Fight the Pay!: Occupy Wall Street’s Cohesive Goal


Occupy Wall Street began on the streets of downtown Manhattan to fight against corporate greed and the lack of support the government has given to the 99% of Americans who are unhappy with the way our country is being run. The movement is led by upset Americans who are fed up with the income gap in the United States and the lack of change that is occurring within corporate America after the 2008 financial crisis. The movement, however, has come under fire because it struggles to find unity amongst the thousands of followers. Some protesters fight against unemployment, some fight for stronger union power and others argue to reduce the drinking age to 18 years of age. In order for this movement to get a concrete result they must focus on one issue, then move to the next once they see changes. I believe that their first goal should be to curb excessive compensation and bonuses that are given in financial corporations.

Executive compensation has gained increased criticism since the economic crisis of 2008. Companies were setting aside billions of dollars of compensation and bonus fees while their bottom line was seeing red. Employees within financial institutions were also given bonuses based on how their financial bets played out. This encouraged excessive risk, playing a role in the economic downturn.[i]In this time of economic turmoil, where companies are fighting to keep their share price up and are cutting jobs to improve their bottom line, corporate executives are being paid millions of dollars. They are receiving these bonuses while their company’s stock price and revenue are plummeting. Jim Cramer, CNBC host, said it best when describing compensation discrepancies, “Let’s indict them. We all know that they committed, to me, they committed crimes. It is outrageous what they paid themselves. It is obscene! I mean there are real reasons to be angry.”[ii] This is the fight that Occupy Wall Street should to in order for opponents to take them seriously.

Donatella della Porta, Massimiliano Andretta, Lorenzo Mosca and Herbert Reiter discuss the impact of social movements towards globalization and what makes a movement successful. Occupy Wall Street falls within the category of movements supporting “globalization from below.” They are “seeing market deregulation not as a natural effect of technological development but as a strategy adopted and defended by international institutions (World Bank, IMF and WTO) and by the governments of the most powerful nations to the advantage of transnational corporations.”[iii] Protestors of Occupy Wall Street want to see the government step in and potentially change the way businesses are run in order to close the income gap in the United States.

However, according to della Porta et al., global social movements need to have a “uniform collective identity.”[iv] There needs to be a collective meaning system. Yes, their meaning system can be simplified to the rich are getting richer and the poor are getting poorer, but this is too broad for a collective identity. The identity needs to be the rich are getting richer and the poor are getting poorer because of excessive compensation within firms. I agree with criticisms of the protest saying that “it is not clear how the protestors can or will translate into political change.”[v] They need to start somewhere and prove to the naysayers that their movement is credible and can enact change. Beginning with excessive compensation is the perfect start because this is the reason why protesters are in the 99% and the 1% keeps getting richer and more powerful.

Excessive compensation and bonuses is not new within corporate America, but has been on the rise since the stock market bubble in the early 1990’s. However, after the collapse of Lehman Brothers and the burst of the mortgage bubble there was no way to not scrutinize executive compensation. Once banks began to feel the heat of the downtown the government intervened giving out money from the Troubled Asset Relief Program, or TARP, to the “Too Big to Fail” banks. There were no restrictions given by the Federal Reserve on what this money could be utilized for. Much of it was put towards compensation and bonuses. In 2008, pay and benefits given by the top 25 publicly traded banks and security firms hit a record $135.5 billion.[vi]

A company that has long been giving out astronomical pay checks to their employees is Goldman Sachs. Goldman Sachs, though, is no longer sitting pretty post-recession. However, they seem unfazed still giving out excessive compensation packages. On October 18, 2011, Goldman released their third quarter earnings results and posted a $393 billion loss. On that same day, they allocated $10 billion worth of compensation fees for just the first nine months of 2011.[vii] This does not seem ethical for a company to pay nearly $300,000 per employee while our country could be headed towards another recession. Year after year compensation as a percent of revenue has gone up within Goldman Sachs. In the past three years alone, it has gone up nearly 9%. Although some Occupy Wall Street protesters have gone after Goldman for figured such as these, the overall message needs to be consistent across all protesters’ ideologies in order to change the way financial institutions pay their employees; employees and institutions that helped cause the recession in 2008.

Some might say that the government is already tackling the issue of excessive compensation, within financial institutions, by the implementation of the Dodd Frank Wall Street Reform and Consumer Protection Act. This reform bill gives shareholders more power by implementing a “say on pay” vote for executive compensation packages. However, shareholders’ views have seemed to align with those of the top executives because they believe high compensation packages attract noteworthy talent.[viii] Occupy Wall Street protestors cannot just stand for this lackluster reform. There needs to be stringent legislation put in place by the government that includes involvement of a third party to vote on compensation packages.

