Michael Piwowar and Daniel Gallagher — two CEO-friendly members of the five-member federal Securities and Exchange Commission (SEC) — were trying to defend the skyrocketing pay of America’s top CEOs against a common-sense reform that lawmakers wrote into federal law three years ago. That law, the Dodd-Frank Act, mandates that corporations annually reveal the ratio between what they pay their top executives and what they pay their median, or most typical, worker.
Last Wednesday, after 37 months of frustrating delay, a pay ratio disclosure rule finally came up for formal SEC consideration. In the hour-long debate on the proposal, commissioners Piwowar and Gallagher both did their best to channel Corporate America’s fierce hostility to CEO pay transparency. But commissioners Piwowar and Gallagher would find themselves on the short end at last week's SEC session. The pending CEO-worker pay disclosure proposed rule passed, 3-2, when SEC chair Mary Jo White called for a vote.
With annual disclosure, investors, consumers, and workers would be able — for the first time ever — to compare individual corporations by their level of CEO greed and grasping. Execs pulling in hundreds of times what their workers make would have to explain why other firms can thrive with much narrower pay gaps.
But ratio disclosure could produce far more than embarrassment for overpaid execs. Lawmakers could build consequences onto the information that pay ratio disclosure unearths. They could, for instance, deny government contracts to firms that pay their CEOs over 50 or 25 times what their workers are making.
Back in the 1950s, America’s CEOs averaged just 25 times average U.S. worker pay. A Bloomberg News survey this past spring found eight CEOs making over 1,000 times the average pay of workers in their industry.
In 1982 only 13 Americans sported billion-dollar fortunes on the Forbes 400 list. For this year’s list one needed to have $1.3 billion to make the top 400 --- some 61 billionaires were excluded from the list. The combined wealth of the 400 people on the Forbes list is $2.02 trillion -- and now equals more than the combined total wealth of the bottom half Americans.
Back in 2003, China hosted not a single billionaire. This year 122 billionaires call China home.