Credo Action

Tell the SEC: Implement CEO pay-disclosure rule now

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Petition to the Securities and Exchange Commission:

"Immediately implement, without any further delay, a forceful CEO pay-disclosure rule requiring companies to publicly release the ratio between their executive compensation and average employee pay."

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    Tell the SEC: Implement CEO pay-disclosure rule now

    What matters more: Increasing the wages of American workers, or not hurting the feelings of our nation’s CEOs? If you ask some members of the Securities and Exchange Commission (SEC), the answer may surprise you.

    Today, thanks in part to flat wages and skyrocketing CEO pay, the top 1% have accumulated nearly 50% of all global wealth. The 2010 Dodd-Frank financial reform law requires publicly-traded companies to disclose the ratio between executive and median employee pay. But the SEC is dragging its heels, with one commissioner concerned that the law cruelly “shames” CEOs.1

    If a CEO is making 1,000 times more than the average employee, the company should at least have to say so publicly. While it is no substitute for a simple cap on CEO pay, the pay-disclosure requirement would shine a giant spotlight on outsized executive paychecks and pressure them into either raising wages – or lowering CEO pay.

    Tell the SEC: Implement CEO pay-disclosure rule now.

    Today, CEO’s can make more in an hour than their employees do in an entire year. According to the AFL-CIO’s 2013 Executive Paywatch report, CEO’s pay was 331 times that of their average employees, and 774 times that of their minimum wage employees. To put it bluntly: A minimum wage worker at Walmart would have to work 1,372 hours to earn what Walmart CEO Michael T. Duke makes every single hour. 2

    It wasn’t always this way. In 1950, the CEO-to-median worker pay ratio was 20:1. It rose to 42-to-1 by 1980, and 120-to-1 by 2000. By some estimates, it has increased by more than 1,000% percent.3 As Roger Martin, dean of the University of Toronto’s Rotman School of Management, puts it, “CEOs switched from asking the question of ‘how much is enough’ to ‘how much can I get.’”4

    The same companies that so often claim they “cannot afford” to increase wages are handing out giant checks to bigshot executives. And in many cases, those CEO’s are failing at their jobs – in one case, the former CEO of JCPenney’s made 1,795 times the average department store worker, while driving the company into the ground and laying off 43,000 employees.5 CEO pay has come untethered from performance and importance to the companies themselves, while American workers struggle to pay bills and take care of their families.

    The 2010 Dodd-Frank law started fighting back by forcing publicly-traded companies regulated by the SEC to release the ratio of CEO to worker pay. Right now, companies disclose how much their executives make, but not the average pay of their employees. We can only guess at the actual ratio by looking at average pay for workers in that industry. We need to remind the SEC now that it works for us, not well-paid corporate executives.

    Tell the SEC: Implement CEO pay-disclosure rule now.

    Lobbyists for big companies have objected to the pay-disclosure requirement, claiming that factoring in the pay of overseas employees and pulling together from multiple payroll systems makes the number complicated and expensive to calculate. But CEO pay disclosure is one of the simplest and most straightforward provisions in all of Dodd-Frank, and it provides valuable insight for investors seeking companies that do right by American workers.

    Last September, SEC Chairwoman Mary Jo White told the Senate Banking Committee that the SEC hoped to implement the rule by the end of 2014. That deadline has come and gone with no action. A draft version of the rule was approved by SEC commissioners last year by a vote of 3-2, with Chairwoman White joining the two Democratic commissioners in support. But with the Republican commissioners staunchly opposed and White a swing vote who often takes the side of industry, we need to ramp up the pressure. 6

    Delaying pay disclosure any further is a blatant giveaway to the biggest companies at the expense of struggling workers. We need to remind the SEC commissioners who they work for and demand they implement this rule now.

    Thank you for your activism.

    1. Eric Garcia, “Pay-disclosure advocates chafe at SEC rule delays” MarketWatch, January 2, 2015

    2. AFL-CIO Executive Paywatch 2014” Accessed January 26, 2015

    3. CEO-To-Worker Pay Ratio Ballooned 1,000 Percent Since 1950: Report” HuffingtonPost, April 30, 2013

    4. Elliot Blair Smith and Phil Kuntz, “CEO Pay 1,795-to-1 Multiple of Wages Skirts U.S. Law” Bloomberg, April 30, 2013

    5. Ibid.

    6. Garcia, “Pay-disclosure advocates chafe at SEC rule delays.”