Major Corporations Oppose Rule Comparing Pay Of CEOs To Workers

Corporate America would rather not say how much it pays typical workers.

In a lobbying push that adds to the slew of attacks on last year's financial reform law, an industry group is fighting to hide a number that would put chief executives' pay packages into perspective: how much the other workers make, the Washington Post reports.

American earnings reflect an increasing disparty between the fortunes of those at the top and everyone else, a trend driving a more than three-decades-long erosion of the economic health and political influence of the middle class.

Incomes at the top of payrolls have seen meteoric growth in the last several decades. Wages for the rest of Americans, meanwhile, have stagnated. The top 0.1 percent of earners took home more than 10 percent of the nation's total income in 2008, compared to less than 3 percent for that group in 1975, WaPo noted last week. After the worst economic downturn since the Depression, this trend has only gotten worse, with many workers forced to accept dramatic reductions in pay.

But on top, life is good. Chief executives at 299 U.S. companies took home a combined $3.4 billion in 2010, enough to employ more than 102,000 workers, the labor group AFL-CIO said in study released in April. The compensation for individual chiefs averaged $11.4 million, the AFL-CIO said, according to Bloomberg News.

Companies are resisting putting high executive compensation in perspective. Scores of companies are backing an effort by the industry group Center on Executive Compensation to kill a requirement in last year's Dodd-Frank financial reform law that companies calculate the median value of what they pay workers, and then report the comparison between that figure and the chief's pay.

Crunching those numbers would be just too difficult, corporations say. Calculating median worker pay could cost "easily in the millions," said Timothy J. Bartl, general counsel at the Center on Executive Compensation, Bloomberg BusinessWeek reported in March.

But companies regularly undertake complicated calculations for shareholders about things like, say, derivative hedges, BusinessWeek noted.

Under Dodd-Frank, shareholders of companies with highly paid chiefs have gained a platform for expressing their thoughts on executive compensation. In January, the Securities and Exchange Commission adopted rules requiring corporations to hold shareholder votes on executive pay at least once every three years, an in effort to increase communication between a company's owners and its stewards. But those votes are nonbinding, meaning the chiefs can choose to ignore them.

Sen. Robert Menendez (D-N.J.), who added the pay ratio disclosure requirement into Dodd-Frank, opposed an effort by Republican lawmakers to gut his contribution.

"The real reason House Republicans want to keep the typical worker’s pay secret," he said, according to WaPo, "is that it may embarrass some companies to reveal that they pay their CEO in the range of 400 times what they pay their typical worker."

Comments

[AceNewsServices]

11:44 AM on 07/03/2011

As people in this world are being told to pull their belts in and ask for less in their pay packet, major corporations are trying to cover up the truth about the division between their pay and their workers. The term l am all right jack comes to mind and instead of caring about the people that provide the coal and fuel this economy with their hard earned sweat of their brow, the big chiefs just take more from people with less.

[realitycheck101a]

08:43 PM on 06/30/2011

Major Corporations Oppose Rule Comparing Pay Of CEOs To Workers

Of course they don't want THAT ! ! ! They get paid millions while the "little people" do all the work for peanuts ! ! ! We could fix the economy right NOW if the CEOs and upper mgmt got paid a little less and the "working poor" got paid a little more. A redistribution of wealth needs to take place. Then workers could get paid a "living wage" and fewer people would be losing their houses. America is in serious trouble, and something like this would help to alleviate the lack of cash flow. So what if the CEOs can't afford yet another vacation home, or another yahct. People can't afford to put gas in their cars to go to work; those who are fortunate enough to actually HAVE a job ! ! !

DISCLAIMER: It wouldn't TOTALLY fix the economy, but it would get a lot of people back on their feet.

[Vic22]

06:08 PM on 06/29/2011

Caluclating Median pay could cost in the millions?

Mo&*&^*()er, just use a damn spreadsheet!

[One Percenter]

11:51 AM on 06/29/2011

I'll say it one more time.
CEO compensation in the private sector is NONE of your business unless you own stock in that company.
Good CEO cost money, there is a labor market for that talent.
Is Alex Rodriguez worth $275m.
The answer is - its not your business if someone is willing to pay it.
This is not the public sector.

