Join the emerging efforts to crack down on corporations that reward top executives at worker expense.
Since 2018, U.S. publicly held corporations have had to annually report the ratio between their CEO and median worker compensation. Corporate lobby groups and allied Republicans fought hard to repeal, delay, or water down this disclosure mandate, a measure initially enacted as part of the 2010 Dodd-Frank financial reform legislation. But institutional investors weighed in heavily to defend pay ratio disclosure, as did hundreds of thousands of individuals outraged about the extreme pay gaps at the vast majority of large U.S. corporations.
The CEO-worker pay ratios the new disclosures have begun revealing are boosting momentum behind efforts to use tax, contracting, and subsidy policy to narrow our compensation divides. In 2016, the city of Portland, Oregon, adopted the world’s first tax penalty on corporations that pay their CEO more than 100 times their median worker pay. In November 2020, voters in San Francisco overwhelmingly approved a similar tax.
These landmark precedents have the potential to turn every level of government into a battleground over corporate pay policies that fuel inequality. Lawmakers in at least nine U.S. states and in the U.S. Congress have also introduced pay ratio taxes. India and the UK are also now requiring pay ratio disclosure.
General resources on CEO-worker pay ratios
- Institute for Policy Studies Policy Brief
- AFL-CIO Paywatch (includes searchable database)
- Bloomberg pay ratio tracker
- Rep. Keith Ellison staff report
- Executive Excess 2019: Making Corporations Pay for Big Pay Gaps (IPS report finding that 50 US publicly held corporations had CEO-median worker pay gaps of more than 1,000 to 1 in 2018)
- Fact Sheet: CEO Pay Reform is a Transpartisan Issue
- How Taxpayers Subsidize Giant Corporate Pay Gaps (IPS report analyzing pay gaps at the federal government’s top 50 contractors and top 50 subsidy recipients)
Resources on the Portland CEO pay tax:
- Article in The Nation with Portland surtax 1st year revenue figures
- Institute for Policy Studies Backgrounder on the Portland CEO-worker Pay Ratio Surtax
- Text of the Portland legislation
- City of Portland Bureau of Revenue assessment of the legislation
- List of the more than 500 publicly traded businesses that “do business” in Portland that may be subject to the surtax.
Resources on the San Francisco CEO pay tax:
- Institute for Policy Studies Backgrounder, including comparison of San Francisco and Portland models
- San Francisco ballot measure text and results
- Text of the San Francisco legislation
- City of San Francisco revenue assessment of the legislation
- San Franciscans Vote Overwhelmingly to Rein in Overpaid CEOs
Federal proposals related to CEO-worker pay ratios:
- Senators Bernie Sanders (I-Vt.) and Elizabeth Warren )D-MA) and Representatives Barbara Lee (D-CA) and Rashida Tlaib (D-MI) introduced a bill (H.R. 5066/S. 2849), the Tax Excessive CEO Pay Act, which would apply graduated tax increases on corporations with large CEO-median worker pay gaps, beginning with 0.5 percentage points on corporations with pay ratios of 50 to 1 and rising to 5 percentage points on firms with ratios above 500 to 1.
- The Sanders for President campaign issued a plan on September 30, 2019 for an “Income Inequality Tax” that would impose tax rate increases on companies with CEO to median worker ratios above 50 to 1. In August 2019, the Sanders campaign released a broad pro-union “Workplace Democracy Plan” that includes a ban on federal contracts to firms with CEO-worker pay ratios of more than 150 to 1 or that outsource jobs, pay workers less than $15 an hour, or engage in union busting. As part of his presidential bid, Sanders committed to achieving these contracting reforms by executive order.
- Sen. Sanders (I-Vt.) and Rep. Ro Khanna (D-CA) authored a bill (S. 3640) that would prohibit stock buybacks where CEO pay exceeds 150 times the compensation that goes to a company’s median pay.
- Sen. Jeff Merkeley (D-OR) has introduced a bill, the Equity in Compensation Act (S. 2312), which would apply graduated surtaxes on corporate income tax liabilities, beginning with 2% on corporations with pay ratios of 30 to 1 and rising to 10% on firms with with ratios above 1,000 to 1.
- Rep. Mark DeSaulnier (D-CA) has introduced a similar bill, the CEO Accountability and Responsibility Act (H.R. 8377). This bill would also offer preferential treatment in federal contracts to companies with pay ratios below 50:1.
- Rep. Nydia Velázquez (D-NY) has introduced a bill, the Greater Accountability in Pay Act (H.R. 4242), which would require publicly held corporations to annually disclose the ratio between pay raises for top executives and median employees.
