For Immediate Release
Josh Goldstein (202) 637-5018
CEOs Collect Raises, Hoard Record Cash Reserves
WASHINGTON - According to data released by the AFL-CIO today, CEOs of S&P 500 Index companies received an average of $12.9 million in pay in 2011 – a 14 percent raise. The ratio of CEO to worker pay is now 380 to 1. The newly designed Executive PayWatch, a searchable online database, provides direct comparison of top CEO pay to average wages of workers, such as a nurse, teacher, firefighter and others.
AFL-CIO President Richard Trumka outlined some of the ways CEOs keep the economy out of whack, including the increasingly common practice of corporate cash hoarding and the role of mutual funds in supporting runaway executive compensation.
Trumka noted that this is the second year in a row CEO pay increased, following the 23 percent increase in 2010. In stark contrast, the average wage for workers was about $34,000 – a 2.8 percent increase that barely keeps up with inflation.
“Astronomical CEO pay is based on the false idea that the success of a corporation is due to one CEO genius. In reality, all employees create value, and CEO pay levels should be more in line with the rest of their company’s employee pay structure. CEOs should be paid as a member of a team, not as a superstar,” said Trumka. “The further widening gap between CEO-to-worker pay to an astonishing 380 times is simply bad for our economy.”
Trumka also pointed to new features on PayWatch including data exposing swelling corporate cash stockpiles. That cash level has reached a record $2.2 trillion for U.S. corporations and another $1.5 trillion for banks in excess reserves. The site highlights companies with the highest cash hoards that have cut jobs such as Verizon Communications whose cash holdings and short term investments grew 311 percent to $14 billion between 2007 and 2011. During that period, the company thinned its employment rolls by 17.5 percent.
“The egregious corporate behavior today goes beyond the enormous levels of compensation for CEOs and glaring inequality in pay for their workers. CEOs are simply hoarding their company’s cash rather than investing capital to grow our economy and create jobs,” said Trumka.
For the first time, PayWatch includes a new database of mutual fund voting on “say-on-pay” and other executive compensation issues. Visitors to the website can learn which mutual funds are “pay enablers” verses “pay constrainers” and write their mutual funds to encourage more votes against runaway CEO pay.
PayWatch also examines the world of private equity executive pay, an area that has operated in the shadows until Mitt Romney’s candidacy began raising more serious questions about its practices.
Trumka noted that the PayWatch launch comes two days after a massive day of mobilization where working people across the country called for a fairer tax structure and for millionaires to pay their fair share.
Visitors to the PayWatch website will be empowered to write the Securities and Exchange Commission and urge them to implement the Dodd-Frank Act’s requirement that public companies disclose their ratio of CEO-to-worker pay. Trumka said the AFL-CIO campaign will work hard to defend and further implement this historic reform.
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) is a voluntary federation of 56 national and international labor unions. The AFL-CIO union movement represents 10.5 million members, including 2 million members in Working America, its new community affiliate. We are teachers and truck drivers, musicians and miners, firefighters and farm workers, bakers and bottlers, engineers and editors, pilots and public employees, doctors and nurses, painters and laborers-and more.