FacebookTwitterGoogle+RedditEmail

Tracking CEO Compensation

by SAM PIZZIGATI

Under current U.S. law, all our publicly traded corporations must annually disclose exactly what they pay their top executives. So why do all those CEO pay scorecards we see every spring show such different results?

USA Today found an 8 percent hike in 2012 CEO pay while The New York Times detected an 18.7 percent increase. Towers Watson, a corporate consulting firm, announced that CEO pay growth “slowed considerably,” rising at just a 1.2 percent rate last year.

What explains all these wildly divergent results? Let’s start with how corporations pay their top execs. This can get tricky.

Most executive pay today comes as stock-related compensation. Stock “options” give executives the right, down the road, to buy shares of their company stock at today’s share price. If that share price jumps, the execs can buy low and sell high. Instant windfall.

“Restricted” stock awards, on the other hand, give executives actual shares of stock, not just an option to buy them. Execs do have to wait a few years before they can actually claim these shares. No big deal. The shares will still have value in future years even if a company’s stock takes a hit.

But how should we value all this share-related compensation right now? Should CEO pay scorekeepers estimate how much stock awards granted this year will be worth in years to come? Or should scorekeepers only tally stock-related awards when execs actually profit personally from them?

Different executive pay scorekeepers give different answers. Scorekeepers also keep score on different sets of corporations. USA Today‘s new scorecard for 2012 tallies pay at 170 firms, the New York Times at just 100.

Given all this, do we have any single stat that tells us what we need to know? We do. That stat: the divide between worker and top executive pay.

America’s big-time CEOs, labor researchers at the AFL-CIO report, are now making 354 times the pay of average U.S. workers, the “largest pay gap in the world.”

Three decades ago, in 1982, American CEOs averaged just 42 times more than average U.S. workers. Two decades ago, in 1992, the gap stood at 201 times. A decade ago: 281 times.

The overall trend line, in other words, couldn’t be clearer. How can we reverse it? Identifying the specific pay gap between individual CEOs and their own workers would be a good first step.

Corporations have had to publish, for decades now, how much they pay their top execs. They haven’t had to reveal publicly how much — or how little — they pay their workers. The Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in 2010 changes this dynamic, at least on paper.

Dodd-Frank requires corporations to annually disclose the gap between what they pay their CEOs and their most typical workers. But a corporate lobbying blitz has kept the Securities and Exchange Commission from writing the regulations needed to enforce this disclosure mandate.

Why do our biggest corporations so fervently oppose disclosing their CEO-worker pay ratios? Disclosure by itself, after all, won’t shove down CEO pay levels. But disclosure could open the door to other steps that could curb CEO pay excess.

Lawmakers could, for instance, choose to deny government contracts or tax breaks to corporations that pay their top executives over 25 or even 50 times what their own workers are making.

Far-fetched? Current law already denies government contracts to companies that discriminate by race or gender in their employment practices. As a society, we’ve concluded that our tax dollars must not go to corporations that widen racial or gender inequality.

So why should we let our tax dollars enrich corporations that widen our economic divide?

Sam Pizzigati is an associate fellow at the Institute for Policy Studies in Washington DC, editor of the journal Too Much and author of The Rich Don’t Always Win, Seven Stories Press, New York.

This column is distributed by OtherWords.

Sam Pizzigati writes on inequality for the Institute for Policy Studies. His latest book is The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 (Seven Stories Press). 

Weekend Edition
April 29, 2016
Friday - Sunday
Andrew Levine
What is the Democratic Party Good For? Absolutely Nothing
Roberto J. González – David Price
Anthropologists Marshalling History: the American Anthropological Association’s Vote on the Academic Boycott of Israeli Institutions
Robert Jacobs
Hanford, Not Fukushima, is the Big Radiological Threat to the West Coast
Ismael Hossein-Zadeh
US Presidential Election: Beyond Lesser Evilism
Dave Lindorff
The Push to Make Sanders the Green Party’s Candidate
Ian Fairlie
Chernobyl’s Ongoing Toll: 40,000 More Cancer Deaths?
Pete Dolack
Verizon Sticks it to its Workers Because $45 Billion isn’t Enough
Richard Falk
If Obama Visits Hiroshima
Margaret Kimberley
Dishonoring Harriet Tubman
Deepak Tripathi
The United States, Britain and the European Union
Peter Linebaugh
Marymount, Haymarket, Marikana: a Brief Note Towards ‘Completing’ May Day
Eva Golinger
My Country, My Love: a Conversation with Gerardo and Adriana of the Cuban Five
Moshe Adler
May Day: a Trade Agreement to Unite Third World and American Workers
Vijay Prashad
Political Violence in Honduras
Paul Krane
Where Gun Control Ought to Start: Disarming the Police
David Anderson
Al Jazeera America: Goodbye to All That Jazz
Rob Hager
Platform Perversity: More From the Campaign That Can’t Strategize
Pat Williams
FDR in Montana
Dave Marsh
Every Day I Read the Book (the Best Music Books of the Last Year)
David Rosen
Job Satisfaction Under Perpetual Stagnation
John Feffer
Big Oil isn’t Going Down Without a Fight
Murray Dobbin
The Canadian / Saudi Arms Deal: More Than Meets the Eye?
Gary Engler
The Devil Capitalism
Brian Cloughley
Is Washington Preparing for War Against Russia?
Manuel E. Yepe
The Big Lies and the Small Lies
Robert Fantina
Vice Presidents, Candidates and History
Mel Gurtov
Sanctions and Defiance in North Korea
Howard Lisnoff
Still the Litmus Test of Worth
Dean Baker
Big Business and the Overtime Rule: Irrational Complaints
Ulrich Heyden
Crimea as a Paradise for High-Class Tourism?
Ramzy Baroud
Did the Arabs Betray Palestine? – A Schism between the Ruling Classes and the Wider Society
Halyna Mokrushyna
The War on Ukrainian Scientists
Joseph Natoli
Who’s the Better Neoliberal?
Ron Jacobs
The Battle at Big Brown: Joe Allen’s The Package King
Wahid Azal
Class Struggle and Westoxication in Pahlavi Iran: a Review of the Iranian Series ‘Shahrzad’
David Crisp
After All These Years, Newspapers Still Needed
Graham Peebles
Hungry and Frightened: Famine in Ethiopia 2016
Robert Koehler
Opening the Closed Political Culture
Missy Comley Beattie
Waves of Nostalgia
Thomas Knapp
The Problem with Donald Trump’s Version of “America First”
Georgina Downs
Hillsborough and Beyond: Establishment Cover Ups, Lies & Corruption
Jeffrey St. Clair
Groove on the Tracks: the Magic Left Hand of Red Garland
Ben Debney
Kush Zombies: QELD’s Hat Tip to Old School Hip Hop
Charles R. Larson
Moby Dick on Steroids?
David Yearsley
Miles Davis: Ace of Baseness
FacebookTwitterGoogle+RedditEmail