If you can do that job, tighten up the resume and go get it.

[Amigwyn]

07:31 PM on 06/29/2011

I completely agree with you - as long as that company is not taking tax money for a bailout. The fact that the bank CEOs obviously were not doing their jobs properly and caused the financial problems they did but they still got millions of dollars for their job while the tax payers had to clean up their mess ... well, that's just unacceptable to me as a tax payer.

[One Percenter]

09:44 PM on 06/29/2011

I agree.
But let's remember, we're talking about a handful of banks and two auto dealers. The argument could be made that we had no business bailing the auto corps. There were a few hundred banks but vast majority said they were coerced by the government to take it against their will.

When Obama bought GM, he had every right to fire Rick Wagoner. I'm just not comfortable with the idea of the government nationalizing a major corporation.

[Rastus]

12:30 AM on 07/02/2011

A-Rod can hit, run, field, and throw. I would note that the "average" player at his position, who does none of those things quite as well, does not make A-Rod's salary.
The obvious problem with CEO pay is that even the below average people get obscene money (my GM example you like so much). It should be equally obvious that there isn't that much talent in the CEO "labor market."
The less obvious problem with CEO pay is that the boards who set the pay are not responsive to ownership--unless by ownership you mean someone who owns enough stock to demand a seat on the board. Run of the mill shareholders would often rather see more equitable pay, no rewards for failure (or managed failure at GM), and more in the way of dividends for owners.
If we followed your logic to an extreme, all manner of illegal behavior is private sector--drug dealing, murder for hire, etc. What, after all, is a society?

[One Percenter]

11:46 AM on 07/02/2011

BODs don't hire CEO that are below average even though that person may end up doing a below average job. Companies hire at this level with the best of intentions and obviously it doesn't alway work out.
My A-Rod example is to say, as outranged as fans and sportswriters get over huge player contracts, as long as a team owner is will to pay it to get the good player, the salaries will continue. If companies hire the next Jack Welsh at $20m, it's money well spent.
The Director stand for election by the share holders every year or so. If they are making bad decision is selecting leadership they don't last long. That how it works.

Not following your last point. I have never advocated business not being accountable to existing laws.

[BeerLover]

10:26 AM on 06/29/2011

The USELESSNESS of the SEC: In January, the Securities and Exchange Commission adopted rules requiring corporations to hold shareholder votes on executive pay at least once every three years, an in effort to increase communication between a company's owners and its stewards. But those votes are nonbinding, meaning the chiefs can choose to ignore them

[Carol Thacker Pullen]

10:04 AM on 06/29/2011

Every company I ever worked for always said that "our employees are our biggest asset". Sure seems odd then, how they abuse their greatest asset.

[Inkosi]

10:26 AM on 06/29/2011

They said they same thing about the slaves yet they brutalized them.

[One Percenter]

11:43 AM on 06/29/2011

Turn down the rhetoric.
That's outrageous and makes you look silly.

[realitycheck101a]

08:50 PM on 06/30/2011

You said, "Every company I ever worked for always said that "our employees are our biggest asset". It's true, because they feed off the workers like vampires ! ! ! They get paid the huge salaries, while the "little guy" does all the work for peanuts. THIS MADNESS MUST END ! ! !

[planetjeffy]

05:40 AM on 06/29/2011

They are not to proud to beg for tax cuts
let's see exactly who is getting what.

[ravencalling]

11:39 PM on 06/28/2011

Hmmm.. I can't really believe that crunching the numbers is too hard, unless I am missing something.. Oh yeah.. the exponent that would result from the disparity in incomes is going to make smoke come out of the machines, or.. maybe people would look up from their desks, look at the clock and their paychecks and say to hell with this!

[Inkosi]

10:27 AM on 06/29/2011

Where would they go? Relocating to China or India is not an option.

[Michael J OConnell]

11:24 PM on 06/28/2011

"Crunching those numbers would be just too difficult, corporations say. Calculating median worker pay could cost "easily in the millions," said Timothy J. Bartl, general counsel at the Center on Executive Compensation, Bloomberg BusinessWeek reported in March."

