The Securities and Exchange Commission (SEC) should respond immediately to twin letters from U.S. senators and representatives, sent this week, calling on the agency to “prioritize” the implementation of important disclosure about CEO pay. Approved as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, the section 953(b) provision requires publicly traded companies to disclose the ratio of CEO pay as a proportion of the median-paid employee at the firm.
In the face of intense industry lobbying, the SEC has yet to propose a rule for public comment. A simple disclosure figure should be well within the SEC’s ability. Corporate America’s antagonism may be revealing but should not be compelling.
The financial industry argues that identifying median pay will be difficult. Such claims either constitute an embarrassing confession about widespread mismanagement of a central financial issue, or a disingenuous smokescreen. The idea that firms have no idea what they pay their staff is ludicrous.
CEO pay has swollen from 42 times that of average factory workers in 1980 to 319 times in 2010. Studies show morale and productivity problems in the face of disproportionate CEO pay.
The congressional letter states that: “Income inequality is a growing concern among many Americans. … Incomes at the very top have skyrocketed in recent years while workers’ wages and incomes have stagnated. … And while comprehensive data will not be available until this provision takes effect, there is no question that CEO pay is soaring compared to that of average workers.”
A Public Citizen report last year found that industry lobbyists contesting this rule have spent more than $4.5 million trying to avoid disclosure. In addition, the U.S. Chamber of Commerce has sent two letters to the SEC opposing this measure.
Rather than fight to block it, the industry should embrace it. Investors would benefit from this type of disclosure.
The letters are available at http://www.citizen.org/documents/House-SEC-Letter-on-953b-rulemaking.pdf and http://www.citizen.org/documents/Senate-SEC-letter-on-953b-rulemaking.pdf.
In case you missed this last week, the segment below had this Lady Liberty falling off her couch! Kudos to the smart folks over at the Daily Show who knew about our Warren recess appointment revelation. (If only the White House would subscribe to www.citizenvox.org RSS feed). And, of course, it should go without saying that we feel for John Oliver/ Dodd-Frank. It’s no wonder he’s so upset.
If you haven’t read our latest report “Just Not Us,” you’ve got to check out what the financial industry lobbying SWAT team has been up to. The report examines the financial services industry’s efforts to undermine the proposed rule in Section 956 of Dodd-Frank, which covers incentive-based compensation (i.e., executive pay) that “encourages inappropriate risks.” We review 24 financial services industry companies, trade associations and their allies that submitted comments seeking to weaken the proposed rule. The primary theme of industry’s comments: “Please exempt us from this rule.”
For another enlightening take, click on The Daily Show Dodd-Frank Update link in the box below to get an idea of how NOT far we’ve come in one year since the passage of the Dodd-Frank Wall Street Reform Act.
Swipe this! Yesterday, the Senate actually stood up for consumers. Public Citizen’s financial policy analyst / sometimes poetic, often *sarcastic, wordsmith Bartlett Naylor for once had good things to say!
His statement regarding this consumer victory:
“Public Citizen applauds the Senate for standing firm against bankers’ attempt to preserve their lucrative and unjustified debit card swipe fees, which have functioned as little more than a wealth transfer from the poor to the rich.
Four banks alone account for $8 billion of the $16 billion in annual swipe fee profits. That oligopoly shows the need for the cap authored by Sen. Richard Durbin (D-Ill.) and approved last year as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Will retailers pass on the savings, an average of 32 cents per transaction? Retail markets are competitive and transparent enough that American consumers ought to recoup the savings in reduced prices.
Will regulating swipe fees harm the small banks that should be the backbone of credit in America? Certainly not. Only banks with more than $10 billion in assets are subject to the cap.
If debit swipe fees are capped, the bankers argue, they’ll be forced to make up the difference by increasing other fees. But bank profits aren’t a universal constant. When banks are stopped from profiting unfairly and can’t make up the difference by providing more value to customers, then they should simply profit less.”
*Bartlett Naylor just informed me he prefers “sardonic” to “sarcastic.” Duly noted Bart!
Recently, we asked Public Citizen supporters to tell the federal government what Wall Street greed meant to them. They did. More than 8,000 people sent in stories of lost jobs, lost health insurance and lost dignity.
Here is what some of them had to say:
“I have watched my friends who have masters degrees apply for food stamps.”
“We nearly lost our business in 2008. Next came my Dad who lost a third of his retirement.”
“Because of Wall Street, my son graduated a good school into a bankrupt economy. He is teaching T-ball and waiting tables for a living — jobs for a teenager, not a college graduate.”
“After a lifetime of never even being late on a payment for anything, much less missing one, we had to declare bankruptcy. Our son-in-law lost his job, and our grandson can’t find his first job after completing a community college certificate program.”
“I have been out of work since late September of 2008. … I have an advanced degree.”
“I lost my job. I was unable to find another job. I had to apply for unemployment. … I had worked all of my life and felt worthless now. I lost my health insurance not just for myself but for my children. After my unemployment benefits ran out, I had to go on welfare. In the meantime, I was diagnosed with a terminal disease.”
Public Citizen joined them in telling seven federal agencies to use a firm hand when creating rules to rein in out-of-control executive compensation at big Wall Street firms.
Let’s hope the government listens.