CEO-to-worker pay ratio has increased 1000 percent since 1950, according obtained by Bloomberg. Today Fortune 500 CEOs make 204 times regular workers on average with the ratio up from 120-to-1 in 2000, 42-to-1 in 1980 and 20-to-1 in 1950.
“When CEOs switched from asking the question of ‘how much is enough’ to ‘how much can I get,’ investor capital and executive talent started scrapping like hyenas for every morsel,” Roger Martin, dean of the University of Toronto’s Rotman School of Management, told Bloomberg.
For more than two years after Congress ruled public companies to disclose their actual CEO-to-worker pay ratios under the Dodd-Frank law, the numbers has remained unknown.
As the Occupy Wall Street movement and last year’s presidential election made income inequality a social flashpoint, mandatory disclosure of the ratios remained bottled up at the Securities and Exchange Commission, which hasn’t yet drawn up the rules to implement it. Some of America’s biggest companies are lobbying against the requirement, the site adds.
“It’s a simple piece of information shareholders ought to have,” said Phil Angelides, who led the Financial Crisis InquiryCommission, which investigated the economic collapse of 2008.
“The fact that corporate executives wouldn’t want to display the number speaks volumes.” The lobbying is part of “a street-by-street, block-by-block fight waged by large corporations and their Wall Street colleagues” to obstruct the Dodd-Frank law, he said.
Statistics show that the leading opponent of mandatory pay-ratio disclosure is the HR Policy Association, which represents top human resources executives at about 335 large corporations.
“We don’t believe the information would be material to investors,” commented on the issue Tim Bartl, president of the group’s advocacy arm, the Center on Executive Compensation.
The group has brand names behind it: 17 companies on HR Policy’s board of directors have CEO pay ratios in the top 20 percent of S&P 500 corporations, Bloomberg data show. They include General Electric Co. (GE), with a ratio of 491; McDonald’s Corp. (MCD), at 351; and AT&T Inc. (T), at 339.
“When CEOs switched from asking the question of ‘how much is enough’ to ‘how much can I get,’ investor capital and executive talent started scrapping like hyenas for every morsel,” said Roger Martin, dean of the University of Toronto’s Rotman School of Management, in an interview. “It’s not that either hates labor, or wants to crush their lives. They just don’t care.”
Pay-ratio supporters, headed by investors and trade unions including United Auto Workers Retiree Medical Benefits Trust, say mandatory disclosure would help inform shareholders on advisory say-on-pay votes at companies’ annual meetings.
“Executive pay at some companies is excessive and leads to a number of risks, in particular the risk of damage to the company’s social license to operate and the risk of worsening employee morale,” said Tim Macready, chief investment officer of the Christian Super pension fund in Australia, which has about $700 million under management.
He went on, adding that the pay ratio is a “useful metric in identifying and dealing with both of these risks.”