Over 300:1. That’s the ratio of CEO to employee pay in the United States. The U.S. leads the world in excessive executive compensation, to the detriment of shareholders. The current system of executive pay distorts incentives, exacerbates income inequality, and leads consumers and employees to think the game is rigged against them.
As You Sow’s Executive Compensation initiative encourages shareholders to use the power of the proxy to better control and reduce unjustified CEO pay and to create greater equity in compensation across all publicly traded US companies. Our goal is to help shareholders, including mutual funds, pensions, foundation, endowments, and individuals to create proactive change in a broken system. The initiative:
- Engages shareholders and helping them hold money managers accountable for their votes;
- Pushes companies to develop new social and environmental performance criteria, and working with them to do so;
- Identifies the most overpaid executives, the money managers that approved the compensation plans, the consultants that proposed them, and the compensation committee board directors that approved their compensation packages;
- Encourages foundations and public funds to adopt stringent voting guidelines to address specific disconnects between pay and performance, as well as the systemic issues that drive the increases, such as peer group selection and inflationary ratcheting up of compensation.
The median pay for S&P 500 CEOs is now well over $10 million dollars. The current system of executive pay:
- Contributes to the destabilizing effects of income inequality;
- Makes investors, consumers and employees wonder if they are playing in a game rigged against them;
- Distorts incentives, leading to a short-term focus rather than sustainable growth for companies.
A recent poll showed that only 18% of Americans think the pay of top corporate executives is appropriate. Yet for the most part, shareholder advisory votes (which are required under corporate reform) give rubber-stamp approval to astronomical executive compensation packages, with average support of over 90 percent.
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As You Sow will soon release the fourth annual edition of our groundbreaking report, The 100 Most Overpaid CEOs, which examines the trends and forces behind ever-increasing executive compensation. With the 2018 proxy season soon approaching, our blog will continue to offer updates on the pay of some of the companies featured in our report.