After Citigroup shareholders gave a vote of no confidence to the $15 million pay package of CEO Vikram Pandit, AFL-CIO President Richard Trumka and Pennsylvania AFL-CIO President Richard W. Bloomingdale pointed out that the public is quickly tiring of the runaway pay of CEOs in an opinion piece for the Allentown Morning-Call. Trumka and Bloomingdale discuss the Pandit no confidence vote and how it is a reflection of people’s growing outrage at those in charge of an unfair banking system:
In 1980, CEOs of large U.S. companies made 42 times the average wages of workers. In 2011, the ratio of CEO-to-worker pay had widened to an astonishing 380 times.
Right here in Pennsylvania, Brian Roberts, CEO of Comcast, made $26.9 million in 2011, almost 626 times more than the average Pennsylvanian’s yearly salary of $43,000.
And while the top 1 percent are seeing their pay skyrocket — CEOs of S&P 500 companies last year received an average increase of 14 percent in pay — 478,900 Pennsylvanians are still seeking steady employment. The median income for working families in our state has fallen to $43,000 while wages are barely keeping up with inflation.
Not since the Great Depression have we seen this level of income inequality between those in the executive suite and those on the shop floor.
When the AFL-CIO launched Executive PayWatch 15 years ago to track CEO pay, we knew that CEO pay was not only out of control but it also was also a drag on our economy. In the years since then, rising CEO pay has resulted in growing disparity and massive income inequality.
We all work hard and we work best when we work together. Success is the result of cooperative efforts of many people. No one, including CEOs, could be successful without relying on others. Everybody in a company works as a member of a team to create value for that company and contribute to the overall success. There is no justification for one person to earn 380 times that of the average worker.
The “Say on Pay” provision of the Dodd-Frank bill, signed into law by President Obama, allows shareholders to have a vote on whether or not they think CEO pay is at a reasonable range considering all circumstances. This provision has caused many shareholders to go against their CEO:
So far this year, shareholders at five companies, including Citigroup, have voted against CEO pay packages during the 2012 annual meeting season. But even as more shareholders use “say-on-pay” to rein in executive pay packages, there is still much more work that needs to be done to address this issue head on.
It’s time for the SEC to implement another key piece of the Dodd-Frank Act — a requirement that public companies disclose their ratio of CEO-to-worker pay. This is a simple and easy way to encourage companies to consider CEO pay in the context of their entire workforce and restrain the level of CEO pay.
If a CEO is treated to a windfall after a profitable year, there is no good reason for others at the same company to be left in the dust with minimal raises or no raises at all.
Companies can no longer use the excuse of a bad economy for layoffs and cuts when they give out 14 percent pay increases to the CEO and hoard record amounts of cash that should go toward creating more jobs and getting the overall economy back on track.
Ultimately, the economic prosperity of our country is a shared effort and it should be a shared reward. The priority of elected leaders and business leaders in Pennsylvania and across the country should be to restore balance to our economy. Addressing runaway CEO pay is one key way to begin to do that.
Read the entire op-ed HERE.