Major company officials don’t think it’s such a good idea for their firms to be transparent about CEO pay. Why you ask? Well, it could open them up to criticisms about CEO pay.
The Securities and Exchange Commission has received more than 200 letters about the equity pay provision, a measure in the Dodd-Frank financial reform act that would require them to disclose the disparity in salaries between executives and rank-and-file workers, the Wall Street Journal reports. Advocates of the rule argue that it will help investors better evaluate the health of a company, but opponents say it will -- gasp -- expose firms to criticism about CEO pay.
"The ratio is not going to be a meaningful way to help investors but will be used as a political tool to attack companies," David Hirschmann, president of the U.S. Chamber of Commerce's Center for Capital Markets, told the WSJ.
Hirschmann is probably right, given that the ratio between CEO pay and average worker pay is pretty embarrassing at many companies. On average, CEOs made 231 times what workers made in 2011, according to an analysis from the Economic Policy Institute cited by the Los Angeles Times. An average worker would have to work 3,489 years to make the salary of a top-paid CEO.
And CEO pay is exploding while the wages of us regular people are staying somewhat stagnant. CEO pay grew 127 times faster than worker pay over the past 30 years. Last year, the 15 CEOs at the top U.S. and European banks saw their pay rise by about 12 percent on average to $12.8 million.
Workers aren’t taking the discrepancy sitting down. Many workers groups have been pressuring the SEC to implement the equity pay provision, according to ABC News. In addition, shareholders have also been taking their companies to task for paying executives too much; Citigroup shareholders struck down CEO Vikram Pandit’s pay plan earlier this year and some other, smaller banks followed suit.