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SEC adopts rules mandating disclosure of CEO-worker pay ratios

reuters.com

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Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#61

Post by ch4s3 »

pvnick wrote: post #29
brandonmenc wrote: post #27

Earlier quoted context omitted.

> US's absurdly low income tax rates for the wealthy The top 20% of earners pay over 80% of the income taxes. That's low?

As long as there are rich people there will be folks complaining that the rich don't pay enough taxes.

Not really. You don't read news and magazine articles from the 50s 60s and 70s decrying the contribution of the wealthy to the common good. You see people complaining about the taxation of the wealthy during periods of high income inequality. You see the same thing in other countries as well. Presently we tax wages heavily for middle income levels and tax capital gains at a much much lower rate.

People are pissed that the wealthy, wielding their outsized political influence have pulled up the ladder of opportunity behind themselves.

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#62

Post by dbcfd »

randomname2 wrote: post #53

This may backfire. Over the last 2 years we've been having a stock buyback craze, where corporations can issue unlimited amount of debt and use the proceeds to repurchase stock in an illiquid market pushing the stock to record highs. Shaming CEOs into lowering their pay may work, but these same CEOs will only be rewarded more in options and stocks which do not have the SEC reporting treatment. And this will only ince…

I'm assuming this is a ratio of "pay" not compensation, where CEO pay is their salary, and worker pay is salary or total dollars earned. Essentially cash to cash.

If they plan on having equity included, that will complicate things, since you may have variation in vesting schedules.

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#63

Post by ojbyrne »

zajd wrote: post #12
mod wrote: post #4

Can someone explain to me why we're outraged that CEOs make lots of money? I truly don't understand it. My presumption is that CEOs are adding enough value to be worth their pay, just like every other worker (should be).

Honestly CEO's getting paid a ton isn't really much of a problem as opposed to the US's absurdly low income tax rates for the wealthy. Not to mention capital gains... estate taxes... etc

I can see a case for capital gains and estate taxes but the top marginal income tax rates in NY and California (where I'd guess most CEOs reside) are over 50%. Not sure how that would be called "absurdly low."

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#64

Post by drauh »

brandonmenc wrote: post #27
zajd wrote: post #12

Earlier quoted context omitted.

Honestly CEO's getting paid a ton isn't really much of a problem as opposed to the US's absurdly low income tax rates for the wealthy. Not to mention capital gains... estate taxes... etc

> US's absurdly low income tax rates for the wealthy The top 20% of earners pay over 80% of the income taxes. That's low?

Did you know that people who earn less than $10k per year pay no taxes at all? How is that fair? We should see that beggars get taxed on all the loose change they get from people on the street.

http://www.efile.com/tax/do-i-need-to-file-a-tax-return/#inc...

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#65

Post by dbcfd »

paulhauggis wrote: post #46
_delirium wrote: post #14

Earlier quoted context omitted.

There's a lot of suspicion that your presumption isn't accurate. It's a fairly big area of research, though. One alternate hypothesis is a form of "executive capture", that companies nominally owned by shareholders are actually run by more of a clique of executives, who serve on each others' boards and pay each other large salaries. Some mild but inconclusive correlational evidence for that view is that when controll…

"There's a lot of suspicion that your presumption isn't accurate" If this is the case, the only people that should be worried about it are the shareholders and the other people that own the company. If I was running a company and I had more money to spare (because I couldn't pay the CEO past a certain amount of money), I'm not just going to pay a worker because it sounds nice. Workers should be paid based on market v…

> If this is the case, the only people that should be worried about it are the shareholders and the other people that own the company.

And the SEC is responsible for improving company/shareholder relationships, so this falls under their directorate.

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#66

Post by untog »

paulhauggis wrote: post #59
untog wrote: post #23

Earlier quoted context omitted.

Because the level of CEO pay compared to average employee pay is at all time highs. It's gone from 20x the average employee in 1965 to 295x in 2013. Do you think CEOs are 10x more effective than they were in the 60s? http://www.epi.org/publication/ceo-pay-continues-to-rise/ And yes, you can easily counter saying that private companies are allowed to pay their CEOs whatever they want, which is absolutely true, but at…

"Do you think CEOs are 10x more effective than they were in the 60s?" Why is that for you to decide? The world has become globally competitive since the 1960s, which means it takes a lot more work for a CEO to run a company successfully. "but at the same time many people are growing concerned about a wealth gap in the US - that the rich are getting subtantially richer, while the middle class haven't seen meaningful g…

Why is that for you to decide?

