“A Hero For the Entire Country”
Bruce Murphy talks to WTMJ-AM about Donald Baumgartner's inspiringly generous treatment of employees.
The story reported on the decision by Baumgartner, chairman and CEO of Paper Machinery Corp, and his son John Baumgartner to create an employee-owned company, turning the company over to its employees rather than selling the company to the highest bidder. Steve Barth, an attorney with the Milwaukee law firm Foley & Lardner, legal counsel to the company in the transaction, told the Milwaukee Journal Sentinel he had strongly recommended that Baumgartner cash in by selling the company “to a third-party buyer, at a likely much-higher, cash-upfront purchase price,” but the Baumgartners rejected the idea “to ensure that their employees would be rewarded for helping them build PMC into the great company that it is today.” The Baumgartners could have made many millions more by selling as Barth recommended, but instead put their employees first.
“This is a guy who recognized that his employees helped build that business and were big contributors to the success of the company and recognized that they should get a return as well,” Murphy told TMJ radio. “It’s almost jaw dropping, the results of this. Average employees could become millionaires.”
As Murphy’s story reported, the pay of the 350 top American CEOs has risen 997 percent in the last 35 years, to an average of $16.5 million, or 331 times more than the average American employee’s wage of $20.67. CEOs often win raises by cutting personnel costs, by outsourcing jobs, resisting unions and slashing wages. That has had an impact on the current political discourse, Murphy told TMJ. “What’s happening in America — and I think you can see that in all the votes for Bernie Sanders and to a large degree for Donald Trump — is there’s a real sense that average workers have been left behind.”
Why has this growth in CEO compensation continued like this, Murphy was asked. “People talk about comparing this to a Hollywood celebrity or a sport sports because they obviously make big pay. The difference is they don’t control their own pay,” he noted. “A CEO has a board of directors that he generally appoints and also pays, they get some kind of payment for sitting on the board. He also has a compensation consultant who makes a recommendation, and that consultant is also paid by the company. So really the CEOs have a lot of control over the kind of wages that they get.”
The discussion was a lively and funny one and worth a listen.