State legislative proposals related to CEO-worker pay ratios:
- California surtax (SB 37)
- Connecticut surtax (HB 6373) (The state general assembly is also considering HB 6747, which would disqualify companies with CEO-worker pay ratios of more than 100 to 1 for state subsidies and grants.)
- Hawaii excise tax surcharge (SB 747)
- Illinois fee (HB 3335)
- Massachusetts surtax (S. 1702)
- Minnesota surtax (HF 65)
- New York (S.1659 and A.7454)
- Rhode Island surtax (H. 5141 and S. 0318) (The RI state senate is also considering S. 0211, legislation that would give preferential treatment in state contracting to corporations that pay their CEOs no more than 25 times their median worker pay)
- Washington surtax (HB 1681)
Letters to the SEC in support of CEO-worker pay ratio disclosure:
A wide range of institutional investors, policymakers, and academics have pressed the SEC for clear and strong federal regulations on CEO pay ratio disclosure. For a full list, see 2017 submissions and 2013/2015 submissions.
- State Treasurers Press SEC Nominee, Congress on CEO Pay Disclosure Rule
- Rep. Keith Ellison, et al., Members of Congress
- Senator Robert Menendez and 8 other senators
- Senator Tammy Baldwin
- 100 investors representing $3 trillion in assets under management
- Network for Sustainable Financial Markets
- Religious Society of Friends
- SharePower Responsible Investing, Inc.
- Trillium Asset Management
- US Social Investment Forum
- Walden Asset Management
- Lynne Dallas, Professor of Law, University of San Diego
- Sue P. Ravenscroft, Roger P. Murphy Professor of Accounting, Iowa State University
- Institute for Policy Studies
Media coverage of the CEO pay surtax and other similar proposals:
- CNN.com: Some CEOs earn 1,000 times more than their workers. Here’s how to stop that.
- Detroit Free Press: The US should tax excessive CEO compensation (by Rep. Tlaib)
- Washington Post: Bernie Sanders pushes new tax targeting large companies where CEOs earn far more than workers
- Marketwatch: Paying the boss 1,000 times more than a worker encourages reckless corporate behavior
- Robert Reich: Former Labor Secretary calls for tax on corporations with CEO-worker pay gaps above 100 to 1
- Vox: A plan to fix inequality would target CEOs who make 100 times more than their employees
- The Nation: When Corporations Pay CEOs Way More than Workers, Make Them Pay
- The Financial Times: US companies reveal pay gap between bosses and workers
- The Guardian: Study finds extreme CEO-worker pay disparity at taxpayer-supported companies
- USA Today: CEO vs. worker pay: Federal contractors have big compensation gaps
- The Guardian: No CEO should earn 1,000 times more than a regular employee
- Orange Country Register: Here’s how much CEOs’ pay has gone up and down — but mostly up and up
- New York Times: Portland Adopts Surcharge on CEO Pay in Move vs. Income Inequality
- The Nation: This City Just Came Up With a Novel Way to Fight Inequality: Taxing Corporations With Extreme Pay Gaps
- Fast Company: Why Portland’s Tax On CEO Pay Matters
- Moyers & Company: Local Governments Aren’t Waiting for a Federal Fix for Runaway CEO Pay
- Bloomberg: CEO Pay Targeted in San Francisco, Rhode Island
- Bloomberg: Income Inequality Battle Brewing At State-Level
- Fortune: Donald Trump Needs to Do Something About High CEO Pay
- American Prospect: Corporate Allies in Washington Take Aim at CEO Pay Reform
- Executive Excess: How Taxpayers Subsidize Giant Corporate Pay Gaps
- Taxpayers Are Footing the Bill for Sky-High CEO Salaries
- Rep. Keith Ellison Takes a Hard Look at New Pay Ratio Data
- Historic CEO Pay Tax Passes in Portland
- Tracking Corporate Responses to the Tax Scam
- How to Track CEO-Worker Pay Ratios
- Del Monte’s Pay Ratio is Largest to Date at 1,465:1
- Eleven ‘Small’ Banks that Would Gain from the Senate Banking Bill Sport Hefty Pay Gaps
- Bloomberg Q&A on New CEO-Worker Pay Ratio Data
- A New Landmark in CEO-Worker Pay Ratio Disclosure
- For Minimum Decency, a Maximum Wage
Inequality.org co-editor Sarah Anderson shares findings from an Institute for Policy Studies report on CEO-worker pay gaps at top federal contractors and subsidy recipients.
Inequality.org co-editor Sarah Anderson explains how to build on CEO-worker pay ratio disclosure by linking this inequality indicator to tax and contracting policies.
Inequality.org co-editor Sarah Anderson discusses CEO-worker pay ratio policies on The Zero Hour with RJ Eskow.