Dodd-Frank Act Makes CEO-Worker Pay Gap Subject to Disclosure

Lora Bentley
Slide Show

Top 10 Well-Compensated Execs of '09

Take a look at technology's top 10 highest-paid executives in 2009.

Executive pay has been a hot-button issue for awhile now, but it came into sharp focus when executives whose companies were taking bailout money hand-over-fist somehow managed to keep millions in bonus pay. After news broke that the government couldn't prevent payment of those bonuses, the public was furious and the outcry was loud.

 

In the aftermath, shareholders at several companies have demanded and been given a say on executive pay in hopes of preventing such excess. HP, Apple, Microsoft, Cisco and Intel are just a handful of them.

 

That said, it's fascinating how much CEOs have made -- even in the midst of recession. The subject came up recently when a coworker noted the discrepancy between the $84.5 million Oracle CEO Larry Ellison made in 2009 and the $26.5 million BMC Software's Robert Beauchamp -- the next highest-paid tech exec -- earned in the same period.

 


If that's not shocking enough, what must the gap be between Ellison's pay and the average annual salary of the rank-and-file who work for him? Though companies are already required to report on executive pay packages, they have not been required to report the ratio of executive pay to employee pay - until now.

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act, which became law just this summer, requires companies to disclose that pay gap. As Sam Pizzigati from the Institute for Policy Studies pointed out before the law passed:

Until now, we've only had broad "average" data on corporate pay gaps. We've been able to compare national CEO pay averages with national worker pay figures. But we've never been able to specify pay gaps within individual companies or compare the gaps between one corporation and another. This [provision] would let us do that. Corporations would be required to compute "the median annual total compensation of their employees (excluding the CEO)" and reveal "the ratio between CEO and employee pay."

I agree with Pizzigati's conclusion that the change should "reframe and recharge" the debate on executive compensation, especially if the discrepancy is as bad as I imagine it is.



Add Comment      Leave a comment on this blog post
Aug 26, 2010 1:17 AM user1612135 user1612135  says:

excellent

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Aug 26, 2010 1:34 AM John Tabar John Tabar  says:

This is the only way, there has be some cap on the ratio of management pay to his/her employees.

Tto keep the country strong we need to keep a reasonable pay/salary for the frontline employees who are the backbone of these companies.

I would like to see  an umbrella cap on management pay including salary, bonuses, perks, stck options, severence packages, etc. set by the government. This cap should not be any higher than $2.0 millions/year. Thanks, JT

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Aug 26, 2010 2:36 AM alf1955 alf1955  says: in response to John Tabar

Hmmm... last time I checked, we were a capitalist country.  I may be mistaken, but I believe that means you can charge whatever the market will bear....  One quick question, should the government be able to set an umbrella cap on other pay, say (for example) YOUR pay?  btw, I'm just a working class peon, but I don't want the government to have ANY say in ANYONE's compensation.  Socialism, however mild the infiltration, (which IS what you're proposing) STINKS!!!  'nuff said.... 

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Aug 27, 2010 9:54 AM Jon Jon  says:

Interesting. If an individual chooses to sacrafice the time and energy in his life to be a CEO of xyz company and has the talent and brains to do it, then bully for him or her! Let them make all they can. To the rest of you winers, what is it in your work ethic that made you decide it was o.k. for you to make x in your salary, but make someone else feel guilty or ashamed of what they make based on their choices. I'll take the 200 + years of captilism instead of this popular concensus and practice of demonizing those who dare to succeed

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