Corporations are obligated to disclose how much their CEOs earn compared to the average worker, thanks to Section 953(b) of the financial reforms of 2010 known as Dodd-Frank.
However, three years after that bill became law, some of the nation’s largest corporations are battling regulators to prevent such disclosure, according to Bloomberg.
“The fact that corporate executives wouldn’t want to display the number speaks volumes,” said Phil Angelides, who was the chairman of the Financial Crisis Inquiry Commission, which investigated the collapse that led to the Great Recession.
Angelides says that the attempt to block this provision is just one example of the “street-by-street, block-by-block fight” that corporations and Wall Street are waging against implementation of the modest reform package that passed only after it was weakened to garner Republican support in the Senate.
Groups including the American Insurance Association, Business Roundtable, National Investor Relations Institute, and the U.S. Chamber of Commerce have petitioned the Security and Exchange Commission (SEC), making the argument that “it is unclear how the pay ratio disclosure will be material for the reasonable investor when making investment decisions.” They claim that calculating such ratios is time consuming and almost impossible for multinational corporations.
Without obligated disclosure, there’s no clear way to assess CEO-to-worker ratio. In 2010, the Bureau of Labor Statistics reported large-company CEO compensation was 319 times the median worker’s pay. Currently the average multiple of CEOs to a typical worker is 204 — up 20 percent since 2009, according to statistics collected from workers’ compensation estimates.
Bloomberg‘s Elliot Blair Smith and Phil Kuntz point to Ron Johnson, the recently ousted CEO of J.C. Penney, who earned a whopping 1,795 times what a typical $8.30-an-hour JCP salesperson took home.
The AFL-CIO has been attempting to counter the corporate lobbying with an effort to make the SEC put in place what is already law.
“The impact of high levels of CEO pay on employee morale is particularly important in today’s weak economy, when workers are being asked to do more for less,” suggests an online petition it is circulating to pass on to the government regulators.
“Estimates by academics and trade-union groups put the number at 20-to-1 in the 1950s, rising to 42-to-1 in 1980 and 120-to-1 by 2000,” Smith and Kuntz write.
Even if corporations are forced to disclose how much their top executive is paid, there are a variety of ways for them to cloak compensation.
Still the Campaign for America’s future calls enforcing Section 953(b) a crucial test for new SEC chair Mary Jo White to find out if she’ll be a “watchdog or a lap dog for Wall Street.”
Photo: Matthew Knott via Flickr.com