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). 

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

Weekend Edition
December 02, 2016
Friday - Sunday
John Pilger
The Coming War on China
Jeffrey St. Clair
Roaming Charges: The CIA’s Plots to Kill Castro
Paul Street
The Iron Heel at Home: Force Matters
Pam Martens - Russ Martens
Timberg’s Tale: Washington Post Reporter Spreads Blacklist of Independent Journalist Sites
Andrew Levine
Must We Now Rethink the Hillary Question? Absolutely, Not
Joshua Frank
CounterPunch as Russian Propagandists: the Washington Post’s Shallow Smear
David Rosen
The Return of HUAC?
Rob Urie
Race and Class in Trump’s America
Patrick Cockburn
Why Everything You’ve Read About Syria and Iraq Could be Wrong
Caroline Hurley
Anatomy of a Nationalist
Michael Hudson – Steve Keen
Rebel Economists on the Historical Path to a Global Recovery
Ayesha Khan
A Muslim Woman’s Reflections on Trump’s Misogyny
Russell Mokhiber
Sanders Single Payer and Death by Democrat
Roger Harris
The Triumph of Trump and the Specter of Fascism
Steve Horn
Donald Trump’s Swamp: Meet Ten Potential Energy and Climate Cabinet Picks and the Pickers
Louis Proyect
Deepening Contradictions: Identity Politics and Steelworkers
Ralph Nader
Trump and His Betraying Makeover
Stephen Kimber
The Media’s Abysmal Coverage of Castro’s Death
Dan Bacher
WSPA: The West’s Most Powerful Corporate Lobbying Group
Nile Bowie
Will Trump backpedal on the Trans-Pacific Partnership?
Ron Ridenour
Fidel’s Death Brings Forth Great and Sad Memories
Missy Comley Beattie
By Invitation Only
Fred Gardner
Sword of Damocles: Pot Partisans Fear Trump’s DOJ
Renee Parsons
Obama and Propornot
Dean Baker
Cash and Carrier: Trump and Pence Put on a Show
Jack Rasmus
Taming Trump: From Faux Left to Faux Right Populism
Ron Jacobs
Selling Racism—A Lesson From Pretoria
Julian Vigo
The Hijos of Buenos Aires:  When Identity is Political
Subcomandante Insurgente Galeano
By Way of Prologue: On How We Arrived at the Watchtower and What We Saw from There
Dave Lindorff
Is Trump’s Idea To Fix the ‘Rigged System’ by Appointing Crooks Who’ve Played It?
Aidan O'Brien
Fidel and Spain: A Tale of Right and Wrong
Carol Dansereau
Stop Groveling! How to Thwart Trump and Save the World
Kim Nicolini
Moonlight, The Movie
Evan Jones
Behind GE’s Takeover of Alstom Energy
James A Haught
White Evangelicals are Fading, Powerful, Baffling
Barbara Moroncini
Protests and Their Others
Joseph Natoli
The Winds at Their Backs
Cesar Chelala
Poverty is Not Only an Ignored Word
David Swanson
75 Years of Pearl Harbor Lies
Alex Jensen
The Great Deceleration
Nyla Ali Khan
When Faith is the Legacy of One’s Upbringing
Gilbert Mercier
Trump Win: Paradigm Shift or Status Quo?
Stephen Martin
From ‘Too Big to Fail’ to ‘Too Big to Lie’: the End Game of Corporatist Globalization.
Charles R. Larson
Review: Emma Jane Kirby’s “The Optician of Lampedusa”
David Yearsley
Haydn Seek With Hsu
FacebookTwitterGoogle+RedditEmail