As the Democratic party gathers in Denver one issue that should be frontand center is the staggering inequality of our times. And one of the most damning symbols of our New Gilded Age is exorbitant executive pay.
In 2007, the average S&P 500 CEO’s pay package was $10.5 million, 344times greater than the typical US worker. The top fifty private equity andhedge fund managers pocketed an average of $588 million–19,000 timesgreater than the typical US worker. Thirty years ago, the averageexecutive salary was just thirty to forty times greater than the average American worker’s pay.
Senators Barack Obama and John McCain both propose greater shareholder say over CEO pay. But when it comes to taking realaction to close the loopholes that subsidize these obscene, reckless,and super-sized salaries neither candidate is aggressive enough.
A timely report from the Institute for Policy Studies (IPS) and United for a Fair Economy—Executive Excess 2008– shows how CEO compensation not only exacerbates our economic divide,but that the US taxpayer annually subsidizes it to the tune of more than$20 billion. As Institute for Policy Studies fellow and Nationcontributor Sarah Anderson, a lead author of the annual reports, told me: “It’s hopeful to see the presidential contenders from both parties responding to the widespreadpublic outrage over the problem of excessive executive pay, but theirsolutions fall short. Both support boosting shareholder power overexecutive compensation. This reform, known as ‘say on pay,’ could shamesome boards away from offering truly obscene pay packages, but it hashad limited effect in other countries. Real executive pay reformdemands tougher legislative action. And step one should be to plug thetax loopholes that currently encourage and subsidize runaway pay. Weneed to be asking our lawmakers–how much longer are you going to allowour tax dollars to wind up in the pockets of top executives?”
Executive Excess hones in on five proposed reforms to the loopholeswhich currently result in the $20 billion annual subsidy. It’s worthnoting that Senator Obama has voiced support for one of the fiveproposed reforms, while Senator McCain supports none of them.