The Securities and Exchange Commission came under fire yesterday from organized labor and members of Congress. Both took aim at what corporations are not telling the public.
New Hampshire Congresswoman Carol Shea-Porter, along with 32 other Congressmen, sent a letter to Mary Jo White, the Chairman of the SEC. (Click here to view the full letter.) The letter calls for new SEC rule-making for publicly traded companies to disclose CEO pay and the ratio between CEO’s and their average employee.
“Over the course of my lifetime, I’ve watched American workers become more productive than ever, only to see wages remain largely stagnant. Over those same decades, CEO pay has gone through the roof, rising from 42 times the average pay of workers in 1980 to 354 times that of the average worker today,” Shea-Porter said. “In 2012, the CEO of J.C. Penney (JCP) made 1,795 times that of the average JCP employee. It’s time for publicly traded companies to report on this disparity.”
The letter notes that it is important for investors to know the salaries of chief executives at publicly traded corporations. At the same time, it is essential that these salaries be contextualized through comparison with the median employee salary at the firm. The proposed rule also reflects public concern over disparate levels of executive compensation and the need to have this information available in an understandable format.
Peter Drucker, one of the 20th century’s best-known business theorists, wrote that the ratio of CEO-to-worker pay was best kept between 20-1 and 25-1. One way to reduce without cutting CEO pay is to raise the wages of the average worker.
The 32 Members of Congress to sign the letter noted that they found no credibility in the idea that the burdens of documenting the ratio between CEO pay and median employee compensation will be too high. “Companies already track how much they spend on personnel including salary and benefits,” the letter reads. “Firms that set up advanced computers for high frequency trading or that master the concept of just-in-time inventory should be able to figure out the median salary using basic software.”
While Congress is trying to create more transparency in CEO pay, organized labor took aim at corporation’s political spending.
Richard Trumka, President of the AFL-CIO, released the following statement:
“We are disappointed that the Securities and Exchange Commission is not including a rulemaking to require disclosure of corporate political spending on its regulatory agenda for 2014. The SEC’s Division of Corporate Finance had been previously scheduled to consider whether to recommend a proposed rule in 2013.
Since the Supreme Court’s Citizens United decision, we have seen a dramatic increase in political spending by corporations. Yet much of this spending is not disclosed to investors who own public companies. Without transparency, there is a danger that executives will spend money in ways that do not benefit investors.
Just as labor unions are legally required to publicly disclose their political spending, public companies should be held to the same standard. Nearly 700,000 individuals have written the SEC to support this requested rulemaking. We urge SEC to put corporate political spending disclosure back on its agenda for 2014.”
Many large companies are using their profits to sway political elections and then using their newly gained political clout to push for policies that only benefit the ultra-wealthy 1%. Manly this is benefiting the corporations CEOs, while the company is taking more from the average worker for healthcare and benefits.
In the 2012 election there was an estimated $6 Billion dollars spent campaigning. Most of that money was funneled through ‘Super PAC’s’ that do not have to disclose their donors. Corporations donate millions of dollars to support candidates that will roll back workers rights and labor laws that greatly impact large employers.
We need more transparency from these corporations. How is their money being used to influence the political process and how much they shell out to their CEO’s? If we knew some of these details it would shed some light on how easy it would be for employers to raise the wages of the workers.