Greed at a Glance
A weekly update on avarice in America and beyond

December 4, 2006

Locals in Nashville like to call their hometown the “Athens of the South.” But workers and their student supporters at the city’s premier university, Vanderbilt, see precious little of Plato in the school’s current pay policies. In the ideal republic, Plato once philosophized, the wealthiest citizens would hold no more than four times the wealth of the poorest. At Vanderbilt, chancellor E. Gordon Gee is now pulling in about 75 times the pay of the university’s $7.79-per-hour grounds workers. Gee's current take-home, nearly $1.2 million a year, makes him the third highest-paid executive in American higher ed. His grounds workers make $3 per hour less than the national average. How can Vanderbilt justify that gap? Any big institution, says Vanderbilt flack Michael Schoenfeld, “is going to have to make an almost infinite number of decisions about how to expend resources.”

Over 200 residential “wellness communities” — with offerings that run the gamut from therapeutic spas to meditation gardens —  are now marketing homesteads to fitness-oriented households all across the United States. But if you want to become healthy in one of these new wellness communities, Forbes reported last week, you better be at least a little bit wealthy. How wealthy? The Tucson-based Miraval Life in Balance Resort is now completing a 41-story wellness tower community on Manhattan’s Upper East Side. Three-bedrooms in the new luxury development will run from $1.4 million to $3.65 million, with monthly maintenance charges almost twice the Manhattan high-rise average . . .

In Indiana, the public interest group Families USA notes, annual premiums for family health insurance coverage have soared 77 percent over the past six years. But in Indianapolis, at the Monument Circle national headquarters of the health care giant now known as WellPoint, top executives seem to be having some trouble feeling any sense of crisis. Over the past two years, ever since the $20.8-billion merger that created the new WellPoint, 31 company insiders have cleared over $150 million selling shares of company stock from their own personal stashes. A company spokesman, Jim Kappel, says WellPoint’s executives deserve credit for “delivering more benefit” to members and “helping to hold down the rising costs of health care.”

Is overpaying CEOs a crime? A five-judge panel in Germany last Wednesday punted on that question, accepting a settlement in the first case ever to bring criminal charges against corporate directors for lavishing excessive pay on company executives. Under the deal, Deutsche Bank CEO Josef Ackermann, Germany’s most powerful banker, will now fork over — out of his own pocket — a $4.2 million fine, without having to plead guilty to charges that he helped engineer a $31 million bonus six years ago for Klaus Esser, the top executive at Mannesmann, a German mobile phone company. Ackermann and other directors at Mannesmann, prosecutors charged, had violated their fiduciary duty to watch out for shareholders. Ackermann, if convicted, could have faced 10 years in jail . . .

The more wealth concentrates, the more businesses concentrate on society’s wealthiest. The latest example: the insurance industry. Major insurance companies worldwide, Reuters reports, are rushing to set up special divisions that cater to deep-pockets. Agents for these divisions typically do home visits and offer coverage options that mass-market “good-hands” agents could never imagine. High-end insurers, for instance, will cover art collections “from the moment the hammer comes down in a New York auction room.” No more than 15 percent of the awesomely affluent, notes the British insurer Chubb, are currently working with wealth-centric insurers. Observes one top Chubb official, John Simms: “The growth potential in the high net worth market is huge.”

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