McDonald’s, Lowe’s, General Dynamics, American Airlines, IBM, and General Mills are among 81 companies that are fighting to keep certain information out of public sight, according to a recent article by Peter Whoriskey of The Washington Post. It’s the CEO-to-worker pay ratio.
This disclosure requirement is a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law last summer. Current rules already require disclosure of executive pay. Dodd-Frank requires companies to calculate the median value of what they pay workers, and report the comparison between that figure and the chief’s pay.
Corporations began lobbying against the requirement over a year ago, calling comparisons between the chief’s pay and everyone else’s “useless.”
On Wednesday the House Financial Services Committee approved a bill that would repeal the disclosure requirement. The vote was along partisan lines. Twenty-nine Republicans and 4 Democrats voted in favor; 21 Democrats opposed.
Whoriskey reports that executive pay has more than quadrupled in real terms since the 1970s, even as pay for 90% of Americans has stalled. In 1970, executive pay was 28 times the pay of the average worker; in 2005 it was 158 times.
Senator Robert Menendez, Democrat from New Jersey, added the pay ratio disclosure requirements to the new law. His take on this week’s committee vote?
The real reason House Republicans want to keep the typical worker’s pay secret is that it may embarrass some companies to reveal that they pay their CEO in the range of 400 times what they pay their typical worker.