CEO-Worker Pay Ratios: CEO – Worker Pay Gap Resources

03/10/2021 | Filed under: Features,Global Compensation | Posted by:

Since 2018, U.S. publicly held corporations have had to annually report the ratio between their CEO and median worker compensation. Corporate lobby groups and allied Republicans fought hard to repeal, delay, or water down this disclosure mandate, a measure initially enacted as part of the 2010 Dodd-Frank financial reform legislation. But institutional investors weighed in heavily to defend pay ratio disclosure, as did hundreds of thousands of individuals outraged about the extreme pay gaps at the vast majority of large U.S. corporations.

CEO-worker pay ratios Ending Inequality

The CEO-worker pay ratios the new disclosures have begun revealing are boosting momentum behind efforts to use tax, contracting, and subsidy policy to narrow our compensation divides. In 2016, the city of Portland, Oregon, adopted the world’s first tax penalty on corporations that pay their CEO more than 100 times their median worker pay. In November 2020, voters in San Francisco overwhelmingly approved a similar tax.

These landmark precedents have the potential to turn every level of government into a battleground over corporate pay policies that fuel inequality. Lawmakers in at least nine U.S. states and in the U.S. Congress have also introduced pay ratio taxes. India and the UK are also now requiring pay ratio disclosure.

General resources on CEO-worker pay ratios

Resources on the Portland CEO pay tax:

Resources on the San Francisco CEO pay tax:

  •  The Tax Excessive CEO Pay Act would apply graduated tax increases on corporations with large CEO-median worker pay gaps, beginning with 0.5 percentage points on corporations with pay ratios of 50 to 1 and rising to 5 percentage points on firms with ratios above 500 to 1. In the 117th Congress: (S.794/HR 1979) Support materials.
  • Rep. Mark DeSaulnier (D-CA) introduced a similar bill, the CEO Accountability and Responsibility Act (H.R. 3301). This bill would also offer preferential treatment in federal contracts to companies with pay ratios below 50:1.
  • Sen. Sanders (I-Vt.) and Rep. Ro Khanna (D-CA) authored a bill in the 116th Congress (S. 3640) that would prohibit stock buybacks where CEO pay exceeds 150 times the compensation that goes to a company’s median pay.
  • Sen. Jeff Merkeley (D-OR) introduced a bill in the 116th Congress, the Equity in Compensation Act (S. 2312), which would apply graduated surtaxes on corporate income tax liabilities, beginning with 2% on corporations with pay ratios of 30 to 1 and rising to 10% on firms with with ratios above 1,000 to 1.
  • Rep. Nydia Velázquez (D-NY) introduced a bill, the Greater Accountability in Pay Act (H.R. 4242), which would require publicly held corporations to annually disclose the ratio between pay raises for top executives and median employees.
  • California (SB 37)
  • Connecticut (HB 6373) (A separate state general assembly bill, HB 6747, would disqualify companies with CEO-worker pay ratios of more than 100 to 1 for state subsidies and grants.)
  • Hawaii (SB 747)
  • Illinois (HB 3335)
  • Massachusetts (S.3369/S. 286)
  • Minnesota (HF 65)
  • New York (S.1659 and A.7454)
  • Rhode Island (H. 5141 and S. 0318) (A separate RI state senate bill, S. 0211, would give preferential treatment in state contracting to corporations that pay their CEOs no more than 25 times their median worker pay)
  • Washington (HB 1681)

Letters to the SEC in support of CEO-worker pay ratio disclosure:

A wide range of institutional investors, policymakers, and academics have pressed the SEC for clear and strong federal regulations on CEO pay ratio disclosure. For a full list, see 2017 submissions and 2013/2015 submissions.

Media coverage of the CEO pay surtax and other similar proposals:

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