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Executive Pay- About to be a Secret?

Jul 14, 2011 | By Page May

Source: Mother Jones - It's the Inequality Stupid

Sourced from The Washington Post; Companies Try to Stop Pay Comparisons-

Executive compensation at the nation’s largest firms has more than quadrupled in real terms since the 1970s. In 1970, average executive pay at the nation’s top companies was 28 times the average worker income. By 2005, executive pay had jumped to 158 times that of the average worker.

Some companies have willingly sought to restrain the disparities. Whole foods, the grocery chain, has aimed to limit cash compensation to 19 times the average pay. In 2010, the average annual pay was about $37,000, which dictated a salary cap of $705,000. This limit, however, does not apply to stock and option, and a couple of top officials earned much more. A.C. Gallo, the president and chief operating officer, earned $4.6 million.

Current laws require that executive’s compensation be disclosed. A new requirement calls for the additional disclosure of median worker pay.

The Center on Executive Compensation, a group backed by 81 major companies including McDonalds, Lowe’s, American Airlines, IBM, and General Mills- is lobbying against new rules that would force disclosures of that comparison. On Wednesday, a House committee approved a bill that would repeal the disclosure requirement. 29 Republicans and 4 Democrats supported the repeal; 21 Democrats opposed it.

The companies and their allies in Congress call the comparisons between the chief and everyone else in the company “useless.”

Rep Nan A.A. Hayworth (R-N.Y.) filed the bill too repeal the disclosure: Disclosing such comparisons "can mislead or confuse investors…It creates head but sheds no light.” She also said the calculation of the ratio would be a burden for companies, especially those with global operations.

Sen. Robert Menendez (D-N.J.), who added the requirement to the financial regulatory overhaul bill that passed last year, said: “The real reason House Republicans want to keep the typical worker’s pay secret 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.


Learn more about executive compensation with these articles:

Forbes: Historical Chart: Two Decades of CEO Pay

NPR: CEO Salaries Continue to Rise

NPR: CEO Compensation Now Exceeds Pre-Recession Levels

AFL-CIO: Executive Paywatch


Source: The State of Working America


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