent increase from the previous year and double his compensation package of 2020.

David Risher, the CEO of Lyft, laid off approximately 1,100 employees in 2023, a move that could help him eventually earn (via his12.4 million shares of Lyft stock) $1 billion dollars with that company.

These outlandish compensation packages are emblematic of the routine and shameless greed of American corporate capitalism. In 2021 the ratio of CEO-to-typical worker pay was 399-to-1, far greater than any other industrial society (it’s 50-to-1 in Japan) and a dramatic increase from 1965 when the ratio was 20-to-1.

One might assume there is a positive relation between CEO pay and a company’s performance as measured by shareholder stock returns, but it’s just the opposite. A study of CEOs of large and mid-size American companies found that $100 invested in corporations with the lowest CEO pay packages significantly outperformed companies with the highest CEO compensation packages (returning $367 to $265) over a 10 year period.

Outlandish and unnecessary CEO compensation is a significant and unwarranted factor in the nation’s increasing income and wealth gap.

George J. Bryjak

Bloomingdale

Sources

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Boris, J. and J. Kendra (2022) “CEO pay has skyrocketed 1,460 % since 1978” October 22, Economic Policy Institute, www.epi.org

Koll, J. (2023) “Japan Reality Check #4: In praise of the salaryman CEO” February 23, Japan Optimist, https://japanoptimist.substack.com

“Lyft CEO David Risher Says His Stock Buy Is ‘Best Investment'” (2023) August 18, Barron’s, www.barrons.com

“Lyft’s new CEO tackles a job requiring some heavy lifting” (2023) May 7, AP News, www.apnews.com

Possner, C. (2016) “New study shows inverse correlation between CEO pay and performance over the long term” July 25, Cooley PubCo, www.cooleypubco.com

Sumagysay, L. (2023) “Uber CEO’s pay rose to $24 million last year” March 28, Market Watch,

www.marketwatch.com

Valinsky, J. (2024) “Lyft and Uber to cease operations in Minneapolis after minimum wage law” March 15, CNN News, www.cnn.com