The divide in pay between top executives and regular workers is out of control. A recent Bloomberg News calculation concluded that chief executives on average take home 204 times more than their rank-and-file employees.
But that average gulf in pay is merely a stream compared to the pay disparity at some companies. McKesson, a leading pharmaceutical company, pays its CEO 313 times more than its average worker. J.C. Penney's CEO earned a whopping 1,795 times more than the average worker employed by the retailer. Abercrombie and Fitch paid its CEO 1,640 times more than the average worker. At Simon Property Group, it was 1,594 times more.
Three years ago, a provision in the Dodd-Frank financial reform law said the companies themselves have to reveal the difference between worker pay and CEO pay. That reform still hasn't been implemented. And now the CEOs' lobbyists are pressuring House Republicans to repeal it.
Today the House Financial Services Committee will consider legislation, HR 1135, that strips the wage-gap disclosure requirement from Dodd-Frank.
The CEOs should be embarrassed by the disparity of riches. But that's not their argument for repealing the disclosure requirement. They insist that calculating the CEO-to-worker pay ratio is too hard for them to do.
It is simply not credible for companies to say they don't know how to collect data or that it is too burdensome. The Teamsters know from 100-plus years of collective bargaining that companies quantify a dollar cost for just about every aspect of work possible.
And as pension fund investors, we need the information required by Dodd-Frank to evaluate an investment. If a CEO is allowed to loot a company, the morale and productivity for its rank-and-file employees will suffer.
The Teamsters are one of more than 250 groups that make up Americans for Financial Reform (AFR), a coalition of labor, consumer, civil rights, investor, retiree, community, religious and business groups that came together to reform the financial industry. In a letter sent to lawmakers last month, AFR noted the passage of HR 1135 will shield CEOs from the shame that would come from the public learning about their outrageous compensation while axing an important provision of the law.
Disclosure of CEO-to-employee pay ratios will encourage Boards of Directors to limit CEO pay levels. Part of the CEO pay problem is that the existing disclosure rules encourage companies to focus on what other companies pay their CEOs. Because CEOs believe that they should be paid above average, this 'groupthink' compensation process leads to ever-spiraling pay increases for CEOs.
Congress must remain firm on implementing these fixes instead of gutting the law before it even has a chance to work.