The Wall Street reform law that passed in 2010 includes a requirement that companies disclose the ratio of CEO pay to median pay. This law is still obstructed from enforcement. Meanwhile voters in Switzerland are considering placing a 12:1 cap on CEO pay — an idea that is spreading across Europe.
The 2010 ‘Dodd–Frank Wall Street Reform and Consumer Protection Act’ includes a rule that publicly traded companies must report their “pay ratio” — the ratio of CEO compensation to median worker compensation in that company. The idea is that this lets investors and the public know whether and the extent to which a company is being looted from the top.
This law passed in 2010 but still is not in effect. Under this law all that companies have to do is disclose the ratio. But we can’t even get this law — yes it is the law — to take effect. Conservatives go absolutely batcrap crazy about “illegals” — undocumented immigrants — because “they broke the law,” but when it comes to laws that might have even the smallest of small effects on Wall Street and the 1%, not so much.
After all these years the Securities and Exchange Commission (SEC) finally proposed just this September some specific rules for enforcement. (The two Republicans on the commission voted to block implementation of this rule so companies could continue to violate this new law and keep their pay ratio secret.) Of course, the proposed rules are weaker than the law intends — the proposed rules allow companies to use “sampling” and “estimates” that they come up with instead of actually compiling all of the data as required by the law. But at least the SEC has finally, years later, gotten far enough through the obstruction to propose rules to eventually, maybe enforce this law.
The deadline for submitting comments to the SEC is December 2, 2013. To add your comment read this 162-page PDF and then:
- Use the SEC’s Internet comment form for on S7-07-13 Pay Ratio Disclosure;
- Send an email to firstname.lastname@example.org. Include File Number S7–07–13 on the subject line; or
- Use the Federal Rulemaking ePortal (http://www.regulations.gov).
In Switzerland last March voters approved limits to reign in executive compensation, giving shareholders a say and prohibiting bonuses to executives for joining or leaving a company, or when their companies are taken over. Executives who violate this could be fined six years of pay and jailed for three years. (That’s called “a law with teeth.”) The measure received 68% of the vote.
Now Swiss voters are taking the idea of limiting CEO pay a step further, and are considering changing their country’s constitution to limit a company from paying the top more than 12 times what its lowest-paid worker is paid. Peter Gumbel at Reuters explains who is for it and who is against it, in Swiss outrage over executive pay sparks a movement in Europe,
A month ago, public opinion for and against the initiative was split at about 44 percent. Swiss business launched a public relations campaign, warning that the measure would spark an exodus of corporations. Employers’ associations commissioned studies that predicted lost jobs and higher taxes if the measure is passed. The latest polls this week suggest that the measure is unlikely to be approved, with just over 50 percent opposing it.
(Hey did you catch that part about “employers’ associations commissioned studies that predicted lost jobs and higher taxes if the measure is passed?” Now read this about “stink tanks” which is the same sort of thing in our country.)
The CEO-pay-limiting idea is spreading across Europe to Germany, Spain, France and elsewhere,
Significantly, the 1:12 campaign has made inroads in Spain, where the opposition Social Democrats have just adopted it as official policy. Schüpbach says the idea … is also being discussed within the opposition Social Democratic Party in Germany. And more broadly, the issue of executive pay has become a red-hot political topic in France and elsewhere on the continent.
Who Is The Boss Of Who?
So the idea of limiting CEO pay is spreading around Europe, while here in the US we can’t even get our own government to enforce a law passed in 2010 that only goes as far as saying companies have to disclose the CEO-to-median pay ratio.
So who is the boss of who? In Europe it seems the people are the boss of the CEOs. They can pass laws and enforce them with teeth. But in America not so much. We can’t even get laws that are on the books enforced — even with a slap on the hand.