Pressure on SEC to Implement Rule Disclosing CEO to Median Worker Pay


Vineeta Anand, chief research analyst with the AFL-CIO, said it was "astonishing" and "ridiculous" that companies that oppose the rule say the ratio would be difficult to determine.

"Every company has to disclose how much is they pay for employee compensation," she said. "If a company is a multinational and has overseas operations they have to report to the local jurisdictions."

She said the Internal Revenue Service has a rule requiring companies that offer retirement plans like 401(k) plans to report a similar disclosure just to the IRS, not to the public, to assure they are not overpaying executives relative to other workers.

The AFL-CIO suggested to the SEC that they allow a statistical sampling if they choose not to calculate a median salary.

Also, a number of companies have disclosed a similar ratio showing worker pay relative to CEO salary. Grocer Whole Foods has disclosed a salary cap of 19 times that limits the compensation, which includes wages plus bonuses, of any "team member" to 19 times the average total compensation of any full-time team member in the company. Whole Foods said the average hourly wage last year was $18.24 and the average annual wage was $37,947, capping salaries at $721,000.

Financial company MBIA Inc., has disclosed the average and median salary for all employees at $151,700 and $130,000 respectively. The average and median salary and bonus for all employees were $223,000 and $165,000, respectively. Those figures compare with the salary of CEO Jay Brown, which is $500,000 (3.3 times average and 3.9 times the median) and salary and bonus of $2.3 million (10.3 times average and 14 times median) for 2010, according to its 2011 proxy statement.

The Bank of South Carolina disclosed the median salary of $36,000 last year, about one-sixth the CEO's pay. Natural gas company, El Paso Corp., previously disclosed the median employee pay before being acquired by Kinder Morgan Inc. last week.

In 2010, median total compensation for S&P 500 CEOs rose to $9 million, from about $7 million in 2009. Median total compensation for S&P 500 CEOs grew by 28.2 percent from 2009 to 2010, a significant increase in pay after two consecutive years of decline, executive compensation data firm Equilar reported in May.

Sarah Anderson, global economy project director for the Institute for Policy Studies, said the ratio of CEO pay to that of the average worker has skyrocketed in data analyzed since 1980.

Back then, the ratio of the average CEO to the average worker was 42 to 1, using data from the U.S. Labor Department. In 2010, it had reached 325 to 1, after peaking at 344 to 1 in 2007.

The institute publishes an annual report called Executive Excess: The Massive CEO Rewards for Tax Dodging.

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