AFL-CIO President Richard Trumka on Thursday blasted high compensation for chief executives and urged the Obama administration to move forward with a regulation that could embarrass CEOs.
The nation’s largest labor federation used the release of its annual Executive Paywatch report to push for a Securities and Exchange Commission (SEC) rule that would require public companies to disclose the gap in pay between their CEO and average employees.
“The AFL-CIO launched Executive Paywatch 15 years ago and it’s sort of hard to believe we have been doing this for 15 years and fighting this fight for 15 years. We did it to expose runaway CEO pay and an economy that was increasingly out of whack,” Trumka said.
The website for the report, dubbed “CEO Pay and the 99%,” encourages users to push the SEC to implement a rule that will publicly disclose companies’ CEO-to-worker pay ratio. Clicking on a “Take Action” link, users are directed to a form email that will be sent to the agency, telling them to issue the regulation.
Business groups and financial services trade associations have bristled at the rule, calling it overtly political. Unions lobbied to get the rule included in the Dodd-Frank law that passed in 2010, and Trumka said the administration could be more forceful in seeing it instituted.
“The question was earlier did you think they have been aggressive? I think the administration can be more aggressive when it comes to pushing the regulation with the SEC,” Trumka said.
The union expanded its pay report to show how 40 of the largest mutual funds in the United States voted on “say-on-pay” shareholder resolutions concerning executive compensation. Mutual funds are some of the country’s biggest shareholders, and thus hold significant sway on how much CEOs are paid.
The website instructs users on how to contact their mutual funds and express disappointment if they voted against limiting CEO pay.
The say-on-pay shareholder vote was another provision that became law with the Dodd-Frank bill. Though non-binding, the vote can put companies’ boards of directors in a difficult position if shareholders reject how much the CEO is being paid.
Citigroup CEO Vikram Pandit, for example, saw his $15 million pay package opposed by shareholders at their annual meeting this week. Trumka said he thought the say-on-pay votes would help bring down CEO pay.
He noted that despite the significant 14 percent raise for CEOs last year, chief executives had a bigger spike in pay from 2009 to 2010 — a 23 percent raise, according to the AFL-CIO’s estimates.
“I think shareholders are paying more attention. I think these say-on-pay votes have tempered them,” Trumka said.