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."