It's for society to decide. I know the libertarian perspective is that society/government have no role in deciding how businesses operate, but that isn't actually the reality today. You might just as well ask what gives anyone the right to make companies pay tax.

This will continue to happen when we put more and more restrictions on owning and starting a business

I'm curious as to why you think economic prosperity can only be reached by starting your own business. What's the ideal end game here - every citizen of the US operates their own one-person business?

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#67

Post by slg »

mey wrote: post #7

I have thought once I establish a company, I might tie CEO salary to be limited to being a multiple of the least paid employee. Then what the good ratio is becomes an interesting question to me. Is 10x enough? Is 100x too much? Is a CEO's productivity worth 100x the lowest paid employee? If we go with the lowest paid employee is making 30k a year, and the CEO is making 3mil? Is that too much, not enough, just right?…

Whatever ratio you decide, it introduces a variety of problems. For example, it gives the CEO incentive to cut the lowest paying jobs so they are no longer factored into the ratio. Suddenly your customer service call center is outsourced to a contractor because it allows the CEO to give themselves a raise regardless of whether it is good for the customers or the company's long term business interests.

It also isn't factoring the problems that would arise if your max ratio prevents you from being competitive in the CEO hiring market.

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#68

Post by drauh »

paulhauggis wrote: post #59
untog wrote: post #23

Earlier quoted context omitted.

Because the level of CEO pay compared to average employee pay is at all time highs. It's gone from 20x the average employee in 1965 to 295x in 2013. Do you think CEOs are 10x more effective than they were in the 60s? http://www.epi.org/publication/ceo-pay-continues-to-rise/ And yes, you can easily counter saying that private companies are allowed to pay their CEOs whatever they want, which is absolutely true, but at…

"Do you think CEOs are 10x more effective than they were in the 60s?" Why is that for you to decide? The world has become globally competitive since the 1960s, which means it takes a lot more work for a CEO to run a company successfully. "but at the same time many people are growing concerned about a wealth gap in the US - that the rich are getting subtantially richer, while the middle class haven't seen meaningful g…

- More work? Do they work longer hours?

- Don't the employees also do more work, and spend more money on their own training (college, vocational education, conferences) to remain competitive employees?

- Supply side economics really works! Make the stuff, and people will buy it with the extra money they get from... not sure.

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#69

Post by [deleted] »

paulhauggis wrote: post #59
untog wrote: post #23

Earlier quoted context omitted.

Because the level of CEO pay compared to average employee pay is at all time highs. It's gone from 20x the average employee in 1965 to 295x in 2013. Do you think CEOs are 10x more effective than they were in the 60s? http://www.epi.org/publication/ceo-pay-continues-to-rise/ And yes, you can easily counter saying that private companies are allowed to pay their CEOs whatever they want, which is absolutely true, but at…

"Do you think CEOs are 10x more effective than they were in the 60s?" Why is that for you to decide? The world has become globally competitive since the 1960s, which means it takes a lot more work for a CEO to run a company successfully. "but at the same time many people are growing concerned about a wealth gap in the US - that the rich are getting subtantially richer, while the middle class haven't seen meaningful g…

[deleted]

Re: SEC adopts rules mandating disclosure of CEO-worker pay ratios

#70

Post by ojbyrne »

brandonmenc wrote: post #27
zajd wrote: post #12

Earlier quoted context omitted.

Honestly CEO's getting paid a ton isn't really much of a problem as opposed to the US's absurdly low income tax rates for the wealthy. Not to mention capital gains... estate taxes... etc

> US's absurdly low income tax rates for the wealthy The top 20% of earners pay over 80% of the income taxes. That's low?

That particular statistic is useless without further context, and thus is a favorite of Fox News and other right wing ideologues. If 80% of earners earn one dollar a year then obviously it's low. If 80% of earners earn 1% less than the other 20% then it isn't.

A better statistic is to actually look at the tax rate paid by the top earners compared to lower earners. Top marginal rates on employment income including state tax is often over 50%, which is probably plenty.

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