A set of ideals that protestors of Occupy Wall Street can adopt is that of Kantianism. If stakeholders had a say in compensation and bonus packages the excessive pay problem could be deterred. Kantianism, in its simplest definition, means that no one person should ever use another as a means to an end; this will deem an act unethical. When Kantian theory is applied to business, it is extremely relevant to the compensation issue. When analyzing a firm as a moral community, “the business firm should consider the interests of all the affected stakeholders in any decision it makes. The firm should have those affected by the firm’s rules and policies participate in the determination of those rules and policies before they are implemented. It should not be the case, that for all decisions, the interests of one stakeholder automatically take priority.”[ix] When boards of directors voted to give John G. Stumpf, Chief Executive of Wells Fargo, $18 million or James M. Cracchiolo, Chief Executive of Ameriprise Financial, $17 million all in 2011,[x] I do not believe that they were reaching these decisions while taking into account their creditors, customers, employees, suppliers, etc. They were putting the interests and well-being of the top employees before all other stakeholders.

The boards of directors of firms vote on compensation packages. Often, though, those who sit on the board of directors have vested interests in decisions that are made. Jamie Dimon, CEO of JPMorgan Chase, sat on the New York Federal Reserve’s Board of Directors in 2008. That same year the Federal Reserve gave JP Morgan and other “Too Big to Fail” banks billions of dollars in TARP money. Dimon then paid his employees billions of dollars in compensation benefits using some of the money the institution, that he sat on the board for, gave to his company![xi]This is completely unethical and is the reason why boards of directors should not be the governing body on compensation issues. Even having shareholders have a “say on pay” is not going to completely fix the issue. Occupy Wall Street protesters should argue that since a firm’s stakeholders all come from diverse socioeconomic and social backgrounds this can lead them to make a more sound decision on compensation.

Occupy Wall Street protesters seem to be standing for a similar overarching message, the income gap needs to tighten and the government needs to better regulate large corporations. However, what Occupy Wall Street protesters want out of the movement seems to widely differ. If protesters stood together, fought against one issue and were able to see a tangible result the critics of this movement might begin to show their support. It is clear, that excessive compensation is an issue in corporate America and it is the basis for why Occupy Wall Street began. Those being paid millions are in the 1% and the rest who are just making ends meet or are unemployed are in the majority of the 99%. Still the minority 1% has all the power, money and influence. This is the fight that Occupy Wall Street protesters should fight for rather than all choosing different campaigns that do not make the movement cohesive. Real change can happen and if Occupy Wall Street can transform how compensation is given to a firm’s employees and executives it could be the start of a shift to a larger middle class and smaller lower class.       


[i] Louise Story, “Executive Pay,” The New York Times, Mar. 3, 2011 (http://topics.nytimes.com/top/reference/timestopics/subjects/e/executive_pay/index.html)

[ii] “Jim Cramer Sympathizes with Occupy Wall Street,” NY Magazine, Oct. 14, 2011, http://nymag.com/daily/intel/2011/10/jim_cramers_occupy_wall_street.html

[iii] Donatella della Porta,  Massimiliano Andretta, Lorenzo Mosca and Herbert Reiter, Globalization from Below, 8

[iv] Donatella della Porta,  Massimiliano Andretta, Lorenzo Mosca and Herbert Reiter, Globalization from Below, 89-91

[v] Shannon Bond, “Wall Street protesters seek to create structure,” Financial Times, Oct. 27, 2011, (http://www.ft.com/intl/cms/s/0/68eae5d0-fe51-11e0-bac4-00144feabdc0.html#axzz1cgSLnAQX)

[vi] Louise Story, “Executive Pay,” The New York Times, Mar. 3, 2011 (http://topics.nytimes.com/top/reference/timestopics/subjects/e/executive_pay/index.html)

[vii] Richard Blackden, “Goldman Sachs posts surprise $393m loss in third quarter, as pay and bonus pool hits $10bn,” The UK Telegraph, Oct. 18, 2011 (http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8834083/Goldman-Sachs-posts-surprise-393m-loss-in-third-quarter-as-pay-and-bonus-pool-hits-10bn.html)

[viii] Jennifer Carpenter, “No Need to Over-regulate Banker Compensation”, Forbes, Aug. 25, 2010 (http://www.forbes.com/2010/08/25/banks-compensation-bonuses-opinions-contributors-jennifer-carpenter-ingo-walter.html)

[ix] Norman E. Bowie, A Kantian approach to business ethics, 10-12

[x] “Pay at the Top”, The New York Times, Apr. 9, 2011

[xi] Mark Schumacher, “JPMorgan’s Jamie Dimon Cries the Blues as Banking Regulations Tighten – Cry Me a River,” Sept. 12, 2011, (http://fromthetrenchesworldreport.com/jpmorgans-jamie-dimon-cries-the-blues-as-banking-regulations-tighten-cry-me-a-river/6456)

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