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

April 24, 2017
Mike Whitney
Is Mad Dog Planning to Invade East Syria?    
John Steppling
Puritan Jackals
Robert Hunziker
America’s Tale of Two Cities, Redux
David Jaffe
The Republican Party and the ‘Lunatic Right’
John Davis
No Tomorrow or Fashion-Forward
Patrick Cockburn
Treating Mental Health Patients as Criminals
Jack Dresser
An Accelerating Palestine Rights Movement Faces Uncertain Direction
George Wuerthner
Diet for a Warming Planet
Lawrence Wittner
Why Is There So Little Popular Protest Against Today’s Threats of Nuclear War?
Colin Todhunter
From Earth Day to the Monsanto Tribunal, Capitalism on Trial
Paul Bentley
Teacher’s Out in Front
Franklin Lamb
A Post-Christian Middle East With or Without ISIS?
Kevin Martin
We Just Paid our Taxes — are They Making the U.S. and the World Safer?
Erik Mears
Education Reformers Lowered Teachers’ Salaries, While Promising to Raise Them
Binoy Kampmark
Fleeing the Ratpac: James Packer, Gambling and Hollywood
Weekend Edition
April 21, 2017
Friday - Sunday
Diana Johnstone
The Main Issue in the French Presidential Election: National Sovereignty
Paul Street
Donald Trump: Ruling Class President
Jeffrey St. Clair
Roaming Charges: Dude, Where’s My War?
Andrew Levine
If You Can’t Beat ‘Em, Join ‘Em
Paul Atwood
Why Does North Korea Want Nukes?
Robert Hunziker
Trump and Global Warming Destroy Rivers
Vijay Prashad
Turkey, After the Referendum
Binoy Kampmark
Trump, the DOJ and Julian Assange
CJ Hopkins
The President Formerly Known as Hitler
Steve Reyna
Replacing Lady Liberty: Trump and the American Way
Lucy Steigerwald
Stop Suggesting Mandatory National Service as a Fix for America’s Problems
Robert Fisk
It is Not Just Assad Who is “Responsible” for the Rise of ISIS
John Laforge
“Strike Two” Against Canadian Radioactive Waste Dumpsite Proposal
Norman Solomon
The Democratic Party’s Anti-Bernie Elites Have a Huge Stake in Blaming Russia
Andrew Stewart
Can We Finally Get Over Bernie Sanders?
Susan Babbitt
Don’t Raise Liberalism From the Dead (If It is Dead, Which It’s Not)
Uri Avnery
Palestine’s Nelson Mandela
Fred Nagel
It’s “Deep State” Time Again
John Feffer
The Hunger President
Stephen Cooper
Nothing is Fair About Alabama’s “Fair Justice Act”
Jack Swallow
Why Science Should Be Political
Chuck Collins
Congrats, Graduates! Here’s Your Diploma and Debt
Aidan O'Brien
While God Blesses America, Prometheus Protects Syria, Russia and North Korea 
Patrick Hiller
Get Real About Preventing War
David Rosen
Fiction, Fake News and Trump’s Sexual Politics
Evan Jones
Macron of France: Chauncey Gardiner for President!
David Macaray
Adventures in Labor Contract Language
Ron Jacobs
The Music Never Stopped
Kim Scipes
Black Subjugation in America
Sean Stinson
MOAB: More Obama and Bush
FacebookTwitterGoogle+RedditEmail