First, this statement is complete BS. Any payroll package worth its salt provides salary analysis capability.

Second, the executive high roller lifestyle at employee's expense has gone on long enough.

Finally, I would love to see simple reporting of executive and employee compensation. You can go to the SEC, e.g. http://www.sec.gov/Archives/edgar/data/47217/000104746911000421/a2201545zdef14a.htm#cq42001_executive_compensation to see executive compensation for your company and compare it to your own compensation to start with.

While at me previous employer, a global computer company I challanged the executive compensation program but got nowhere.

[One Percenter]

11:46 AM on 06/29/2011

Good for you, Michael.
You weren't happy with the comp structure at you former company and left.
That's the way it should work.
God Bless the free market.

[Ghostberry]

09:28 PM on 06/28/2011

"Crunching those numbers would be just too difficult, corporations say. Calculating median worker pay could cost "easily in the millions,"

I passed pre algebra, im willing to do it for you for 35k a year.

[Jobu54]

08:50 PM on 06/28/2011

How about mandating a published figure comparing CEO total annual compensation to the amount paid annually to each politician masked as "campaign contributions" but, in reality, paid graft.

[realitycheck101a]

08:58 PM on 06/30/2011

LOVE THAT IDEA ! ! !

[Randi M KosiewskaShort]

06:11 PM on 06/28/2011

My husband linked me to this because it is similar to musings of mine: a minimum wage law that included pay ratio standards.

What if companies had to pay a minimum pre-set per-hour dollar amount to their employees AND had to pay based on a highest paid to lowest paid ratio cap?

What if companies had to be more equal with how they dispersed the earnings of the company?

To work, it would mean that:
- A company's earnings were regarded as being generated by the sum of the efforts of all its employees, and,
- Should be more evenly returned to the workers as fair (reasonable, rational & honest) compensation for their efforts.

(I can see political alarms going off with that statement, but I will continue anyways. ~_~ooo)

- The comparison would have to include ALL TOTAL gains (consumable/non-consumable or tangible/intangible) acquired because of the position held within that company.

For example:
When an executive has a meal business-meeting, that meal would be included as his or her income when comparing it to, say, a cashier at the company's store. The executive consumed a meal, a basic necessity no matter the circumstances. However, the cashier lost the cost of that meal while the executive gained the cost of that meal. That is a calculable employee gain. Maybe no taxes are owed, but it should count in the comparison.

I know its imperfect and incomplete, but that's why I call them "musings."

[planetjeffy]

05:38 AM on 06/29/2011

pay should include all compensation - stock options, club memberships and expense accounts
Any business meals, limo rides, first class airfare, 4 star hotels, etc above the basic should be counted, but won't.

[realitycheck101a]

08:58 PM on 06/30/2011

If only it really worked that way........

[gcymru5491]

04:02 PM on 06/28/2011

Crunching #'s = "too difficult"

....or just too embarrassing??????????

Fort. 500 CEO's make over 300X the salaries of their avg. workers.

[abinglewood]

02:31 PM on 06/28/2011

We are in a time where Corporate America is devisting the workforce in America. With Corporate bailouts and corporations moving jobs to other countries for cheaoer labor and a bigger profit, they don't want us to know that their CEO'S are getting paid the same millions of dollars as they did before the crisis. Corporate America wants to bring back jobs but not until they have destroyed every safety net in the goverment that protects the American worker. Once we will accept the wages they are paying those workers in other countries they'll come back, but we won't be able to live with those salaries. Great job GOP defending the rights and freedom of the greedy and rich while taking away from the American public.

[MiddleMolly]

04:35 PM on 06/28/2011

You've made some very good points:

We have Chinese workers making American bridges (for private subcontractors) working for $12/day. And we have Chinese iPod makers working under slave labor conditions for a buck or two an hour:

http://mollysmiddleamerica.blogspot.com/2011/06/oakland-bay-bridge-chinese-paid-12-day.html

[realitycheck101a]

09:05 PM on 06/30/2011

And that is just SO wrong; totally heinous ! ! ! They know they can afford to pay them more. But they're just so DAM greedy ! ! !

[Skeetshooter]

01:23 PM on 06/28/2011

Why do you think they call it greed...