Class Worriers.

Kurt Vonnegut is fond of saying "be careful what you wish for because you might get it." For years, critics of CEO compensation have been badgering boards of directors to align CEO pay with performance. in CE's 13th annual analysis of CEO compensation (see page 48), Carl Weinberg finds that at the 288 companies surveyed, pay is more aligned with performance than ever before. Yet he also finds several anomalies in the pay process, not to mention dysfunctional compensation committees that sometimes stand pay for performance on its head. The push to put more CEO pay at risk has led to increasing use of stock options, which in turn pushes total realized compensation to undreamed of heights. Meanwhile institutional investors are bellowing about dilution. Add to this a volatile economy that drives a tight talent at the top market and yet pays unheard of sums for those who don't perform and get the sack.

Our "Speaking Out" columnist calls it "compensation obscenity," referring not necessarily to the sums involved, but to the absurdly elaborate arrangements and high bonus awards for just signing on. One day we'll wake up to a news report that a CEO collected a eight-figure severance for getting the boot at one company only to pocket an equally astounding sum merely for signing on to another company. If a CEO works it right, he or she doesn't have to worry about performance at all!

Despite several record-breaking CEO pay packets this year there is a noticeable lack of baying from politicians and the media. In 1992, Bill Clinton began his presidential run by targeting executive pay and perks to draw attention to the gap between rich and poor. Class warfare has always been a favorite arrow in the Democratic party's quiver, but Al Gore's rant against big oil and the pharmaceutical industry aside, the Clintonistas are a bit more reluctant to excoriate the big money earners, perhaps because the party has edged up so close to Wall Street investment bankers and Hollywood producers to fill campaign coffers. Writing in the Los Angeles Times last June, AEI scholar Karilyn Bowman thinks there are several reasons why the income inequality debate is less potent. Even before the current economic boom, reckons Bowman, most Americans were reasonably satisfied with what they had. Solid majorities in polls over the last quarter century showed people feeling better off than their parents' generation.

"In part because the Federal government has performed so poorly in the minds of many Americans," Bowman writes, "businessmen who produce wealth look good by comparison. Most Americans don't think the prosperity the country enjoys today comes from Washington. In recent polls more people have said that they would like their children to grow up to be Bill Gates than Bill Clinton."

Maybe. But in the coming Presidential squabble over issues such as taxation and Social Security all bets are off. According to a recent study by the Tax Foundation, the $26,759 total tax burden that a median two-earner family paid in 1998 is the highest ever. Federal state and local taxes claimed 39 percent of a median two-income family's total earnings of $68,605. This is down slightly from the historical high of 41.5 percent in 1996, but only because Congress passed the Taxpayer Relief Act of 1997, which brought some relief. There are many factors responsible, including not only rising state and local taxation, but also increases in the payroll tax used to fund social insurance programs. Perhaps in the coming months Al Gore, the chief class warfare terrier, will finally give us a working definition of his favorite bogeyman and chief beneficiary of everything the evil Republicans favor-- "the rich."