Business group: Public companies shouldn’t have to compare CEO and worker pay
By Peter Whoriskey
June 24, 2011
Here’s one financial figure some big U.S. companies would rather keep secret: how much more their chief executive makes than the typical worker.
Now a group backed by 81 major companies — including McDonald’s, Lowe’s, General Dynamics, American Airlines, IBM and General Mills — is lobbying against new rules that would force disclosure of that comparison.
The lobbying effort began more than a year ago. It involved some of the biggest names in corporate America and meetings with members of both parties on the House Financial Services Committee and Senate banking committee.
The companies and their Republican allies in Congress call comparisons between the chief and everyone else in the company “useless.”
But some Democrats and investors say the information should be issued to highlight the growing income disparity in the United States. They add that opponents of disclosure merely want to hide the outrageous scale of executive pay packages.
On Wednesday, a House committee approved a bill that would repeal the disclosure requirement.
Disclosing such comparisons “can mislead or confuse investors,” said Rep. Nan A.S. Hayworth (R-N.Y.), who filed the bill to repeal the disclosure. “It creates heat but sheds no light.”
She also said the calculation of the ratio would be a burden for companies, especially those with global operations.
The committee vote was largely along partisan lines: Twenty-nine Republicans and four Democrats supported repeal; 21 Democrats opposed it.
“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,” said Sen. Robert Menendez (D-N.J.)...